5 Steps to Start a New Business
June 01, 2016
Starting a small business is both exciting and overwhelming. It requires guts, passion, and commitment to transform an entrepreneurial dream and vision into reality. These five important steps must be taken before making that critical decision to "sign on the bottom line."
1. Make a "gut check."
• Why do I want to own my own business?
• Do I have what it takes to start and own my own business?
• Am I willing to take a risk and lose my investment?
• Am I willing and capable of working whatever hours are necessary whether the business is successful or not?
• Do I want the stress of ownership? And, can I handle the stress once it comes (and it will)?
• Do I really know how to operate a business knowing all the core functions, or do I just know the technical aspects of the business I want to start?
• Can I manage employees and do I want to?
• Am I a control freak? Does everything have to be done my way, or can I effectively delegate?
2. Research the market to determine the feasibility for the product or service.
• Have I done sufficient market research to determine the feasibility of my idea to be transformed into a successful business?
(2) Personal interviews
(3) Industry outlook
• What is the competition? Can I really compete? Is there a place for my business?
• Have I "tested the water" in any way?
• Am I technically proficient to compete in today's marketplace using the Internet, social media, e-commerce, etc.
3. Prepare a workable a business plan that includes:
• Marketing strategy and budget
(1) Potential customers and target market
(3) Sales forecasts
• Operational plan
(3) Inventory and suppliers
(5) Credit policies
(6) Professional assistance
• Financial information
(1) Projected (proforma) income statements & balance sheets
(2) Cash flow budget
(3) List of all start-up expenses
(4) Break-even analysis
• Growth plan
4. Decide how the business is going to be financed.
• How much is needed to open the doors?
• How much is needed for the first 6-12 months of operations?
• Is the business going to be financed with debt or equity financing?
(1) Debt financing – when a business borrows money
(2) Equity financing – investment from the owner or outside investors
5. Begin a process of continuous learning
• One thing that is constant in business is change
• Must continuously learn about:
(1) Your product or service
(2) New ways to market
(3) How to engage employees
(4) Be current on industry advancements
• Cannot be stagnant in thoughts
• Process improvements are a necessity
• Innovation and change are important in differentiating a product or service from the competition
Association of Accredited Small Business Consultants