6 Questions to ask before starting a business
If you recently lost your job or have always dreamed about being your own boss, you may be contemplating a new business venture. Before launching a small business, increase your chances of success by answering a few simple questions.
1. Is there a market for my product or service? Test your target demographic. This can be as simple as putting together focus groups who will provide honest feedback. You might also attend trade shows to network with others in similar markets. Consider reviewing census figures for your area. For example, are you planning to sell baby clothes when most people in your target area are empty nesters?
2. How much money will I need? You’ll want to review sales revenue and expense forecasts for the first year of planned operations. By the way, don’t count on friends, relatives, or bankers to bail you out if cash flow doesn’t meet expectations. A basic rule is that the company should have enough cash to survive – without tapping loans, credit cards, or lines of credit – for at least a year. For many people, that means starting the business while keeping their day job.
3. Do I have a business plan? A detailed business plan will help you think through all aspects of your company’s start-up phase. It defines what you’re selling. It lays out marketing strategies, start-up capital requirements, overhead expenses, expected cash flow, and plans for business growth. It should include a summary of your experience in that product or service.
4. Are my books in order? Whether you keep your own records or hire someone else to perform this important task, you should know whether your business is profitable on a monthly basis. That means tracking all expenses, including payroll costs and inventory. A sales-only focus has doomed many small businesses to failure.
5. How should the business be structured? Sole proprietors are liable for the business debts, taxes, and legal costs of their companies. You might want to consider setting up your firm as a corporation or limited liability company. Analyze this important decision at the outset so that you understand your options.
6. Should I set up a website? Whether or not you plan to use the Internet for sales, you can’t ignore the potential value of an online presence. It might create a higher degree of visibility for your small business and enable you to advertise your main selling points to the general public. A website also gives the opportunity to promote your activities or offer special incentives.
Starting a small business is not for the faint of heart. For guidance in getting off to a good start, give us a call. Fall River #: 508-679-6079 New Bedford #: 508-999-0020