Thinking of starting a business? My hat is off to you, and I hope that this blog can provide resources for you to get started. Since my retirement from industry six years ago, I have been a SCORE volunteer (Service Corps of Retired Executives). Over these years I have met many clients who dream of starting their own business. Their motivation to start a usiness may vary, but their common goal is a desire to be successful and to be their own boss. My experience has imparted to me a good sense of those who will be successful and those who will not be successful. It is those people who are prepared and have a strong urge that are successful. From my training and experiences I have prepared a suggested road map to start your own business. Do take advantage of your local SCORE volunteer while planning for your business. The service is free and the volunteer can be found through your local Chamber of Commerce.
The Business Idea
The idea to start your own business can come from many sources: your hobby, your work experience, your desire or a situation you found where a service was not being met. To confirm that you have a sound plan you have to: – Describe the business in a paragraph or less. – Decide if the product or service is unique… cheaper or faster, etc.? – Decide whether this business meets your personal goals? – Commit to investing many hours to make your business successful? There are many other questions that you will need to answer truthfully to yourself and then discuss them with your spouse and close friends. Once you are comfortable with the answers then you are ready to proceed to the next steps. The Small Business Administration has a full list of questions to help fulfill this part of the journey. http://www.sba.gov Above all, your business has to “solve your client’s problem”. It is this objective that makes a business successful. If this main objective is met, then all your other needs can be fulfilled.
Start Preparing for Your Business Plan:
You need to do some basic work before you prepare your business plan.
Finding a Business Name: You need to derive a business name that represents your dream of a business yet does not infringe on another business. Your State’s Secretary of State can readily tell you if you have a unique name. You will find that this is important as you get deeper into your business plan. Try to derive the most attractive name you can identify.
Finding a Potential Location: Is your business going to be a storefront, web site, home or perhaps out of a van business? Inputs to your business plan will require lease or rental expenses, insurance and other facility expenses. Just as importantly, you will have to determine the traffic past your selected location and how many potential customers your business will attract. The more attractive locations will attract more business but will be more expensive. A local commercial real estate agent is of great value to help you with this decision.
You need a Logo: I believe that all businesses should have a logo. It will be added to checks, business cards, literature and other materials. In my opinion, it brings the business together. The logo will be used on business cards, letter heads, web sites and all other forms of advertisement. Take a look at http://www.logomaker.com/index.html for a very reasonable logo design.
Business Structure: You need to decide on your legal business structure. The options are: Sole Proprietorship C Corporation S Corporation Partnership Limited Liability Corporation (LLC) For the majority of my clients, the Limited Liability Corporation is the best fit. For a reasonable fee you can have a business entity that has limited liability for business debts, which protects your personal properties. You can form the LLC with your State’s Secretary of State. A good Web Site to review the four business structures is: http://www.quickmba.com/law/org/
Employer ID Numbers (EINs): You should get an Employer ID Number (EIN) from the Federal Government. The number is issued by the IRS and it is free. http://www.irs.gov/. At the minimum this will save your using your Social Security Number for identification. The IRS site has lots of good information on small businesses that can be of benefit to you.
Write Your Business Plan: The business plan is the most important document for starting your business. The Small Business Administration has a template that you can use to write the business plan. http://www.sba.gov The business plan document should have the objectives of the business, its structure and it financial road map. This document will always be used to keep all participants on the same roadmap. It is the most laborious yet important document you will derive. This document should be reviewed by your spouse, good friends, and SCORE Counselor. A good web site to find samples of business plans is http://www.bplans.com/. This site shows examples of successful business plans and also has good information for starting a business. Again, I must emphasis that you need to keep the overall objective of “What Problem am I solving for the Client” in front of you. If you fulfill this objective the rest will fill in.
Financing: You have finished the business plan and now will decide if you need financing to start your business. How much do you need? Most of the clients that I see can actually finance their business with a credit card. They need a financial record of 650 or better to get a card and probably can use the card for up to $10, 000.00 financing. Perhaps you can provide money from your savings or take in a financial partner.
If you require more money to finance your business, prepare for battle. The banks are tough and you are competing for time with people who will be doing much larger business with the bank. This is what you will need: A polished business plan A list of start-up costs Past three year personal tax returns. A statement of personal histories Credit reports from Equifax (1-800-658-1111), Experian (1-800-682-7654) and Tran Union(1-316-636-6100)
Be prepared to answer all questions on your finances and needs. Be prepared to show that you are conservative in your plan. Seek out used or rental equipment or other innovative techniques to save money. You should remember that the banker is usually interested in helping start a small business if they have a stong plan and collateral. You have to be prepared because his or her time is limited.
Further Steps for Success: Hopefully, you will make it through these hurdles and be ready to open your business. You are to be congratulated because this is a great accomplishment. You are your own boss and in charge of your future. Do not celebrate too much for now, though, as you still have to hire employees, choose the technology you require for running your business and wade through many other details. May it be rewarding and profitable.
By: Paul Calhoun
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