Tips for Planning Your Business Startup

Starting a business can be a very daunting adventure if a proper plan is not put in place. Most entrepreneurs start up their businesses without putting adequate plans in place to succeed. No wonder one out of every five businesses crumbles within 5 years! If one thing should be taken very seriously, it should be your business plan. This is your “blueprint for success.”

Every business begins from a thought. A thought or idea can only become reality when expected actions are taken. When an idea is conceived, the logical corollary is that such ideas need to be written out, in black and white and on paper; or else the idea will fade off when the enthusiasm that the thought initially brought subsides. Hence, having a written business plan is pertinent if your business is to stand the test of time.

Now, what is a Business Plan?

One definition, according to entrepreneur.com, is that a business plan is a “written description of the future of your business; a document that indicates what you intend to do and how you intend to do it.” If you notice a paragraph on the back of an envelope describing your business strategy, you have already started a written plan, or at least the first draft of a plan. The business plan itself consists of a narrative and several financial worksheets.

The very act of planning helps you to think things through in a systematic and thorough way. Study and research your market niche if you are not sure of the facts, and look at your ideas critically. It may take some time now, but helps to avert costly and disastrous mistakes in future.

In this article, I want to provide a very brief look at the steps involved in planning a business:

1. Identify Your Passion: Knowing what you love doing, even without making money, is the stepping stone in starting any business. Most people enter into a business they know nothing about, and stop after only few months. Some get tired of their businesses simply because they are not happy with the activities involved in running the business anymore. According to Sabrina Parsons, (CEO of Palo Alto Software) “Know yourself, and work in a job that caters to your strengths. This knowledge will make you happier.”

The reason why many businesses fail in their first five years is because the entrepreneurs do not find fulfillment in running their business anymore. Hence, they tend to move on in search for happiness.

You must look within by evaluating yourself and identify what you are good with. If what you are good at gives you happiness, think of how you can monetize it and make it a business. You do this by sharing your passion with others. However, passion alone is not enough in starting a business. You need to plan, set goals and above all, know yourself.

2. Conduct Intense Market Research: As stated above, passion alone is not enough in determining the type of business endeavor you should get involved in. You need to be sure if there are people who are really interested in paying for what you have to offer. Apart from that, you need to identity the category of people who can afford the prices of your products or services, and in what quantity.

You also need to determine how to attract your prospective customers. How do you intend to reach your targeted customers? How do you intend to distribute your products to your targeted customers? How do you know the actual price that potential customers are willing to pay for your products? These and many other things are what you should know before investing your money in starting any business.

3. Write a Business Plan: A business plan is a written document that describes your business idea. Your business plan will give you a sense of direction towards achieving your business goals and objectives. It describes what you want to do, when to do it, where to do it, and how to do it. A written business plan can also be used as a guide running your successful business.

Writing down your plans helps you to anticipate the future of your business. Anticipating your business helps you to identify and possibly avoid any challenge that may bedevil your business in the future.

4. Register Your Business: After you have written down your business plan, you must register your business so that clients will take you serious. Apart from that, registering your business makes your business have a life of its own. It separates you from your business. Any serious minded entrepreneur must have his business registered.

The most common type of business is that of a Sole Proprietor. You run your business yourself and keep accurate books (for tax purposes). You deduct your expenses and pay taxes on the gains. This is the simplest type of business to open. It is also the most vulnerable to having your assets taken away by an angry customer who would file a law suit against you for whatever reason. This is one of many reasons that business owners opt for one of the other types of business set ups.

A Partnership is a type of business where two or more people enter into a business arrangement. Two friends, etc. decide to open a business. If you decide to enter into a partnership, you need a document that details how the business will be divided if the partnership is broken up. It may sound crude to plan this before opening the doors, but it will save a lot of heartache and expenses in the end. Besides, if you never dissolve the partnership – the document is never needed. This is one of those “it is better to have it if it’s needed rather than need it and not have it” moments.

Corporations: There are several types of ways to incorporate. I am not going to get involved with a detailed discussion here. My recommendation is if you are planning on incorporating your business – hire an attorney with expertise in this area. There as several types of corporations and your attorney can evaluate the facts surrounding your business and guide you to the most appropriate type of corporation for you to use.

5. Get The Necessary Capital: This is the most difficult aspect of starting a business. Getting the capital to finance a business is the major factor that discourages most entrepreneurs from moving ahead with their plans.

There is no doubt that most businesses start through self-financing. The reason for this is clear – Nobody believes in your dream until there is a physical manifestation. As a potential business person, you must learn to save aggressively in order to meet the financial requirements of operating your business while taking care of your family at the same time. You can also opt for loans from friends, family or corporate bodies (banks, saving and loans, etc.).

A general rule of business states that, in addition to your start-up costs you should also have at least six to twelve months’ worth of your family’s budget in the bank. In order to finance your company, you will need to match the company’s needs to the appropriate financing option. You should seek the assistance of a good accountant in this area. The accountant will be able to advise you what is best in your situation and also offer assistance in tax planning.

6. Taking Risks: Once the financial aspect of starting a business is settled, what risks you should take should be the next line of action. You should keep on testing different things to be able to ascertain what works well for you and your business plan. By accurately listing the acceptable risks you are willing to take before hand (in your business plan) and in what situations these risks would be taken, will give you valuable guidance when obstacles occur (and they will occur).

By having your plan of action already in place, it will be very easy for you to refer back to your well thought out plan and decide on the course of action to take concerning a pre-identified obstacle to your business success.

It is important to know from the beginning that you may fail in this business. You may not want to acknowledge this fact. I mean, who wants to “plan” on failing, right? But, by acknowledging this now will help to keep you going when you experience any setback in the future. What matters most in business is your level of discipline, persistence and belief.

Whenever, you experience any failure, go back to your business plan and pinpoint where you missed it so that you can implement the appropriate corrections. If the trouble you are experiencing was not identified in your original business plan, now is the time to add it to your plan.

Brainstorming To Start A Small Business – Questions To Answer

Hello readers and potential future entrepreneurs. I understand the feeling; desire to create, operate, and succeed. Throughout my professional career, I have learned that there are numerous steps that must be taken in order to organize opening and operating a small business. I have put together a few questions which aspiring entrepreneurs should, at the very least, consider reading over. There are many questions that may arise with opening a small business, and I will address a few of those questions briefly in the following list of questions one may ask while brainstorming.

What type of business do you want to open? There are various business endeavors an entrepreneur could involve themselves in. It all comes down to what knowledge one has, or is willing to obtain. Are you a restaurateur? Repairman? Plumber? Home health / assistance? Do you have experience managing or working at such establishments? Do you need formal education from an institution? Will you work as a sole proprietor, or a partner / member? Research limited liability companies (LLCs) in addition to sole proprietorships and partnerships. S corporations are another option, but they are for business with stockholders, and may not be right for your particular business application.

What kinds of licensing and/or permits are required? Each business will have different licensing requirements; it all comes down to what the entrepreneur ultimately chooses to do. A restaurant would need food safety licensing in addition to basic business licensing, and if alcohol is on the menu – there is another permit the entrepreneur would need to legally sell alcohol on the premises. Repair oriented businesses would need at least the business license to repair, but if they sell parts as well, they would need to have “retail” listed on their business license in addition to “repair”. Health care services require at least formal education and licensing as an LPN, RN, or one of several other health care related licenses. Be sure to check your state’s laws to ensure what is necessary to operate your type of business.

What training / education / certifications are required to legally run this business? We touched upon this in licensing / permits, however there is much more involved than the required licensing. For example, one cannot operate a vehicle collision repair business without the knowledge of performing those types of repairs. There are schools that can be attended to learn what must be learned to effectively operate nearly any kind of business. However, there are also businesses where experience is enough to operate effectively without needing any formal education (lawn care, house cleaning just to name a couple). Also, there are certifications for training in nearly, if not all, care industries.

Does this business require a storefront? Retail establishments will undoubtedly need a storefront. Bear in mind, retail business will have a much larger initial investment than a service based operation. That initial investment is inventory. Some service businesses may not need a storefront to operate, as much of the service performed could very well be on-site. If a storefront is necessary, be sure to consider delivery or on-site service if it is feasible for your operation.

How much will it cost? This number will vary wildly based on the type and size of business you are planning. For smaller businesses, this number could be as low as $200 for a license and/or permit, or as high as a million dollars or more. Obviously, inventory is very expensive, and so are specialized tools for performing extremely precise work. Calculate the expected opening and operating expenses. Determine what size storefront is needed (if applicable), and research local commercial realty properties, locations, and prices. It is absolutely cheaper to rent in the short-term, although the thought of owning property that is paid off is very tempting. Prices on most things will vary based on your location. Employees are another cost, if your business warrants employees. When employees come into the equation as opposed to sole proprietors or partnerships, one must add extra insurance for the business (unemployment insurance comes to mind). Check with your selected insurance company for which types of additional coverage are required, and if offering health insurance can be done reasonably. Those employees will also need to have taxes paid on their wages – part from the employee’s paycheck and part from the company. Another potential cost is repayment of loans, if you don’t already have the capital needed to open your business. Basic operating expenses are not to be forgotten, as heating/cooling, Internet connectivity, and utilities will be regular expenditures for any storefront. On-site service operations cost very little when compared to a physical storefront.

How can an individual pay for this? If you do not have the funds available, which is very common, applying for loans is a way to attain funding. Be sure to have a business plan with projected expenses and revenues. There are other ways to gain funds for a business. Look into grants. While they are not very common, they are a potential source for assistance nonetheless. If many people believe in your dream, one could possibly acquire donations from those individuals.

What about accounting? Bookkeeping is a necessity – research which accounting/bookkeeping software would work best for the type of business you are planning. Point-of-sale (POS) systems are needed for “ringing up” and selling inventory or goods to the customer. POS systems keep track of sales, sales taxes, employee labor dollars spent, and many other items. If you are apt at creating spreadsheets, you may be able to keep track of your own inventory depending on your particular business model.

Business Challenges and Ways to Overcome Them

For many businesses today, there are many challenges that come along inhibiting success. It is, therefore, important to know the pitfalls that one can run into and the possible solutions. Some of these challenges are:

• Lack of Integrity
• Resource management; borrowing cash
• Increased Competition and Selection
• Customer Loyalty and Marketing
• Uncertainty
• Regulations
• Risk management and problem-solving
• Finding competent staff

These are the main challenges that every business faces or will face. It will only be wise to have a prior understand what they are and hence find a proper way of solving them. No one starts a business to fail but at the same time, challenges are not meant for failing but to sharpen, strengthen and inspire growth. This article goes deeper into each of these setbacks and offers practical solutions for the same.

Challenges and solutions

1. Lack of Integrity

Lack of integrity can put a business on its knees. With the standards of living going up the roof, workers trying to meet their quarterly goals and be successful at the same plus get that little overtime bonus, the temptation to cut corners is so great.

Information is omitted or given in terms of doing what it takes to get ahead. There is head to head competition among employees, and soon the entire staff is infected. This behavior goes up the ladder whereby the managers and directors are also involved.

For integrity to improve, there is a need for work policies to change. There should be no room for any minor or major misconduct. Staff should be trained on how they are expected to conduct themselves. Different kind of systems can be used to deal with problematic employees namely, counseling, warning, and termination. The greater the misconduct, the greater the action taken. Those who show high levels of integrity should be rewarded so that other employees can be won over to good virtues.

2. Resource management; borrowing cash

Money is everything, and that is a statement that will be heard for a very long time to come. Many businesses are making a profit but what draws them back are heavy expenditures and borrowing. It is quite common to see many businesses, especially small ones, fail to manage cash flow.

The main solution here is to ensure that there is enough capital or cash saved up to meet business obligations as they rise.

Cash management becomes vital during the fluctuation period, as cash is flowing in more slowly into the business and moneylenders are less than willing to extend the loan repayment period. For the growing small business, tackling taxes and business the proprietor may handle accounting but dealing with the professionals is even better. Business books get more complexed with every client that walks in and employee you add. Having a professional bookkeeper will ensure your business succeeds where others are failing.

Borrowing money from lending institutions only adds injury to the cash flow situation since these institutions have the power to dictate the lending terms and policies.

3. Increased Competition and Selection

It has never been an easy task to start a business, however, gone are the years when it took long procedures to start a business. Today you can purchase a host domain name online and register a business with just a few clicks. Nevertheless, staying in business is a much more convoluted subject. While business expertise was once a time consuming and expensive endeavor, nowadays you can find experts online who you can consult and get assistance from on any difficulties encountered. There are user-friendly interfaces and even support teams to help you set up an online store, get marketing materials and business cards, all at a very pocket-friendly price.

The simplicity of starting a business creates a much wider level of competition. You are likely to find different businesses competing to come up with the best product while others concentrate more on their selling point instead product manufacturing. This contributes to increased selection, which makes it more challenging for businesses of all sizes to maintain customers who with a click of a mouse can change suppliers. It is a battle of marketing, focus and perception. Business owners who master these changes and provide a good customer experience will more likely be on the winning team.

4. Customer Loyalty and Marketing

Along the same road of increased competition and selection to a potential customer, emails, social media, texting and other communication modes are making it easy for individuals and businesses to get their messages out to customers and hence sell more.

The conservative fluctuation period is also causing a decrease in client base. Customers are forced to be conservative with their pockets and as a result, the normal business growth of new clients is not taking place as quickly as it should. Executives and business owners are forced to spend more time figuring how to go an extra mile in order to keep the existing clientele base. The same time, trying to figure out how to reach new customers in a cost-effective way without necessarily competing chiefly on price, this always leads to a race that ends at the bottom.

Figuring out the best channel for marketing is the key for individuals to be successful in the current business world. How do you reach your clients with the right message and where can you find them? Once you get a new customer, how do you keep them and when do competitors of all sizes and types, trying to convince them that they can provide it cheaper or better, constantly barrage them? Identifying what your clients want and giving them a satisfactory experience will make a huge difference in your business’ future.

5. Uncertainty

Everyone including business leaders is usually uneasy with uncertainty. Because of economic struggles and global debts, uncertainty is more common today than in the past years. The sorrowful news is that uncertainty leads businesses and individuals to a short-term focus. Because of uncertainty, businesses tend to shy off from long-term planning for short-term benefits.

While this might seem like a better choice, failure to plan five to twenty years ahead can end up destroying the value of the business in the end. Businesses must learn the art of balancing short term goals and long term goals. Usually, short term goals should be small steps leading towards the bigger goal. The ever changing market speculations by business analysts in the news usually leave a bitter taste in the mouth of business owners. The end result is executives and business owners raising prices, and thus, clients stop spending on the business. You need to get back to work with what you have and not media speculation.

6. Regulations

A change in the regulations is always a major concern in certain marketplaces, but unexpected energy, financial and environmental policy is wrecking mayhem for nearly every business today. Whether a demand from stakeholders or clients to become environmental friendly or an imposed policy to increase costs due to the new carbon taxes, environmental consideration is among the biggest problems that businesses face. And we don’t have to give too much pressure to the issue of financial regulation and reform though we do have some suggestions about how to prepare to face that problem if you are a brokerage house or bank.

The challenge to be solved is to comprehend the meaning of regulation in your marketplace, its effect on your business, and how to develop the skills which are required to deal with the challenge. Two main areas of regulatory problems and difficulties are health care and taxes. Lawmakers are still arguing over what is called the fiscal cliff, the combination of millions of dollars in budget cuts and tax increase. Even if the congressmen reach a conclusion, it is most likely that it won’t be understandable enough to the point of being required the following year.

Health care has also been another problem for businesses. For instance, the new Affordable Health Care Act (ObamaCare) is so complicated that local and state governments won’t understand what to do, and businesses will have to sacrifice resources and time to understand the law hence hiring professionals to break it down for them to implement it effectively.

Many businesses do not know whether they will have to continue with the national system, or the state system will be creating exchanges. Additionally, they do not know what that will mean for their costs. For some business enterprises, that information will aid them to conclude whether it is cheaper not to provide insurance and just pay the government fine of two thousand USD per employee or whether they will provide insurance to their employees and avoid the penalty. Companies that have nearly close to fifty workers may opt not to recruit more employees in order to remain outside the law’s radar.

7. Risk management and problem-solving

A major problem faced by nearly all companies is assessing, identifying and mitigating risks, including the financial and human capital. The need for a more sophisticated challenge solving competency among current business controllers is limiting the possibilities of their ability to effectively deal with risks facing their businesses. This is the main reason business managers tend to land from the frying pan into the fire, depending on who among their executives they are trying to put away and in most cases the ever changing business environment is what starts these fires.

So what is the challenge to be solved? We believe, to achieve more in the future, organizations must conclude that problem solving is the main path to business success then develop a strong problem-solving ability at all levels. As organizations continue to identify the challenges, they will have the right problem-solving techniques to know how to best maneuver them.

8. Finding competent staff

Without exception, every business owner has faced the major business challenge, which is, finding the right staff, ensuring they buy into the business’ vision and retaining them. I firmly admit that I have no magic formulae for this challenge. In fact, if business executives can come up with the right formula to engage and recruit the right staff members, they would have made millions.

A small organization is like a family and in most cases, they can dysfunction or work well. In large organizations, the main challenge in human resource is how to fit in the workplace and office politics, but when it comes to small organizations, it is skills and personality. When you work in a small firm, each individual’s personality can have a huge impact on the productivity and harmony of the business.

The main goal is to learn how to deal with each staff member’s personality, find out what drives each staff member and shape your management accordingly. In spite of unemployment, many businesses try to find the ideal staff members with the precise skill for the business. Many upcoming manufacturing jobs require individuals with hi-tech skills. They include vacancies at the production sites where computers and machinery are used to build products like machines and airplane parts. Some skills require several years of perfection and training. Because of technological advancement, business executives are struggling to find the right high-skilled individuals to fill positions in their firm; that is individuals who have the right IT skills, deductive reasoning skills, and problem-solving skills.