Starting a small business

Each small business is as unique as the entrepreneur running the business, and there is no one standard formulae for starting your own business. However, there are key success factors to help guide your business and ensure you are on a solid foundation before you open the doors.

Abilities
The first is to assess your own personal capabilities, resources and characteristics. Why are you going into business for yourself? What are your strengths? What areas need improvement? What resources are available to you? Take a personal inventory.

Research
This is the most important step, and should take the most time. It is important to fully understand the market for your product or service. Market research involves learning about the industry, traits and buying habits of potential customers, any government guidelines, and the strengths and weaknesses of your competition. While conducting market research you will get a good sense of whether you can implement your business idea and be successful. You may want to draw a path of where the industry has been and the possible future paths.

Marketing Plan “the 6 P’s”
Product: What are you selling? Be very specific and detailed on this question, it will help keep your focus throughout this process. What are the important features and benefits that will encourage a person to buy your product or service? A good product will satisfy either a real or perceived need of your customer.

Price: How will you price your product so it is low enough for a customer to purchase yet high enough to cover all fixed and variable expenses of your business and make a profit. Price should reflect the image of your product, for example, is your product a premium product, discount type product, or somewhere in between. A good rule of thumb is charge what the market will bear. You should know that from the research that you have done.

Promotion: How will customers find out about your product or service? What form of advertising will you use? Who will you be promoting your product to? What message and image do you want to promote through the various forms of advertising? How much can you afford to spend? Some lower cost forms of promotion are; flyers, radio, internet, word of mouth. Some more expensive tools are television, sampling, and tradeshows.

Path of Distribution: How will you deliver your product to your customer? Do your customers visit you or do you have salespeople visit your customers? Will you sell direct or through a distributor, or retail store? Do you rely on a supplier to provide raw materials to you? If so, what suppliers are available, and what is the quality and price of their goods? Does your supplier fit your goal? Did you compare suppliers to get the best deal?

People: Who is involved in your business? Do you have employees? How much do they cost? How many can you afford? How much do you cost? Do you work well with the people you work with? How do you keep everyone happy?

Process: What are the steps, from beginning to end, of the entire cycle. The best way to do this is a “flow chart”. List the major factors along top, and then break them down into more detail underneath. As well as just clarifying what it is you actually do, this will also help you find inefficiencies in your process.

Logistics
How will your business operate day-by-day? Where will your office be located? What is the name of your company, and can you register it? What equipment, supplies, employees and materials are required to start your business? Most important is how much will it cost?

Business Plan
Proper planning for your business-financial, operational, marketing, management-is the key to turning your idea into reality. A business plan is a working document outlining all key aspect of your business and action plan to assist in reaching your goals. A business plan should be revisited regularly and act as a guide for decision-making.

Money
You will require money to launch your business. The way you structure your financing depends on how much you need, how you plan to use the money, how long you require it, and how you’ll repay. In most situations a combination of debt and equity is the most effective way to go.

Debt Financing
This is the money you borrow to run your business. The goal of CreditSunrise.com is to assist you in this endeavor. We show you how lenders evaluate your business based on the strength of your business plan, management capabilities, repayment abilities, security, and credit history to evaluate your company’s chances of success.

Equity Financing
This is the amount the owners inject into a company. The most likely sources for equity financing for start up businesses are your personal savings and money from people you know. It is not easy to find outside investors for any new business.

Maintaining a healthy business
Once your business is up and running, the challenges do not stop. Here are some tips to maintain a healthy business:

Cash is more important than profit. Cash is what pays for employees, supplies, and repays your loan. Rapid growth without a control on cash flow can lead to low liquidity, trouble paying the bills, and eventually bankruptcy.

Develop a good relationship with your suppliers and lenders. You may require assistance in the future.

Pay all bills (both business and personal) on time. Bad debt situations such as bounced checks or late credit card payments should be avoided at all times.

Be realistic about your capabilities and the amount of work you take on. Many businesses become discouraged when profits do not automatically materialize because of underutilization. Another trap is over utilization, which leads to not being able to deliver a quality product on time.

As stated above, review your business plan and cash flow regularly.

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