1. Is the business itself viable?
Many new businesses fail not because the idea was poor, but because the would-be entrepreneur didn't do his homework. Your town may well be able to support two organic food markets, but not right across the street from one another. Remember to consider:
- market size
- ease of entry
- potential market share
Mark the competition's location on a map and look at the radius of the town. A centrally located business will outperform one on the edge of a community. If your competition is on the eastern edge of town, is there a place for you on the western edge? Would customers rather do business with you than drive across town? Do you have access to better or equivalent inventory and a good location to seize that part of the market? The old saw, "Location, location, location" is crucial to a new business.
2. What are your short term and long term goals?
What do you hope to accomplish in both the short and long term? You may simply want to reach a "break even," point in your first month, selling as much inventory as you purchase with a plan for a profit of X% in the second month to be increased by X amount each subsequent month. Evaluate your progress at documentable intervals, generally three, six, and twelve months. Have you set aside money that will carry you through a bad first month? If so, how will you adjust your goals for the remainder of the period in question?
3. How will you keep your records?
Successful businesses keep records. Some are necessary for day-to-day operations and tax payments. You can use a financial package like Quick Books with modules to assist you in figuring payroll as well as Social Security withholding for your employees. A spreadsheet like Excel is excellent for tracking inventory and sales, with built-in graphing capabilities will allow you to see a "picture" of your business performance. If you don't think you can handle these tasks on your own, plan to hire a bookkeeper or an in-house employee who can keep everything accurate and up to date.
4. How will you handle space, equipment, and staff?
Although you can locate space on your own, there are many advantages to working with a commercial realtor. A professional in the field will understand the demographics of the areas you are considering and may be able to find lease space as well as buildings for sale (depending on your goal in that regard.) By the same token, you may find that leasing equipment is a better option than buying, at least in the first year. If you are taking out a small business loan, you can add lease financing for business equipment to the terms of the agreement.
Don't over-invest in space, equipment, and staff at the outset. Work with as few people as you can manage. Consider hiring independent contractors or freelancers for specific projects, rather than paying people in periods when there may be little or no work. Make sure that the people you do select have the necessary skills. If you have to spend too much time training your personnel, you're losing money.
5. How will you advertise initially?
Initial advertising is tricky. If people don't know about you or can't find you, they can't do business with you, but you don't want to be stuck with costly glossy brochures that never get used. Marketing is a "garden" you must tend constantly. Where will your advertising dollars be most effective? Some possibilities include:
- A trade publication.
- The local newspaper.
- Online through purchased ads or a business website.
- Radio.
- An inexpensive postcard mail campaign.
Don't forget to think "outside the box." You can, for instance, place ads on the plastic flip down liners of grocery carts where hundreds, even thousands of people will seem them weekly.
Don't feel bad if you don't know how to answer these questions yourself. As the entrepreneur, it's your job to anticipate potential issues and solve them by whatever means necessary, including going to experts. We don't all have business degrees, but with proper forethought and good planning, we can all be successful business owners.
Many new businesses fail not because the idea was poor, but because the would-be entrepreneur didn't do his homework. Your town may well be able to support two organic food markets, but not right across the street from one another. Remember to consider:
- market size
- ease of entry
- potential market share
Mark the competition's location on a map and look at the radius of the town. A centrally located business will outperform one on the edge of a community. If your competition is on the eastern edge of town, is there a place for you on the western edge? Would customers rather do business with you than drive across town? Do you have access to better or equivalent inventory and a good location to seize that part of the market? The old saw, "Location, location, location" is crucial to a new business.
2. What are your short term and long term goals?
What do you hope to accomplish in both the short and long term? You may simply want to reach a "break even," point in your first month, selling as much inventory as you purchase with a plan for a profit of X% in the second month to be increased by X amount each subsequent month. Evaluate your progress at documentable intervals, generally three, six, and twelve months. Have you set aside money that will carry you through a bad first month? If so, how will you adjust your goals for the remainder of the period in question?
3. How will you keep your records?
Successful businesses keep records. Some are necessary for day-to-day operations and tax payments. You can use a financial package like Quick Books with modules to assist you in figuring payroll as well as Social Security withholding for your employees. A spreadsheet like Excel is excellent for tracking inventory and sales, with built-in graphing capabilities will allow you to see a "picture" of your business performance. If you don't think you can handle these tasks on your own, plan to hire a bookkeeper or an in-house employee who can keep everything accurate and up to date.
4. How will you handle space, equipment, and staff?
Although you can locate space on your own, there are many advantages to working with a commercial realtor. A professional in the field will understand the demographics of the areas you are considering and may be able to find lease space as well as buildings for sale (depending on your goal in that regard.) By the same token, you may find that leasing equipment is a better option than buying, at least in the first year. If you are taking out a small business loan, you can add lease financing for business equipment to the terms of the agreement.
Don't over-invest in space, equipment, and staff at the outset. Work with as few people as you can manage. Consider hiring independent contractors or freelancers for specific projects, rather than paying people in periods when there may be little or no work. Make sure that the people you do select have the necessary skills. If you have to spend too much time training your personnel, you're losing money.
5. How will you advertise initially?
Initial advertising is tricky. If people don't know about you or can't find you, they can't do business with you, but you don't want to be stuck with costly glossy brochures that never get used. Marketing is a "garden" you must tend constantly. Where will your advertising dollars be most effective? Some possibilities include:
- A trade publication.
- The local newspaper.
- Online through purchased ads or a business website.
- Radio.
- An inexpensive postcard mail campaign.
Don't forget to think "outside the box." You can, for instance, place ads on the plastic flip down liners of grocery carts where hundreds, even thousands of people will seem them weekly.
Don't feel bad if you don't know how to answer these questions yourself. As the entrepreneur, it's your job to anticipate potential issues and solve them by whatever means necessary, including going to experts. We don't all have business degrees, but with proper forethought and good planning, we can all be successful business owners.
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