Thinking of Starting a Small Business?
Starting a small business requires determination, motivation, and know-how. Here are the critical steps to provide you with the know-how to have a successful small business startup:
Identify Your Business Opportunity:
Choosing what kind of business to start can be an immobilizing task when confronted with the multitude of opportunities. It's important to determine where your passions lie and to understand your personality type. Yet, equally important is what skills you bring to the table and whether you are entering a dying industry or a fast growing emerging business.
Build a Business Plan:
For any start-ups, a business plan allows you to gain a better understanding of your industry structure, competitive landscape, and the capital requirements of starting a small business. A study mentioned in "Business Plans For Dummies" by Paul Tiffany states that companies with a business plan have 50% more profits and revenue than non-planning businesses. Writing a business plan just makes good business sense.
Business Plan Outline:
A business plan outline is the second most important starting point once you've pre-determined your audience. The business plan outline should be prepared before the actual research and writing of the business plan.
Research & Information Collection:
Once you have made the decision of the type of funding your business requires, it is time for the research. Business plan research covers several key areas:
- Insight from your experience working and observing the industry you will enter. This data will have to be backed but by the next two sources.
- Published information from library, Internet, and paid database services will provide information on the market growth, overall industry perspective, and customer profiles.
- Field research covers interviews with customers, suppliers, competitors, and industry experts. This provides the real insight behind all the published facts.
The easiest way to go about collecting all your experiences, interviews, and research is to create files for each section of the business plan. These files can be: paper-based, computer files or set-up using business planning software. As you start the research and collection phase of planning, fill your files with notes and printouts.
General Industry Overview:
Begin the research process with an overview of the industry; uncovering industry and association reports. By having a general understanding of the industry, you will avoid embarrassment in contacting experts with basic questions. Begin the field research once you have a good grasp of the industry fundamentals and need answers to the hard-to-find information.
Once the bulk of the data has been collected, the process of analysis begins. Look at building a competitive profile, contingency plan, risk assessment, etc.
Start the financials when you have found some average industry ratios for your business. Work closely with your accountant to develop realistic projections. Being overly optimistic will raise eyebrows with your investors or banker.
Save the first section for last. When you have thoroughly, completed all sections of the business plan, write the summary. Highlight the key points and include the return on investment or loan payback requirements.
Review & Editing:
Remember, you only have one shot at making a good impression. A well-written business plan that opens doors and wins the money is a plan that has been revised and reviewed. Do not forget this important step. Ask others for feedback. Make certain to edit, proofread, proofread, and proofread.
Business planning is not easy but by following these critical steps to writing a business plan, you will ensure your business has a chance at funding and success in the future.