If you want to successfully operate your own business, it is critical that you realize how important the planning stage of your business is and are willing to put in the time and effort needed to develop an effective business plan.
Approximately half of new small businesses fail within the first five years. One of the major reasons is lack of planning prior to startup. If you have already started your business, you can still improve your chance for success by developing a plan for the future of your new business.
I have observed that many people starting a business do not identify their target market. This approach is not only ineffective; it is a waste of time, effort and money. You should plan to focus your marketing efforts on those consumers (or businesses) that are most likely to be interested in purchasing your product or service.
First, identify the characteristics that best describe your ideal customer such as age, gender, income level, ethnic group, type of business, size of business, etc. Then tailor your planned marketing efforts to that target market. What are the best ways to get your message to them?
Knowing who your target market is will also help you determine how large your potential market is before you start your business. Are there really enough potential customers in your targeted geographic area to make your plan feasible?
Another important question to answer is what other businesses are targeting these customers. Identify who your competitors are and how you compare to them.
Don’t just look at businesses exactly like yours when identifying the competition. Think of competition as alternatives your potential customers have to buying from you. Compare your business to these alternatives and be able to explain why your potential customers will choose to buy from you instead of the competition.
Take a look at your strengths and weaknesses and those of your management team. Determine ways to shore up the weaknesses and capitalize on the strengths. Look at personnel needs and develop job descriptions for the positions that must be filled. Determine work schedules and pay rates. What education and experience will you require for each position?
Become aware of the legal and tax obligations you will have. This could include requirements on a city, county, state or national level such as business license, name registration, special permits, sales tax, income tax and payroll taxes, to name just a few. You need to seek the advice of an attorney and a Certified Public Accountant (CPA).
It is also important that you become aware of and plan for the costs of complying with these requirements. They can significantly impact the overall cost of starting and operating your business.
Many individuals starting a business significantly underestimate their overall cost. Take time to do thorough research so that you do not overlook or underestimate any startup costs. Look at not only what it will cost to get your business open, but also how much money you need to have on hand when you open to keep your business afloat until it can sustain itself.
Estimate potential sales and expenses to develop a projected income statement for your business. You also need to do a projected cash flow statement. These projections should be done for at least the first two years, with at least the first year done on a monthly basis.
Starting your business can be a dream come true, but it is a risky step to take. However, as discussed above, you can take steps that will improve your chance for success.
One effective way to plan for your startup business, or for a business you recently started, is to participate in SBDC StartSmart. The Georgia SBDC Network is offering this series of classes in Savannah beginning March 5.
SBDC StartSmart provides the resources, tools and support to help you build a successful business. Partial scholarships are available. To apply, contact the UGA SBDC office at (706) 542-2762 or go to our website at https://www.georgiasbdc.org/.