March 29, 2024

Business Basics

Starting Out

Business Ownership

| 4/21/2016

Have You Done Your Homework?

Planning for Success

You wouldn’t buy a house or a car without some serious research first. So why would you even think of launching a business without the same careful attention to detail? Some things you need to consider before taking the entrepreneurial plunge: management style, the industry you represent, potential markets for your product or service and your overall financial condition.


Despite differing backgrounds and goals, every business owner needs expertise in the same five basic business functions: management, operations, marketing, sales and finance. Use the Entrepreneurial Assessment at FloridaSmallBusiness.com/TryIt to rate your strengths and weaknesses in each of these areas. If you don’t have personal experience in a particular one, now would be a good time to acquire it. Reach out to family, friends or colleagues for their specialized expertise or enroll in a workshop, seminar or college-level course to broaden your knowledge of a particular topic or skill. Look for special opportunities, such as entrepreneurship educational programs specifically aimed at veterans, women and minorities.


Every business in the U.S., including yours, falls within a particular NAICS (North American Industry Classification System) code, a standard used by federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing and publishing statistical data. Knowing the NAICS code for your industry is useful for filing tax forms and being considered for federal contracts; it also opens the door to a wealth of information.

Before launching your business, look up your NAICS code online for the following data:

• Size of your industry in sales
• Growth trends
• Sensitivity to seasonal economic fluctuations
• Average profit margin
• Trends affecting your industry
• How does my product/service differ from theirs?

Also, be sure to access the Industry Assessment template available at www.FloridaSmallBusiness.com/TryIt to categorize the positives and negatives about your industry, then use what you learn to take advantage of “opportunities” and counteract “threats.”


Since no business exists in a vacuum, there are always market factors to consider, such as:

• Need for your product or service
• Total customers in your market area
• Potential customers most likely to need/want your product or service
• Affordability of your product or service
• Competition
• Ways my product/service differs from the competition

Look for market information online or at the library from such sources as Small Business Development Center (SBDC) National Information Clearinghouse (www.SBDCNet.org); industry and trade associations; chambers of commerce; market research firms; media; competing and non-competing businesses with the same target market; and the U.S. Census Bureau.


How much money you’ll need to launch depends on the type, size and location of your business. The task of estimating the costs of starting and running your business can be tedious, and you may be tempted to skip it for now because you’re uncomfortable with doing the math. Keep in mind, however, that by estimating your initial and ongoing costs up front you will be able to: (1) determine the amount of any financing you may need to get your business off the ground; (2) set a break-even point (the day when you can expect to begin making a profit); and (3) better manage your cash flow through the first crucial year and beyond. Two groups of figures to consider:

• Startup Costs You’ll need to pay fees for licenses, permits and registrations, perhaps make a down payment on the purchase of office space or, if you’re renting, your first month’s rent and security deposit. Utilities (deposits and initial hook-ups), office furniture and supplies, telecommunications equipment and computers, business cards and stationery, website development and grand opening advertising are other startup costs to figure in.

• Ongoing Costs These are the costs you incur on a regular basis to keep your business running. Start with your salary and the salaries, wages and commissions you pay to employees. Then add in rent or mortgage payment, fees for professional services to an accountant or lawyer, utilities, taxes and insurance. More ongoing costs include what it will take to replenish or add inventory, supplies needed to operate your business, website hosting and advertising.

Tags: Florida Small Business, Business Basics

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