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Dream It ... Now Do It
Business Ownership
Set Yourself Up for Success
You wouldn’t buy a house or a car without research. So why would you consider launching a business without the same attention to detail? Before taking the entrepreneurial plunge:
#1. Assess Your Skills
Every business owner needs some expertise in five basic business functions: management, operations, marketing, sales and finance. If you don’t have experience in a particular function, now’s the time to acquire it. Ask family, friends and colleagues for advice; enroll in college-level courses and workshops to broaden your knowledge.
#2. Analyze Your Industry
Every business in the U.S. falls within a particular NAICS (North American Industry Classification System) code, a standard used by federal statistical agencies to classify business establishments for the purpose of collecting, analyzing and publishing statistical data. Before launching your business, look up your NAICS code online to determine:
• Sales potential
• Growth trends
• Seasonal fluctuations
• Average profit margin
• Industry trends
• Unique features
#3. Evaluate Your Market
No business exists in a vacuum. As you prepare to become an entrepreneur, consider market factors affecting your product/service:
• Need
• Total customers
• Most likely buyers
• Affordability
• Competition
Look for market information from such sources as the 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.
#4. Set Financial Parameters
Launching any new business requires money; how much depends on your business type, size and location. Estimate your initial and ongoing costs up front to better:
• Establish financing goals
• Set a realistic break-even point (the day you begin making a profit)
• Manage your cash flow
Two groups of figures you must consider:
Startup Costs Fees for any necessary licenses/permits/registrations; down payment on the purchase of office space or, if you’re renting, first month’s rent and security deposit; utilities (deposits and initial hook-ups); initial inventory; office furniture and supplies; telecommunications equipment and computers; business cards and stationery; website development; advertising; expenses related to a grand opening event.
Ongoing Costs Your salary and the salaries, wages and commissions paid to employees; monthly rent or mortgage payments; fees for professional services (accountant, lawyer, etc.); utilities; taxes; insurance; replenishment of/additions to inventory; supplies needed to operate your business; website hosting; advertising.
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