Starting a business? Read this!
By Duane Hewitt
If you plan on starting a business, you need to understand all the principles to ensure your success. Whether you’re starting a sole proprietorship to sell soap, a family business that will offer janitorial services, are planning on starting an automotive shop, or even if you want to enter into the field of manufacturing, the fundamentals are the same.
When starting out, you have to think logistically about every aspect of the business. For example, if you want to sell perfumed soap you’ll have to move a lot of product to make $50,000 a year – and without selling to family and friends. So how will you do it? If you want to start a landscaping business but will be competing head-to-head with a dozen leading landscape firms in your area, how will you enter the market and compete? Business structure, product availability, distribution channels, quality and extent of services, geographic region for the business, available capital, and marketing strategies – this and more all comes into play.
This article is intended to point you in the right direction, but the onus is on you to investigate and learn everything you need to know point-by-point and learn “how.” What follows is the start-up list you’ll need to consider in planning your business:
Market Research:
You must know your products and services thoroughly well as they compare to other similar products and services on the market. You must also know the opportunities and obstacles before you. Determine your special selling points. What makes yours better? This aspect of market research can be very grass roots. If you want to open an automotive shop, you’ll need to know about all other auto shops in your region and how it is you’ll compete. Know for certain why customers will come to your business. Larger and more elaborate businesses will require detailed extensive research into the market to understand market conditions and competitors. Develop a S.W.O.T. analysis about your business and your competitors. S.W.O.T. stands for Strengths – Weaknesses – Opportunities – Threats. It’s an excellent way to develop a realistic and impartial assessment of how your business will stand against competitors in the market.
Business Structure:
You’ll need to make a careful review and study of the different business structures in your region (state, province, country). A Sole Proprietorship is the most common and easiest to register. If you plan on offering a service, such as catering, landscaping, or janitorial services, this may be a good option to get you going. But one potential pitfall is that in a sole proprietorship, the business owner has legal and financial responsibilities directly tied to the business. In the worst-case scenario, this means that if you are ever sued your personal assets are subject to the outcome. On the other side of the business structure spectrum are corporations. If you incorporate your business (Inc.), your business becomes a separate legal entity from the owner(s) and directors. Determining the right business structure is a lengthy topic. Ideally, it’s best to consult with a professional chartered accountant or in the very least to read extensively about the pros-and-cons of the various business structures.
Marketing and the Marketing Plan:
Marketing refers to those strategies you put in place to drive your business. If your business is a sales business, the marketing strategy will read like a sales strategy. If your business is focused on information then your marketing strategy will read like a communications strategy. The reason you should create a Marketing Plan is because when you write down your ideas it helps to solidify those ideas. It also helps you add to and continually improve upon how you market your business. A marketing plan can be half a page in length or 100 pages long. Get the basics down in writing: Identify what your business does, who you’ll sell to, how you’ll bring in sales, how you’ll promote and advertise, and create a list of marketing initiatives. By example, nowadays when people hear of a new product or business they immediately jump online to read about it. For this reason, you’ll want a website. Learn website fundamentals and include some points about this in the plan. Internet advertising, print advertising, brochures, word-of-mouth, your sales methods… these all become your marketing tools that you should itemize in your plan. Good marketing strategies for your business are important aspects of making your business succeed.
The Business Plan:
The Business Plan will include details specific to the economics of the business. Good financial management is central to business success. You must develop an understanding of all financial components of your business and all of those components must be in place. For this reason, the Business Plan will include details about your financials (although caution is advised about including some details of confidential information); it will detail the business structure, it will include operating costs and structures, and it will contain sales and procurement strategies and quotas, it will include a profit-and-loss component, it will cover details about the reporting structure, and so on. In many cases, the marketing plan and the business plan are like a married couple; they go hand-in-hand to make everything work.
Implementation:
You’ll want to line up your business so that it’s “turnkey.” This means that once you declare yourself open for business, you know everything you have to do on day one and every day following to get the business up-and-running. This doesn’t mean you won’t hit snags and setbacks along the way. You will. But you should also have some idea about how you’ll address those challenges with effective solutions.
A checklist of things to consider:
- Choosing a name for the business – you’ll need to select a business name that isn’t in use and hasn’t been purchased, licensed, or copyright protected. Find a business name that’s also available as a website domain name that you can purchase;
- Registering your business – you’ll need to register the business and its structure and be prepared to implement methods of adhering to the applicable legislations as they apply in your region;
- Finances – if you need start-up capital or other financing, where will it come from?
- Products and Services – make sure you can identify clearly what these are;
- Product availability – be sure that you’ve got good quality suppliers in place;
- Logistics – you’ll need all components in place for how you’ll get your product to market, the dependability of your supply chain, and all other working parts like a well-made watch;
- Geographic location – the location of your business can be paramount to all functions of the business and its ultimate success;
- Operating region – is something that might be different than the geographic location;
- Markets and Target Markets – know the customers and demographics of your business and its products and those markets that you plan to sell into;
- Sales and Procurement – you’ll need to know how you will sell your products and services
- Advertising and Promotions – you should develop these ideas in your Marketing Plan. You need to know how you’ll promote your business to generate customer interest;
- Quality Control – you must have a method to ensure your products and services are of high quality;
- Qualifications – have something prepared that attests to your qualifications and credentials (even if it’s previous experience, expertise, and an excellent reputation in your field)
- Regulations – make sure you’ve investigated any possible legislature or regulations that may apply to your business and its offerings. Regulations apply to many facets of business, such as import and export, hiring, tax, reporting, and more;
- Copyright and Intellectual Property Law – Some types of ventures will require an assurance that there has been no copyright or intellectual property law infringement;
For many of these points, and depending on the scope of your business, it’s generally recommended to enlist the counsel of a professional chartered accountant and/or a lawyer with expertise in business law.
None of this information is meant to overwhelm you. Instead, it’s intended to help you think through the various components of starting a business. Get into the habit of writing down ideas and strategies as suggested for the Marketing Plan and Business Plan. Writing down the ideas helps materialized those thoughts and allows you to expand your thinking and your strategy. Apply yourself to thorough research and good planning and your business will stand a better chance of success. Make no assumptions! Get the information you need from authorized sources and verify all info before you proceed.
Note that this article is not intended as counsel or professional advice. Those wishing to start a business or purchase a business should investigate the requirements in their region and consult with a specialist in business law, such as a lawyer or chartered accountant.
Copyright 2017 Duane Hewitt. All rights reserved.
