FIRST STEPS FOR STARTING A NEW BUSINESS
So…you have this great idea for a business of your own. You believe you have what it takes to be successful, and you have been saving for a very long time. You believe if you don’t “go for it” now, you never will. But, before you “go for it,” you want to make sure you idea is a good one, that there is a market for your products, and that you will have sufficient funds to make it happen.
Before you jump the gun and make mistakes that could bankrupt you, answer these questions (you will need this information to develop your business plan, once your final decision is made).
NEW START-UP IN DETAIL (No particular order)
- Why do you want to start this business?
- What is the business?
- What is the planned entity set-up and why?
- What is the legal costs involved to set up my entity?
- What is the service or products?
- Who is your competition?
- How will you separate your business from the competition?
- What is your business model? Quality/Service – Quantity/Price – Quantity/Service – Quality/Price – Pick one.
- What will you do different that will attract market share?
- Who is the intended consumer (your target market)?
- Where is the intended market area that the business will serve?
- How will you advertise your business?
- What is you plan for total marketing?
- Who will operate the business?
- Will you have partners?
- If you will have partners, who are they and what will their titles be?
- If you will have partners, how much cash will each inject?
- What do your partners expect in return for their investment?
- What do you and your partners reasonably expect as a return on their investment the first year, second year, etc.?
- What experience do you/they have to operate this business?
- Where will you locate the business?
- What type facility, square feet, etc.?
- How much rent do you expect to pay each month for your desired location?
- How many employees will you need?
- When will you start the business?
- How much capital do you have to inject into the business?
- How much personal income will you draw from the business the first year to make it worth your while?
- Is your credit ratings strong enough to support loan approval?
- How much capital will you need to start the business?
- What percent of the total capital required will you inject? (Usual requirement 20-30%)
- What do you reasonably expect in total sales revenue for the first year?
- What do you reasonably expect revenue to be by month for the first year?
- What do you reasonably expect cost of goods sold to be, as a percent of sales?
- How much gross profit, as a percent of sales, do you expect the first year?
- What do reasonably expect total operating expenses to be the first year?
- What do you reasonably expect total operating expenses to be by month for the first year?
- What do you reasonably expect net profit margins from operations to be as a percent of sales the first year?
- How much gross profit will you have to generate to breakeven?
- If you are projecting a loss for the first year, when do you think you will breakeven?
- Why do you think you will succeed, when others have failed in your market with a similar business?
- Who is your CPA?
- Who is your business attorney?
- Who will your suppliers be?
- Who is your banker?
As you can see, there are many questions that need answers BEFORE you start your business. So get out your note pad and start to work. Don’t kid yourself. Planning is not easy, but totally necessary if you want to succeed. This information and more is vital to your success.
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