You Want to Start a Business? You Need a Business Plan

by D. C. Bennett

Starting a business can be exciting and fulfilling, allowing you to use your critical thinking skills creatively to research your idea, develop strategies, identify your target market, and organize the operation of the business. Succeeding in your own business will give you a great sense of accomplishment. But if the business fails, all the responsibility and liabilities are on you and you alone.
North Carolina is a good state for business start-ups, but it’s also a risky one. According to the North Carolina Department of Commerce in the year 2003 North Carolina ranked 10th nationally for new business starts (22,465) and 12th for business failures (23,234).



Do you have what it takes?


Though people
think that owning a business makes them their own boss, the fact is,
the business and its customers will be your real bosses. So if you’re
thinking of starting a business, you should first examine yourself to
determine if you have what it takes to become a business owner. Ask
yourself these questions: Are you disciplined? Trustworthy? A hard
worker? A self-starter? A good organizer? 

How do you feel
about people? Can you lead others? Make hard decisions? See things
through? Handle responsibility? Keep records?


How diligent are you? Do you possess computer skills? Do you know your current credit rating?

Being your own
boss means working long hours six or seven days a week plus late nights
and holidays. Often you will be the only one working while every one
else is on the golf course or home asleep. Do you have the emotional
strength and good health to handle the workload and daily schedule? Are
you willing to lower your standard of living until your business is
firmly established? Are you emotionally prepared to do so? Is your
family?


Do you have the skills and  experience you need?


If you determine
that you have the character, personality, and diligence to go ahead,
then ask yourself these questions. Do you possess the basic skills
needed to succeed in business? If you lack certain skills, are you
willing to hire some one else who has them? Have you worked in a
business similar to the one you are starting? Had any business training
in school? Worked as a manager or supervisor? Hired and fired people?


Do you
understand business financing and cash flow management? Do you know the
record-keeping requirements for small businesses? Do you understand the
basics of marketing and marketing development?


Do you know your market?


If you’re
confident about your skills, remember that every business is unique.
So, determine exactly what business you’re going into (i.e., not
“owning a store,” but a specific kind of retail). What is your product
or service? Who will buy it? How much is it worth, i.e., how much will
your customer actually pay for it? Will you be paid on delivery, or a
month later?


There are
probably other businesses in the city providing the same service. Who
are your competitors? What will be your advantage over them? What ideas
do you have to make your product or service unique and competitive? How
will you make people aware of your business?


If there are few
or no competitors in you area, find out why. Have similar businesses
failed? If so, why?
Do you know the current business and economic
trends in your city?


If you’ve
determined that there’s a market for your product or service, it’s your
responsibility to define it. Market research helps to gather
information about demographics, lifestyle, and buying behavior of your
potential customers; it will help you determine – in advance – the
demand for your product or service. This is very time consuming, but
it’s essential to tell you who your customers will be, where to find
them, and how large the market is for your business.


How will you run your business?


Now you have to
address other aspects of starting a business. Will it be a corporation,
sole proprietorship, partnership, or a limited liability company? You
need to plan for financing – having enough capital to start and carry
through until you turn a profit – marketing, employees, accounting, the
equipment and office supplies you’ll need, and location.


The Business Plan


Research,
preparation, and planning are of the utmost importance when starting a
business. A well-designed business plan will help you make the many
decisions you’ll face.


Experienced
business owners and managers will tell you that your business plan is
the road map to where the business is going, what you have to do to get
there, and what it will look like on arrival. A good business plan 1)
helps you to focus; 2) defines a track to follow; 3) establishes
benchmarks to measure progress; 4) creates a document to attract
financing. It will map out the steps and the actions necessary to guide
your business. It’s also your survival kit: the reference tool that
will help you keep your business on track during the all-important
start-up years.


By bringing
together your goals, objectives, strategies, and resources, a good
business plan can help you avoid some problems and even help protect
you from failure. But no business plan will eliminate all your
problems. Wherever you turn, a new one will arise. With a well thought
out plan, however, you can often anticipate a crisis and deal with it
before it overwhelms you.


Here are some examples of problems that many new business owners face:

•  
 Insufficient initial capital due to inadequate planning, mistaken
estimate of market demands, lack of management ability, failure to
select and use appropriate outside professional help;

•    Inability to market the product or service effectively;

•    Over-dependence on a single individual, supplier, or event;

•    Failure to understand the capital requirements of a growing business;

•    Poor timing of expenditures due to poor planning and expediency instead of reasoned decision making.

As a business owner myself, I always keep these six points in mind:

•    All companies, no matter how big or successful, are mortal; some just reign a little longer.

•    Never be impressed by the glow of your past record; the cemetery holds kings and queens as well as paupers.

•    Always remain flexible and receptive to change.

•    There is no such thing as a permanent “niche” in the marketplace, because no market is permanent.

•    Constant
research is the heartbeat of a company; established products or
services serve an existing market, while new and improved products
create markets.

•    Above all, remain humble. Even the mighty fumble and tumble.


D.C. Bennett
founded D. C. Bennett & Associates, a business planning and
development company, in July 2004. A proactive business planning and
development company, it provides a variety of business planning and
development services. For more information, call 828-252-5403 or
828-279-3451.