Launching a small business is a dream for many people with ideas and a desire to play by their own rules. But achieving that dream means facing some harsh realities. Successful (and non-successful) companies are not born overnight, so here are some important questions to ask yourself if you are in the idea stage:
- Are you entrepreneurial? Do you have good ideas for a product or service that will satisfy the needs and wants of consumers? Is there demand?
- Do you have the desire to be your own boss? Do you have a core competency in the type of business you wish to develop?
- Are you passionate about your product and service and/or have strong convictions it will succeed?
- Have you researched customers’ needs and wants?
- Do you feel you are prepared to take on the next steps? Author, artist, and trainer Mary Anne Radmacher, makes this point about courage and taking the next step, “The jump is so frightening between where I am and where I want to be…because of all I may become, I will close my eyes and leap.”
If you answered yes to all of these questions, you are ready to begin the planning process. Tactically, you will want to ensure alignment of product/service; customer demographic; planned location(s); legal structure/registration of your business; evaluation of financial needs and personal commitment; and evaluation of accounting nuances (e.g., cash flow, payroll, taxes, etc.). If you plan to have employees, there are human resource issues to consider, as well as a number of other administrative tasks and responsibilities. These four questions will help you with those initial steps:
- Do you want to be a sole proprietor, partnership, or corporation?
- Do you have working capital? If not, do you have a plan and the expertise to raise the capital you need?
- Have you registered the business, established a bank account, and obtained an Employer Identification Number?
- Are you prepared with the proper accounting and record keeping capability?
There are a number of other things to address prior to actually opening a business. The U.S. Small Business Association is a great resource to help you plan your new business initiative.
This discussion is designed as a high level overview only, so remember the importance of developing a detailed business plan prior to any other initiative relative to starting your business. There are a variety of business plan templates to assist with this development, but be sure that your plan at a minimum includes a vision and mission; extensive information on the product or service; overview of management and operations issues; a marketing plan; and most importantly a finance plan including a pro forma. Also, remember to evaluate your own strengths and weaknesses up front. You want to leverage your strengths to the extent possible and mitigate weaknesses through mentors, consultants, or other assistance.
Written by Dr. Ray Powers and Bill Davis.
Dr. Ray Powers is an academic department chair, and Bill Davis is an instructor with the Forbes School of Business® at the University of Arizona Global Campus.
References:
Radmacher, M. (2015). Good reads.
Retrieved from https://www.goodreads.com/author/quotes/149829.Mary_Anne_Radmacher
SBA, U.S. Small Business Association (2015). SBA website.
Retrieved from https://www.sba.gov/