Small Business Tips For Big Success
The process of starting a small business is a very difficult, challenging, and daunting task in today’s complicated and ever-changing business environment. How much cash will it require? What are the legal ramifications and economic issues? What type of entity is most beneficial? Who can help with the financial projections? What is the best financing options available? These are only a few of the many questions and issues that entrepreneurs face when trying to open a small business. Where do you start?
The following is a simple guideline that, I believe, many entrepreneurs can use to help ensure a well-defined, educated, and successful start to opening a small business.
STEP 1 – BUSINESS PLAN
The first step, and probably the most important, is to do your research and develop a comprehensive Business Plan. This plan will include many items, some of which are:
1) Business Purpose - Why do you believe this business will be viable?
2) What are the market demographics related to producing and marketing the product or service?
3) What are the current market conditions and/or barriers for entry into the market?
4) Who are the competitors?
5) What is management’s background and experience?
6) What are the liquidity and equity requirements? Do you have the needed resources or do you need equity partners?
7) What are the financial projections and business assumptions?
8) What is the best business structure? (Corporation, Partnership, Sole Proprietorship, etc.)
9) What are the staffing requirements to operate the business?
10) What legal and tax implications will you experience?
This is a summarized list of questions that need to be analyzed and understood in detail to increase the opportunity for success in a small business venture.
DON’T PANIC! There is a very reliable and proven source to help you through this critical step: your nearest District US Small Business Development Center (SBDC). The SBDC’s were founded to provide small business entrepreneurs the tools, information, and guidance in stepping through the complicated process of developing a successful business plan and opening a small business venture. They have experienced personnel and a proven approach that will provide you with a detailed business plan report – I refer to as a roadmap – that will be used in every area of the remaining guidelines. Going through the steps of this process will not only supply you with a roadmap, but also educate you to the many factors you will deal with on an ongoing basis within your company.
STEP 2 – IMPLEMENT THE PLAN
As with most any business decision, the people you engage to help you will be an integral part of the success of your small business. The three most important people are your choice of lawyer, an accountant and a banker. I like to refer to these three as your trusted silent partners. They should all three provide guidance, experience and knowledge to accurately step you through the process of opening the business effectively and efficiently.
1) The lawyer will help set up the entity which best suites your business and also be your source for any future legal advice.
2) Your accountant will also make sure the company is set up properly, from a tax standpoint, and provide financial reporting as needed to help you monitor and stay on track with your projections and help with tax planning and strategy.
3) Your banker will help fund your business plan and should provide you with an effective depository strategy as well as the needed technology to support your daily operations. The banker (preferably a Preferred or Certified Small Business Administration lender) should also present you with the best alternatives for funding a portion of the total cost of opening and be able to address any working capital needs that your business plan will require. The relationship with your banker should include ongoing and regular (at least quarterly) discussions of current financial performance, ways to improve efficiency, possible expansion opportunities and a person to discuss your ideas and the impact of these ideas on your business.
These are just three of the many business relationships that you will form over the life of your business, however, I believe they are the most important.
STEP 3 – LIVE YOUR DREAM
The rest is up to you! Serve your customer’s needs with high energy, timely response, integrity and respect. Work hard and enjoy the rewarding feeling of being a successful business owner.
Be on the lookout for my next blog, where I will discuss applying for an SBA Loan.