In today’s economic climate, amidst layoffs, downsizing and the general tightening of corporate belts in order to maintain bottom line profit margins, more and more people are choosing to see this as an opportunity to follow their dreams of becoming a small business owner.
Don’t Jump The Entrepreneurial Shark On A Whim
Before quitting your day job there are some important things to consider and take care of long before you even think of launching your own entrepreneurial venture. That said, here are 14 things to think about in advance – some of which seem obvious, but are surprisingly overlooked by new small business owners far & wide.
Narrow Down Your Product/Service Offering
Have you ever heard someone say “Over 90% of small businesses fail?” I hear it all the time. And while I believe numbers and statistics can be easily manipulated to say just about anything, that’s still pretty staggering. Much of that failure can likely be attributed to small businesses having too broad a focus from the start. New small businesses tend to try to generate revenue from virtually any source and, as such, often spread themselves far too thin. Make sure your focus from the start is narrow and specialized to match your skills, goals and business model. A successful entrepreneur doesn’t shift focus.
Decide On A Company Name
Seems pretty obvious, right? Right. What isn’t so obvious is what goes into creating a brand based on your new company name, or the time that goes into researching a potential company name. Consider these factors when choosing a company name:
- Availability – is any other company anywhere in the United States (or you country of origin) using the same or similar company name? If there is another company using a similar name, but in a completely unrelated industry, you may still want consider it. However, at some point – even if the other company is not in competition with you in any way – there could be some branding issues from an Internet marketing standpoint. It is best to be completely unique whenever possible.
- Market Research – knowing your audience is key. Check out some of the most successful companies you will be in competition with. Is there anything that stands out about them? What are their company names? Do they market using their full company name or a DBA? Corporations spend tons of money researching what will appeal to their target demographic. Whenever you can, take advantage of their investment to gain some insight into the psyche of your market without spending a dime.
Where Will Your Business Be Located?
Again, this seems obvious…but you’d be surprised how many small business owners rent retail, industrial or office space without fully considering what they will need out of the space. You want to make these decisions long before they have the potential to impact your business. Is this a home based business? Do you need a retail location? What is the cost for the space you want to occupy? Will you own, rent, lease to buy?
Will You Have A Staff or Are You On Your Own?
How much of this work are you going to be able to handle on your own from the start? Will you need a full-time staff to meet the demand for your products or services? Will part-time help be sufficient? Who will handle the employment paperwork? Payroll? Recordkeeping? Hiring employees certainly does raise the bar on the level of difficulty for a start up, so great consideration should be given to this issue long before you launch.
Corporate Structure Options
There are a lot of corporate structures that address a variety of business needs. Should you opt for an LLC, a sole-proprietorship, S-corporation, C-corporation? Consult an accountant and/or attorney to help determine which corporate structure will work best for your business.
Establish Your Business Entity
Once you’ve decided on a business name and corporate structure, it’s time to file the paperwork. Can you do it yourself? Sure…but you probably shouldn’t go it completely alone. You could hire an attorney to handle it for you, but that can get a little pricey. There are a variety of companies out there that can help you. The Company Corporation and Legal Zoom are two such companies.
Projecting Sales and Expenses
It’s important to know where you are now and have a plan for moving forward. Estimating your monthly expenses and projecting sales on a cash flow statement is an integral part of the planning for any small business venture. More detailed cash flow statements will be created during the development of the business plan, but having an estimate in mind from the start is important.
Additional things to take into consideration:
- Complete a break-even analysis
- Establish a business-specific bank account
- Business communication system – cell phone, e-mail, VoIP, etc.
- Buy basic necessary equipment – computer, manufacturing, etc.
- Start building a list of potential customers
- Find a graphic/web designer & SEO/Internet Marketing
- Consider your future plans – investor control, your ownership percentage, etc.