The basis for a business is meeting needs. Entrepreneurs get their ideas from a range of personal and professional experiences, so as you evaluate and refine your concept keep in mind it should incorporate at least one of the following components: something new or something better, a new or under served market, increased integration and better distribution or new delivery.
Start by writing a business concept statement and try to be precise. Instead of saying, “I am going to start a business that does consulting” say “I plan to open a management consulting company that provides strategic planning for mid-size businesses in the Southern Coastal Area to improve efficiencies that will increase sales and reduce costs.”
Know the market
A great concept is just that if there isn’t sufficient market demand to support your business. Is the market large enough? Can you reach it efficiently? And is it ready for your product or service?
You must perform market research that should include at least two of the following: online searches, personal observation, informational interviews, focus groups, surveys, competitive analysis and paid research services.
Part of your market research should be devoted to industry health and trends because your business will be affected by the same environment for the overall industry. Don’t overlook global markets. Technology has connected the world, and even small businesses can find opportunities to sell internationally.
This stands out as one of the most important elements in determining the success of your business. Having the right people in place can literally make or break your business.
Start by looking at yourself. What is your past management experience and background? Businesses change and effective managers are able to pivot and adapt. They are motivators and leaders with the patience to deal with a variety of different personalities.
Do you have experience in the industry? If not, you may need to consider education, training or both before opening your business. Don’t be afraid to acknowledge your limitations, which might be overcome by hiring people that complement rather than duplicate you.
Be realistic. Many of the small businesses that fail do so because they were under funded before they got started. What is the total start-up cost and have you included working capital for at least six months? Are you planning to fund the business yourself, seek a loan or approach investors?
Banks and investors will want to see financial projections for the business, and you should too. Poor cash flow management can bring even healthy businesses to their knees. This means that you need to consider break evens, cost of goods sold, accounts receivables, accounts payables, inventory controls as well as overall operating expenses. And, you will need a good record keeping system to produce financial statements to monitor the financial health of the business.
If you are ready to launch your new business and would like help with the above and more, plan to attend a UGA SBDC StartSmart class. For more information, please visit https://www.georgiasbdc.org/startsmart/.
Becky Brownlee is a consultant with the University of Georgia Small Business Development Center at Georgia Southern University and can be reached at firstname.lastname@example.org for business assistance.