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Opening A Small Business Successfully

What's the Best Business to Open?

Opening a small business is challenging and rewarding. Do not become one of the companies going out of business in this economy; ensure that your business not only survives but thrives. What is the best business to open? Learn how to open a business; successfully.

Building your business requires commitment and focus. It's never going to go as smooth as you think it should; even if you do everything right, something unplanned will come up.

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There is no perfect formula for success but there are certain things you can do to increase your opportunity for success.

One of the first steps to take (once you've decided what type of business to pursue) is to create a business plan.

Your plan for opening a new business needs to follow certain steps; your road map for the future.

Once you've developed the plan, then you need to implement it and test and measure as you go along to ensure that the actions and strategies you are undertaking are right for the direction you want to go.

Best Business to Open

Note: A business student interviewed me recently on what it takes to run a small business. His questions were very much focused on leadership skills; and certainly being an effective leader is a key business ownership attribute.

But as a small business owner, leadership is not the most important characteristic, because most small businesses don't have a lot of staff to lead. What is important? Read about what it takes to be a successful entrepreneur.

To minimize the risk of being one of the business failure statistics (of companies going out of business), it's good to have an understanding of what's the best business to open.

In today's economic environment, some of the best choices are:

  • health care businesses (no matter what the economy is doing (slowing, flat or growing) you still need to take care of your health;
  • resumé writing services to help unemployed find work;
  • repair service (cars, computers, appliance, - no one wants to buy new - they try to extend the life of used items;
  • Also small business support services - that are outsourced such as accounting/bookkeeping, human resources, legal services, sales, marketing, etc.

Your Opening A Small Business To-Do List:

(once you have a business idea in place that you want to pursue)

keys to opening a small business

  • Decide on how you want to structure your business. Check with your local government for more details; and ask for legal advice when deciding how to set up and operate your business. Most regions in the United States and Canada allow business organization along the following structures:
    • When you are opening a small business you need to consider whether or not you want to open as a proprietorship, or as a partnership or as an incorporated company? Each of these three business entities might be called something different in different countries; it's important to recognize that you need to understand which of these entities will work best for you and structure your business accordingly.
    • As a sole proprietor, it is easy to set up. You are self-employed and you are responsible for all debts and claims against your business. A creditor can claim against your business and personal assets.
    • As a small business partnership, you and others have combined resources to set up a business. Each partner is personally responsible for all the debts and claims against your business. You are each equally responsible for the actions of the partners in the business. A written partnership agreement should be prepared; there are online sample agreements available or ask your lawyer to draw one up.
    • Incorporating your company typically requires legal advice (although it can be done through self-help documents in some jurisdictions). A corporation is a legal entity. The advantage of a corporation is that it provides limited liability for its shareholders; it is a separate and distinct organization. Creditors cannot claim against your personal assets (unless you used them to guarantee your loans or other debts). Ownership of a corporation is through the assignment of shares; shares can be transferred or sold yet the corporation will still exist.
  • Create a business plan outline first; then build a comprehensive strategic plan. The reason to do a business plan outline first, is that each business is different.
  • When opening a small business and, if you're going into manufacturing, your business plan would need to include a safety checklist, a capital expenditures plan, a human resources plan, a working capital management program and much more; but all of it would be tailored to manufacturing.

    If you're opening a small business in the services sector, you will need to include a selling strategy plan for services, a marketing services plan, a competitive pricing strategy program, and so much more.

    If your new business is in business to business selling or business to consumer selling, do you need an inventory plan; what customer service tips do you need in your plan; is your competition in business strong or weak (include competitive intelligence in your planning process).

    Once you've identified what you need to cover in your plan that is unique, then make sure you cover all the standard planning activities: business financial plan, including target financial ratios; your profit maximization plan; your marketing plan; your sales plan; your operations plan; and more.

    Your strategic plan needs to include your business strategies, your competitive strategies, your long term vision and objectives.

  • Once you've got your organization structure and plan in place, you need to do some financial analysis. Can you make money at the business? How long will it take to break-even? How long before you can calculate profit on a regular basis?

    First, put together a list of startup costs. For example, the cost of incorporating your business; the cost of business cards and promotional materials; the cost of hiring a lawyer and an accountant for advice, the cost of startup inventory (if you are in the retail or manufacturing sectors), the cost of building improvements to set up the space for your business, and whatever else is specific to your business.

    Then put together a list of your annual, quarterly, monthly, weekly, daily expenses. Things like office rent, light, heat, phone, internet, postage, shipping, salaries and benefits, materials, inventory, insurance, legal and administration expenses, computer, software, office supplies, and more.

    Next put together your sales plan and detail the assumptions you are making in that plan. Put together several versions of both expenses and revenues: best case, worst case and average. Make sure that when you calculate how much money your business can earn, that you are realistic. If you over-estimate your sales revenue and under-estimate your costs, you'll go from opening a small business, to closing it in a very short time.

    What's your source of startup financing:

    • bank business loans;
    • government loan programs;
    • bootstrapping: use of personal credit cards and/or working a second job and/or borrowing from family and friends;
    • selling assets;
    • re-mortgaging your house;
    • taking on a partner who will buy in to the company ... consider all your alternatives.
  • What is the highest value, the least risk and the lowest cost financing for your business?

    Okay. You've got your business structure set up.
    Written your plan. What's next?

  • Define your product or service. What is unique or different about it? Where is it positioned in its market? What is the product life-cycle for that product or service?

    For example, if you want to open up a small graphic design studio:

    • Service or Product Differentiation: Your work output is dedicated to using local recycled products and minimizing the economic footprint of the your business. You participate actively in the non-profit sector: it is a personal passion; e.g. volunteering with the local Big Brothers. You speak from a volunteer's depth and perspective.
    • Service or Product Positioning: Your work is focused on local rather than national or international non-profit organizations.
    • Service or Product Life-Cycle: The non-profit segment is in the growth stage of its life-cycle.
  • Define marketing mix for your product; then develop your marketing mix program: your product or service features and benefits; your pricing strategy; your promotional strategy; and how you will place or distribute your product or service.
  • Spend enough time on the product or service development; the urge is to rush through to get to the selling of your product or service, but that usually results in an under-developed marketing program and an under-performing product or service. Conversely, don't stay stalled at this stage either; you do not want to spend endless hours on developing the marketing for your product or service. At some point you need to move forward.

  • Launch your product or service. Get some media coverage if appropriate. Send out press releases. Talk to the local newspapers. Post on relevant forums and blogs. Get some profile. Pay for advertising (local radio stations for local businesses can sometimes bring in high volume); make sure your marketing tactics and advertising techniques fit the plan you have laid out. Ask your friends, family, associates help you get the word out.

Plan for Success

Have someone not too close to you review your opening a small business plan. Ask them to give you an honest assessment of the strengths and weaknesses of the plan.

Some people have a great idea, but can't launch it. They lose their energy as they get bogged down in the details of opening a new business. Other people launch their business but are slow starters and run out of cash early. Still others get the business going, and it keeps limping along; not making much money, but not losing money either.

And then, there are the people who launch their business, learn from their downs, build on their ups, and within five years have a steady, profitable and sustainable business. These people not only love their work, they've also learned that effectively managing their business helps to sustain and grow the business.

Opening a small business is not a perfect science.

Question: What is most important in opening a small business and running it?

The answer: You need some luck, a willingness to work hard, a positive attitude, the ability to communicate well, the ability to admit when you are wrong (instead of continuing on in the wrong direction), the willingness to network with others and take their advice, and the ability to learn quickly. You also need to be able to organize, plan and manage your business; do not let the business manage you.

If you are have started up your business and are questioning your direction or results, or you are thinking of opening a small business, use the Contact Us Form to get some advice.

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Feedback from Site Visitors:

Hello. I am a professor teaching Human Resources Management. You have an excellent page on writing business value statements entitled your "Value Statement: Develop a Definition of Values in Your Business". I would like to use this page (giving full credit) to teach my students how to write good business value statements for the HR Strategic Plan they are required to prepare. Thank you. Richard C. Brocato, Ph.D. Professor of Management, Maryland, USA

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