Getting Started--from Idea to Business Plan
By: Source: AARP.org Date Posted: 2006-03-24 15:23:22.790252-05:00
Are you ready to join the 10 million Americans who are starting new a business?
A recent study by the Kauffman Foundation found that men and women of every age and background are starting their own businesses. In fact, creating a new business is more common in the U.S. than setting up a new household or having a child.
So what about you? You have your idea for a business. Are you ready to get started?
Your new small business has the best chance of success if you:
- Spend many months, even a year or more, researching and preparing.
- Take business start-up courses and read start-up guides.
- Get advice from professionals, like accountants or lawyers, as you plan.
- Are prepared to be patient, instead of expecting to earn lots of money right away.
Preparing
There are many ways to research and prepare for your business. There are also many people who would like you to pay them to help you. It would be hard to even count the number of business start-up guides, programs, schemes, scams, materials, and deals.
Down the line, it could be worth it to pay a large sum for help in, say, creating the legal structure for your business. But in the beginning, use every free, low-cost, government, and nonprofit resource you can. Your three best bets for taking business start-up courses and finding business advisers - all free or low-cost - are the U.S. Small Business Administration (SBA) and two resources it sponsors - SCORE and Small Business Development Centers. SCORE provides free, confidential business counseling, face-to-face and by e-mail.
To make sure you're ready to begin, use the SBA's Checklist for Starting a Business. It's a free, interactive list to get you thinking. Answering each set of questions will help you decide how realistic your business idea is. The Checklist helps you:
- Identify your reasons for wanting to own a business
- Assess yourself and your situation
- See how your skills and experience match your business idea
- Find a business niche
- Analyze the market for your product or service idea
- Plan your start-up
- Organize your finances
Any question to which you answer "no" is a clue. That's the area you need to research more.
For example, how would you answer the question, "Do you know what financial reports for your business should be prepared and how to prepare them?" If you can't say "yes," you need to learn more about keeping business records.
Planning
What's the most common mistake of new business people? Not doing a business plan.
Just the idea of writing out a plan may put you off. You may wonder how you'll ever find the details you need. You may be so enthusiastic about your business idea that you want to jump right in and get started.
Hang on to that enthusiasm. Just channel it through your business plan first. Your success will be much more likely.
So what exactly is a business plan? It's simply a description of the business you hope to start.
- It shows why your business idea is workable,
- It sets out how your business will operate, and
- It predicts what money you'll need to invest and what you'll earn.
Your plan doesn't have to look fancy. It doesn't have to use complex language. It can even be hand written. It just has to be written.
There are different ways to organize business plans. Most have four parts. Each part answers major questions about your business.
- Business Description
What will you sell? Which product or service? What needs does your product or service fill? Whose needs will it fill? What's your competition? Why aren't other businesses meeting the needs of your potential buyers? - Marketing
Who will buy what you sell? Why? Why from you and not from someone else? How will you reach these buyers? How will you persuade people to buy from you? How will you figure out how much to charge for your product or service? - Finances
How much money will you need to get started? To operate for the first year? What will your cash flow be each month? What expenses and income do you project for the first couple of years? Will you be paying anyone? Yourself? How much?
Who'll manage your business finances? What accounting system will you use?
Where will your start-up money come from? All from you? Some from other people? Will start-up money from others be gifts or loans? What loans will you apply for? When will you have to pay back the loans? - Management
How will your business operate day to day? How much time will you spend on providing your product or service vs. managing your business? Is there enough time? What help do you need from other people? Will you pay them? How?
What equipment and space do you need? How will you lease or rent what you need? What about insurance?
How will you schedule producing your product or providing your service? How will everything fit together?
Take SBA's online business plan workshop. Get answers to your business plan questions from SCORE's online business counselors. And celebrate when you complete your plan. You're almost ready to announce your opening.
Additional Resources
Starting Your Business
The U.S. Small Business Administration has everything you need. Find the Checklist for Starting a Business and the Small Business Startup Guide here. Links take you to many other resources, including start-up help for women, veterans, and minorities.
SCORE
Review your business plan with a free SCORE counselor. Find your local SCORE chapter. Ask questions online. Sponsored by the SBA and others.
Small Business Development Centers
Find your local Small Business Development Center. Take a course or meet with a business adviser. Find start-up advice in easy-to-use articles and tips. Sponsored by the SBA and others.
A World of Resources for Entrepreneurs
Links to sites sponsored by The Kauffman Foundation, dedicated to encouraging entrepreneurs.
Steps in Starting Your Own Business
Use these Riley Guide sites to find tutorials on business start-up, sample business plans, financing sources, and legal tips.
Books
Find these books online at Barnes and Noble.com:
Legal Guide for Starting & Running a Small Business, Fred S. Steingold, Ilona M. Bray, Nolo Press, 2003. A starting place for finding all the legal advice you need.
Successful Business Planning in 30 Days: A Step-by-Step Guide for Writing a Business Plan and Starting Your Own Business, Peter J. Patsula, Patsula Media, 2003. Concise, easy-to-read information and ideas on the essentials of entrepreneurship, starting with your business plan.
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