Set yourself up for success.
You wouldn’t buy a house or a car without serious research. So why would you even consider launching a business without the same careful attention to detail? Before taking the entrepreneurial plunge:
Assess Your Skills
Every business owner needs some level of expertise in five basic business functions: management, operations, marketing, sales and finance. If you don’t have personal experience in any particular function, now is the 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 in specific areas. Look for special opportunities, too, such as entrepreneurship educational programs that are specifically tailored for veterans, women and minorities.
Analyze Your Industry
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 to classify business establishments in order to collect, analyze and publish statistical data. Knowing the NAICS code for your industry is useful for filing tax forms and applying for federal contracts; it also opens the door to a wealth of information.
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
Use the Industry Assessment template available at www.FloridaSmallBusiness.com/TryIt to categorize the “opportunities” and “threats” you may face.
Evaluate Your Market
No business exists in a vacuum. So as you prepare to become an entrepreneur, consider these market factors affecting your product or service:
• Total customers
• Most likely buyers
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.
Set Financial Parameters
Launching any new business requires money; how much depends on your business type, size and location. Estimating the costs of starting and running a business can be a tedious process, but you need to bite the bullet and just do it. By estimating your initial and ongoing costs up front you will be better able to:
• 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 Right out of the gate, you will need to pay fees for any necessary licenses, permits and registrations and make a down payment on the purchase of office space or, if you’re renting, pay first month’s rent and security deposit. Other startup costs include: utilities (deposits and initial hook-ups); office furniture and supplies; telecommunications equipment and computers; business cards and stationery; website development; advertising; and expenses related to a grand opening event.
• Ongoing Costs Costs you are likely to incur on a regular basis to keep your business running include: your salary and the salaries, wages and commissions you pay to employees; monthly rent or mortgage payments; fees for professional services to an accountant or lawyer; utilities; taxes; insurance; replenishment of/additions to inventory; supplies needed to operate your business; website hosting; and advertising.
Take our entrepreneur’s personality quiz and download worksheets to help with your business analysis at FloridaSmallBusiness.com/TryIt.