Starting a new business can be a daunting task but a rewarding one. This article is meant to help give some direction to someone that is thinking about starting their own business. A general idea of what ground work you need to think about and start planning for if you are serious about pursuing your dreams and making them become a reality.
First, you need a business plan which may seem cumbersome but is extremely necessary to flesh out the feasibility of your ideas. Not to mention a good business plan is vital to gaining loans or grants to fund the project.
A Business Plan should at least include but is not limited to the following:
1. Name of the business
2. Who are your competitors?
3. What makes your product or service better than your competition?
4. Do you have any strategic business partnerships you can leverage?
• If you are a caterer can you partner with a hall? This way you are guaranteed so much business & start a word of mouth client base.
5. Definition of who your customers are
6. How you are going to market & sell to your customers
• Are you going to use website, flyers, radio ads, strategic partnerships
• Market analysis can be done with the help of:
US Department of Commerce and Census Bureau
National Trade and Professional Association directory
Web-based: Google Trends, Trends Map & Social Mention Linked-in
Annual Survey of Buying Power produced by Sales and Marketing Management magazine – This can help with projected revenues.
7. Define your product or service
8. Develop a mission statement, branding & message you want to advertise
9. Legal Paperwork -
• Need a license, then speak to your state’s department of licensing and regulatory affairs.
• Patent ideas -Contact the Patent and Trademark Depository Library. Find out if you have an original idea and who to talk to if you need a patent attorney.
• Copyrights have to be registered with the government for about $65.
• Determine what type of business you are going to register under ie
- Sole proprietorships register a “Doing Business As” with the county clerk.
- Limited Liability Corporation(LLC), INC, PLC register with the state ie MI Dept of Energy & Labor
Working with a lawyer that specializes in zoning and business law can be helpful to avoid pitfalls. They can set you up with legal paperwork for clients to sign in an effort to reduce settlements. Business lawyers can help keep clients from coming after personal assets in the case of lawsuits ie LLC setup. They may have ideas depending on how you setup your business as to what insurance you will need too. As anything it is good to get at least three bids from different companies to get the best deal for your business.
10. What are you going to need to get your business up and running?
• New Structure & Land – Contact the planning office about zoning laws and building permits
• Existing structure – Contact the planning office about zoning laws and who to contact about getting a licensed inspector because not all inspectors have any ie electrical or HVAC licenses. If you run a business out of your primary residence you can sometimes bypass a business tax on your property but may need a inspection to make sure you are compliant with current codes. Check to see what local laws apply to you.
11. List of Expenditures ~Split into initial setup fees & annual cost of doing business:
Zoning & buying land, Setup of DBA or LLC + registration fees,client legal forms to reduce settlements, Copyrights/ Patent Costs and Business Insurance
•Licensed Skilled Trades
Inspector Fees, Permits, licensed electrician/ HVAC/ plumber to bring you up to code.
•Equipment / Supplies
Renting Building, computer, printer/fax/copier, Bulk supplies, Used/ surplus equipment
Initial Market Analysis Costs, $120 setup a domain name & website/yr, $200/yr list with search engines & use clickthrough services to increase web traffic, flyers & radio ads
Your annual wage & health Insurance, employee wages, Payroll accountant or software. Speak to a business account to see if you need software for payroll that includes health insurance/workmen’s Compensation Insurance/Social Security/ state and federal tax with holdings.
Note whenever I have managed projects and budgets I add 15% to projected costs. This is in an effort to cover unexpected events ie building delay due to weather that puts you behind on opening and therefore reducing anticipated revenues. Or used equipment may break and need to be replaced. Your list will vary but the above list is a basic start to making an expenditure list for your business.
12. Projected annual revenue – Include how you are coming up with these numbers.
13. Projected Return on Investment (ROI) for investors
14. Exit plan – This defines what happens if you go out of business and how your stakeholders who invested in the business are going get their money back ie sell equipment, etc.
This is not an all inclusive list for everything contained in your business plan but should give you a good idea of where to start. Once you have a good portion of the above information worked out and written down. Then you could see one of the below organizations to help you work out additional kinks and polish the business plan. Then you can seek out people to fund your business.
Groups who help small businesses
• US Chamber of Congress
• National Federation of Independent Business
• National Association of the Self-Employed
• Small Business Administration & state level small business development centers
• Senior Core of Retired Executives (S.C.O.R.E)
A.) Banks- They do not generally want ownership but interest. Their repayment times can vary but range many times from 5-10 years.
• Sam’s Club Small Business Loans • Bank loans
B.) Venture Capitol- Many times they want 15-30% ownership in the business plus 15-30% return on investment. Repayment times are varied but can be 5-10 years depending on the type of revenue being produced & amount of ownership they negotiate.
C.) Grants – These are funds you do not have to pay back but generally have to fill out a lot of paperwork and jump through the proper hoops to attain.
• Small Business Technology Transfer Program (STTR)
• Federal Grants
• Small Business Innovation Research Program (SBIR)