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Tuesday, January 5, 2016

Starting A Business

There are lots of good ideas for starting a business, yet more than half of all new businesses fail in the first year, and half of those remaining fail the second year.  Why?

Starting a business is easy, staying in business requires dedicating your life to the business plus more money than you expected. Then the realities of the marketplace are not what you expected. The idea of a business plan is not so much about the plan as it is about researching and thinking about the how to tie your dream to actionable steps. 

Owning a small business is a lifestyle. You will have long days at the store working on budgets, marketing, customer relations, employee issues few days off, worrying about sales, solving vendor problems and a host of other questions.  You have to be dedicated to the business and your family has to be supportive.  Without personal dedication and family support many owners burnout, the business become a heavy burden.

Money, what you need to earn, what you never have enough of.  Start up expenses will exceed estimates, sales will be slower than desired, and a lack of cash flow consume more and more of your savings. Finding a loan to start your business will be difficult. Most banks like to see up to two years of operating history before they will consider your loan application. Additionally, you need to invest your own money and collateral.  If you don’t have enough confidence in yourself to invest in yourself , then why will anyone else be willing to support you with a loan.

Not enough customers, to generate sustainable sales.  Do not deceive yourself by thinking “everyone” is a potential customer.  A marketplace reality is that all potential customers are already buying from other businesses. Your business will need to compete and win customers away from your competitors.  Start by identify who is most likely the target customer and ask them what do they want. 

A simple plan and budget will help organize all the things you need to do to start your business. A good plan is short, provides an outline that keeps you focuses on actions yet be responsive enough to consider new opportunities. Budges are the foundation for a successful business by prioritizing expenses and setting revenue goals.  Budgets identify how much it will cost to start and to operate.  When you plan for what it really takes to be successful actions can be taken to start at a manageable scale and then grow as sales increase and you improve operations.
Get Help. When writing a business plan and starting a business its very easy to convince yourself that you know what's best.  An objective third party review will bring you back to reality and help you find a path the results in a successful business.