Small Business Startup Tips #0001
Welcome to the very first issue of Small Business Startup Tips, an electronic newsletter that will be published monthly beginning in January 2008.
My name is Deb Mason and www.how-to-start-a-small-business.com is my site. My main reason for creating and maintaining this site is purely selfish. I want to be able to use my knowledge and experience to help others in a practical way.
It is my hope that you will be able to find something of value to you on the site or in the Small Business Startup Tips ezine!
This Month's Feature Article
Each month the Small Business Startup Tips ezine will present a feature article on a small business startup topic. If you have any suggestions for future articles, please feel free to drop me a line through my contact page.
10 Things You Must Do Before You Quit Your Job!
By: Deborah Mason B.Com (Hons) M.Ed CPA
When you have a really good idea for a small business and have made the decision to start a small business, there are just one or two (or ten) things you should do before you hand in your notice and quit your job.
1. Develop your business idea into a business model.
To develop a business model you need to take a good hard look at your business idea and fill in the blanks. What are you going to sell? Don't kid yourself, every business is selling something, and you need to have more than just a rough idea of what that something is.
Who are you going to sell it to and how? Click here for more information on developing your business idea into a business model.
2. Research and test your market.
By now you should know which market you are planning to enter. Take the time to thoroughly research the conditions that exist in that market, investigate the strength of your competition, identify any barriers to entry, and check out the major suppliers for the market.
Who holds the power within the market, customers, suppliers or your competitors? What is each of those groups likely to do if they perceive your new business as a threat?
3. Identify your target customers and work out how to find them.
Do you know who your target customers are? How old are they, where do they live or work? Why do they want to buy your product and service, what is the benefit to them?
Analyzing your customers can enable you to target your marketing efforts, fine tune your product or service to make it more attractive and tailor your sales and delivery mechanisms to meet their needs.
4. Evaluate the strengths, weaknesses, opportunities and threats facing your new business.
Before you quit your job, take the time to honestly evaluate yourself and your business proposal by doing a SWOT analysis.
In a nutshell, SWOT Analysis involves identifying the strengths and weaknesses of your proposed business (internal factors) and the threats and opportunities in the environment (external factors). The idea being that you take advantage of your strengths and any opportunities in the market and fix or minimize any weaknesses, while doing everything possible to counter potential threats.
Completing the analysis may well uncover vital information about you, your business and the environment you plan to operate within, thus enabling you to seriously improve your business model before you take that final step and quit your job!
Click here for more information on how to complete SWOT Analysis for your business proposal.
5. Develop an operating budget.
How much is it going to cost you to operate your business each month?
6. Work out how much money you need to open the doors and keep them open for the first twelve months.
Things to think about when you are calculating your start-up costs are working capital, the cost of purchasing plant and equipment, how much you plan invest in marketing, insurance costs, rent, telephones etc.
Are you going to be hiring staff?
What about an Accountant?
If you are selling hard goods, you will need to have the cash to purchase at least three months worth of inventory and you will need somewhere to store it.
7. Prepare a business plan.
Why bother with a business plan?
There are quite a few good reasons actually. Firstly, if you are going to need financing for your small business your potential investors will require a well researched and comprehensive business plan.
But to my mind the most important reason for creating a business plan is that the value is usually in the journey. Going through the process of developing a business plan can help you to clarify your thinking about your business, as you are going to have to document, explain and in all likelihood, defend, all of your assumptions!
8. Work out the legal details of your new business, and get professional advice on how to set up your business.
If you are going to start a small business you will need to decide on a business name and to work out which small business structure is going to work for you. Do you need to incorporate or do you plan on operating your business as a sole trader?
Do yourself a favor though, even if you do everything else on a shoe string, spend a bit of money and buy the legal advice you need to make the decision. It could very well save you considerable heartache in the long run!
9. Put aside enough money to live on for at least six months.
During the start-up phase of a new business it is not uncommon for more cash to be flowing out than in. Nor is it uncommon for small business owner to reinvest any early profits back into the business rather than drawing down on them.
If you can, set aside enough cash to pay your bills, put food on your table and keep the roof over your head for at least six months as there is no guarantee that you will be able to draw a salary from your fledging business. If that is still the case in six months time, you should seriously consider re-evaluating your decision to start a small business!
10. Get a sanity check from someone who has been there - done that!
Before you wager your livelihood, your savings and your professional reputation on your business idea, run your business plan past someone with experience in a similar small business.
There is any number of good reasons for taking this step, not the least of which is that a small business survivor can point out any flaws in your plans and help you to rework them, thus giving you an even better chance of succeeding as a small business owner.
What's New
In this section of the Small Business Startup Tips ezine I plan to highlight any new pages or sections that have been added to How to Start a Small Business in the previous month.
The site is relatively new and it will grow and evolve over time. This is one of the ways that I am trying to help my visitors to locate any new information one the site.
If you prefer not to wait a month to find out what is happening on the site, another alternative is to subscribe to the site blog. Instructions on how to do that are available on the How to Start a Small Business Blogpage.
Ask a Question
Do you need to ask a question about starting a business of your own? Now is your chance, ask away!
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How to Conduct Market Research
Now that you have developed a business model, one of the critical steps is market research. Never done it before? On this page you will find information on how to conduct market research.
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Startup Profit Potential
One key element of your business model to evaluate is the startup profit potential. Can your business model earn you the profit you require?
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Estimating Product Costs
One of the steps involved in working out the profit potential of your new business will be estimating product costs.
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Site Index
Looking for something in particular? On this page you will find a link to each page on this site listed in alphabetical order in the site index.
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Got a Suggestion?
Although I am building this site predominately to satisfy my own need to contribute something of value to the world, there is very little point unless you, the visitor, can find something on the site or in the Small Business Startup Tips ezine that is relevant and useful to you!
So I need your help.
I need you to tell me what you would like to see on the site or in the Small Business Startup Tips ezine. What are the topics that interest you? Or maybe you would like to write an article for the ezine yourself!
All contributions are welcome, just drop me a line by email or through my contact page.
Want to Subscribe?
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That way you will receive a copy directly to your mailbox every month!
