There are a variety of reasons why people start a new business. In these recent times of layoffs, corporate downsizing and high unemployment rates, you may decide that working for yourself is the best alternative. To get a new business off the ground successfully, consider what resources you will need to develop a solid business plan and successfully carry out that plan. Fortunately, these resources are readily available in your community—you simply have to know where to start.
Nearly 65 percent of new businesses fail within the first five years of operation with the primary reason being lack of proper research. There are steps you can take to improve your chances of success. A good starting point is to seek counsel from reputable, established business owners in your industry. These individuals can offer important planning tips for your business’ early stages. These business owners with “boots on the ground” experience are a vital resource in helping you avoid pitfalls and may provide information that can lead to the development of a more solid industry-specific business plan.
Once you have a feel for the industry, contact your local Small Business Administration (SBA) office. The SBA will provide business research information free of charge in many aspects related to your business. One important aspect is the demographics of the area in which you will practice. A demographic study will help you understand your potential customer base and identify your existing competition.
Make certain that the location where you plan to open your business has both the age and income demographic that will provide the best opportunity for success. The SBA also will provide tips for writing a business plan if you are uncomfortable devising a plan on your own. The Service Corps of Retired Executives, or SCORE, is also a great resource and will help when needed.
The next step is to ensure you have enough capital to carry out your plan. You need to be sure you have access to sufficient funds not only to open your business but also to cover business and personal expenses should times get rough. A business lacking adequate back-up capital is virtually doomed from the start.
Develop a working relationship with a local banker and share your business plan with this person. Even if you do not need funds upon start-up, in lean times or times of expansion, an established relationship with your banker may provide you with funds needed for future plans.
Before you open your doors, hire a qualified certified public accountant (CPA). A successful business owner is organized. Poor organization leads to poor accounting, and poor accounting is one of the biggest reasons that businesses fail. Your CPA can help you provide details of revenues and expenses to solidify your business plan. The more detailed and well thought out the business plan, the better your chances of clinching the financial backing you will need to operate your business.
Understand that your costs and overhead will likely be far higher than you anticipate. The unexpected is to be expected, and may come in the form of anything from escalating equipment, lease or insurance payments to surprise taxes and fees on the local, state or federal levels. A CPA can assist you by working with you and your insurance agent (property insurance, workers’ compensation insurance, owner’s life insurance coverage), real estate agent (leasing property versus purchase of a business site), or payroll service to better understand and control the costs of your business. Your CPA can also help you execute your business plan, including adjusting the plan periodically and helping you to distinguish between long-term and short-term goals of the business.
Hire the services of a reputable attorney. Your attorney, along with your CPA, can advise you on the form of business you should establish, whether you should operate as a sole proprietorship, partnership, limited liability company, or corporation. Each structure offers advantages and disadvantages in the way of taxes and legal liability. If you choose a form of business other than a sole proprietorship, request assistance from your attorney to properly complete the appropriate registration forms for your business structure.The operating and reporting requirements and the tax consequences of each of these forms of business can vary greatly and your CPA can help you best choose the form most suited to your particular business and personal goals.
These trusted business advisors will ensure you are in compliance with licensing requirements, necessary fees, and applicable regulations, and may also assist you in handling other important issues such as tax payments and payroll. Reliance on those crucial business partners allow you to concentrate your energies on operating your business. The expense of obtaining the services of an attorney and a CPA will be recouped many times over.
Butcher, baker, candlestick maker? These villagers provided the essentials of life in the communities of old. In the present day, we all continue to rely on providers of essential services. A new business start-up requires the cooperation of a village of advisors to ensure the entrepreneur better understands the business and its operation in an ever complex economic, legal, and tax environment.