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Start a Business
Starting a Business can be a thrilling (and sometimes frightening) experience. A critical aspect of going into business is taking time to really think through what you’ll do, why you’ll do it, why people will buy it, and how you will accomplish it. The following are the major steps necessary in the process. To learn more and to get samples of business tools and templates, visit our Resources and Forums sections which are organized so you can skip directly to materials and discussions by topic.
Develop an Idea
How many of us have seen someone come up with something and said – Why
didn’t I think of that? Or, better yet, I had that idea
weeks/months/years ago – I could have done that! But could we really
have. Success in business takes a great idea – this is true – but is
also takes risk and initiative and passion for the business you are in.
One of the best ways to start a business is to take a good, objective look at the following questions:
What am I good at (or what can I be great at)?
What am I passionate about?
It will do you no service to start a business in which you won’t be
happy and passionate. And like it or not, some of us will never be
able to play concert piano. An honest assessment will give you good
insights into how to begin a business for which your passion will
continue.
The list of each should then be compared against market opportunity – e.g. where people need something. Two questions to ask:
- Where is there a need for a product or service?
- How can you fill that need either more completely, with higher quality, with better value/at a lower cost, or with a better user experience?
The combination of the 4 questions will provide a great basis for your list of Top Business Ideas. Select the best match for you, and you are now ready to summarize your idea. Do this in 50 words or less, and include what specifically is unique about your product or service idea (for example – maybe there is no one else providing this in the area you plan to start your business, you can do it more cost effectively passing on the savings to customers, you can provide a completely higher level of service that people want, or you have a completely new product). Think about the idea as a picture. This will become your business Vision. Once you’ve painted that picture, you can move on to test your idea
Test Your Idea | Back to top
Once your idea is summarized, it’s time to test the idea, and fine tune it based on feedback from your profile customer type.
First, we recommend going to family and friends who you can keep
in confidence and ask them to help you fine tune the idea, then go to
those people who would fit your typical customer profile.
Ask yourself:
Who would you sell to, and be very specific. If you were to draw a
picture of the customer – what would they look like? Age, location,
amount of finances, interests, etc. Where do I find these people or
businesses? What are some of their other needs?
Next, find them – as many as possible - and ask them about the need they have – not for your particular product or service, but for what that product or service is going to fulfill for them. What is their need? Is it hard to fulfill that need? Is it expensive? What’s the hardest part about fulfilling it? What would be their ideal fulfillment?
Fine tune your idea based on the above feedback, and then go back to your profile customers and test your revised summarized idea. Prior to sharing it with them, have them sign a non-disclosure agreement (NDA) to protect your idea (contact your attorney for this form prior to this discussion – he or she may also recommend you submit a patent application depending on the novelty of the idea). Once you’ve gotten the feedback incorporate it your summarized idea, and keep testing following the process above. Remember we all see the world through our lenses, and it’s your customers that will be paying you for your product/service – not you buying your own product/service!
Create Your Business Plan | Back to top
You’ve got a great idea which you’ve summarized and tested. Now you’re ready to develop your business plan. Unfortunately, most people jump into business without thinking about why and how they are going to run the business. And that gets many business owners into trouble. Think about business planning as planning a road trip. You wouldn’t think of leaving on a trip without having an idea of where you were going and the route. You know where you want to go (this is analogous to your great idea) and you know you have a car that you’ll use to get there (analogous to your skills, initial funding, experience and credentials). You’ll need to determine if you can do it on your own, if you need someone along to split the driving/navigation, potential detours if you run into problems, additional money, gas and supplies you’ll need.
All business plans include these major components
- Executive Summary: The executive summary should be a one page, concise explanation of your business and it’s reason for being, the market need that it fills, key objectives and goals.
- The Market: This is typically the largest section of the business plan. The market describes the typical customers you will sell to, what their need is historically, now and in the foreseeable future. Include data and metrics on the demographic which can be gathered from a variety of sources (such as Chambers of Commerce, Business Groups, City Economic Councils, Census Bureaus and Governmental/Public Agencies). In addition, every market analysis includes an in-depth, objective, competitive analysis which describes options the customers have to fulfill their needs now and how it compares to your offering(s). It is vital that you do the research to determine this, as it will impact how you’ll sell, how you will position your product and the pricing and potential cash flow you will receive. Sometimes you may not view a competitor as such. You may think you have no competitors. This is almost always not accurate. You most likely have competitors, but they may not be easily identified. An easy way to find your’s is to ask yourself – what need am I fulfilling, and how are my prospective customers getting their needs filled now. For instance, I may want to open a holistic health and wellness center where there isn’t one within a days’ travel. The competition might be a combination of a subscription to a wellness magazine, ordering supplements on the internet and doing yoga and energy work following a DVD.
- Your Product(s) and/or Service(s): This section describes the core of your business, how it will meet your customers needs and how it compares against the competition.
- Marketing and Sales Plans: Marketing is the lifeblood of an organization. It is often referred to as a mix of the 4 Ps:
- Product: The product aspects of marketing deal with the specifications of the actual goods or services, and how it relates to the end-user’s needs and wants. The scope of a product generally includes supporting elements such as packaging, warranties, guarantees, supplemental products, support and disposal.
- Pricing: This refers to the process of setting a price for a product, including discounts. The price need not be monetary - it can simply be what is exchanged for the product or services, e.g. time, energy, psychology or attention.
- Promotion: This includes how the prospective customers are communicated to – for instance advertising, publicity, selling, and branding
- Place: Refers to how the product gets to (is placed with) the customer; for example, through retail selling, through third party sales reps, internet sales, telesales, distributors, wholesalers or direct sales force. This also encompasses where the product/service is sold – for instance geographically and demographically (young adults, families, business people), etc.
Marketing Plan components include many aspects, unique to the industry and company for which it is developed. - Management and Personnel: Here’s where you outline the people that are going to make your plan happen. Objectively look at the activities in your marketing and selling plan, and bullet the activities that need to be performed, in addition to identifying operational activities – such as compliance activities, accounting, administration, technology, manufacturing, etc. Next, take an honest look in the mirror – where are your strengths and where are your weaknesses? How does this compare to critical activities in your company? Most businesses start with the owner wearing many hats. However, it is important to understand where your greatest value is for your company. If you are great at selling and not very good at details and numbers, you should consider hiring staff – either temps or third-party companies to assist in accounting activities. If you are horrible at selling – consider developing alliances with other companies that can sell your products/services, or hiring a sales person. Once you’ve identified these activities you can and should do, look at the additional activities and determine who can fill those roles. You may need to outsource some activities. Develop a staffing plan that maps the person (or 3rd party, company or professional) to the activity. The Management and Personnel plan describes the resumes and experience of key management and other key staffing positions, as well as any other key relationships that are needed in support of your company operations.
- Financial Data: Often seen as the hardest part of a plan, the financial section of a business plan is a relatively straight forward exercise based on the previous sections. A good financial plan can be used as an ongoing tracking mechanism to see how the company is performing against initial projections and budgets. By creating these projections, you will know if your Idea for a Business truly is profitable and achievable. Your plan should include minimally a Balance Sheet, Profit and Loss Statement, a Break-Even chart and a Cash Flow Analysis.
- Investment (Optional): Based on cash flow, you may need additional investors to provide funding until the company shows positive cash flow. Investors will need to know the amount of investment requested and what the projected/proposed return is.
- Appendices: The appendices will include detailed resources such as market/census data, research resources, industry data, management resumes, prospective customer testimonials and purchase commitments, news articles, patent/trademark and license information, and any other supplementary materials to support the plan. These should be strong, objective materials that support your plan’s success.
- Review & Rework: Once you’ve completed your plan – have outside eyes review it (again, consult with legal counsel regarding non-disclosure and/or other forms for reviewers to sign) and provide feedback. Incorporate the feedback as appropriate.
Choose a Legal Structure | Back to top
For legal and financial purposes, you must have a formal structure for your business. The type you choose is dependent on your current financial position, your current and future personal goals and goals for your company. We recommend consulting other business owners, an accountant and/or legal counsel to help you in determining the appropriate structure for your business. For a document that summarizes the types of US legal entities, view the chart document in our Business Community.
Select Your Location(s) | Back to top
Your location can be critical to your business. As they say in retail “Location, location, location” – there’s great reason for this. In retail, you need to have adequate parking, good lighting and ambiance, traffic patterns and complimentary businesses in retail. If you are a manufacturing business, you need to have adequate infrastructure resources and affordable compliance. And if you are in the a hi-tech field, if you cannot source much work virtually, you will need to have access to a highly skilled labor workforce. Doing a solid analysis of how location will impact each critical aspect of your business will help you draw a picture of what your location needs are. Once you’ve defined these, go to local government and public resources, such as town halls, Economic Development agencies, and libraries to determine where you can locate your company.
Launch Your Business | Back to top
Once you’ve developed your plan, and begun your company activities, you’ll want to get the word out. Many local organizations and vehicles exist to promote your company. Check with your local Chamber of Commerce, Business Publications and Community News and Media, as well as Industry Groups. Many will help you plan a company launch and ribbon cutting to help celebrate the birth of your new business!