If you haven’t read Part I, click here.
So, this is it: you’re ready to start a business and you’ve already gone through an early assessment to make sure this is really what you want to do. Some of the early assessment includes:
Determining if you’re ready for the full commitment
Brainstorming your idea with family and friends
Understanding your risk tolerance
Knowing your own skill set and seeking out a partner to fill any voids you may have
Doing some internal market research and spoken with some type of advisor
These assessment steps are listed in detail in the March edition of Showcase. What comes next is a series of questions you will need to ask yourself when moving forward.
Now is when you’ll begin to take a deep dive into getting your business up and running. That starts with putting together a business plan. We often hear that term: business plan. But what does it mean? Why do you need a business plan? Varun Sadana, Vice President of The Launch Place, explains. “You’ll need to determine who the audience for this business plan will be. Are you presenting this to potential investors? Is it a business plan to take to a bank?” he says. “Sometimes you’ll want a business plan simply for internal operations, so that you can revisit it three to six months later to see if you are on track with the goals you set out to achieve.”
Beyond this initial determination, you’ll need to take a good look at the state of the industry you’ll be operating in. Is that industry growing or shrinking? For example, now wouldn’t be a great time to open a video rental store. That market has been rapidly declining for years. In addition, is the market oversaturated in the field you are considering? If your city or region has an abundance of Mexican restaurants, would it be wise to open another? Or is there a demand for another type of niche restaurant that isn’t currently being met?
Also, you’ll need to know the ideal profile of your potential customer. What do they look like? Where do they live? How old are they? What is their discrete income or spending habit? Are they enterprise customers? These are a few things you need to consider when thinking about this simple question: who is going to buy what you are selling? You can do this customer discovery in number of ways, including interviews, survey, and focus groups.
Another factor this is very important is your competitive advantage. Sadana says, “When we work with technology-based companies, for example, we ask them: what’s your competitive advantage? What makes you unique? How they differ from other operators in the industry?” This could mean a patented product or a unique process.
In our previous article, we discussed some of the financial factors you must consider when thinking of starting your own business. If you’ve made it this far in the process, you’ll now need to have in-depth financial projections for your potential business. Some of the questions for these projections include:
How much it will cost to start the business?
How will you manage cash flow and debt?
How much will be in your marketing budget?
What are your revenue projections for next12 months and three years?
What do your gross and operating margins look like?
How much will your other G&A expenses, like phone and internet service, be?
After this, you’ll need to put together your marketing plan. Remember who your audience (customer) is. Now, how do you reach them? Social media is a great tool for reaching people for a relatively low cost, but you’ll still need to know the best ways, and times, to reach those people. Also, be smart about your marketing. If your product is a type of fishing lure, advertising in a fashion magazine will probably not be beneficial for you.
Other cost factors that will need to be determined are legal fees, business licenses, approvals and registrations, as well as zoning requirements. Depending on the particular industry you are getting into, these costs can be quite extensive.
While it’s important to know the type of business plan you’re putting together, and who the audience for that plan will be, there are generic business plan templates available online that can help you get started.
With that being said, if you don’t feel comfortable putting together a business plan on your own, don’t be afraid to seek outside help, stated Sadana. “At The Launch Place, we can help you put together your business plan and a detailed financial analysis.”
Below are links to helpful information to get started.