BUSINESS: STARTING YOUR OWN BUSINESS – PART 1: THE BUSINESS PLAN
Greetings everyone! In the next several weeks, I will be covering the different stages of starting your own business. From coming up with an idea, to planning how the operation should work, to legal formation of the business entity, I will be covering the different issues I think every entrepreneur should consider in order to increase the chances of running and maintaining a successful business. I am writing this series not only for those who wish to start their own business, but also for those who are already established business owners. After all, issues arise at all stages of business. Please keep in mind that I am in no way a business guru. What I am, is an attorney and an entrepreneur who has experience – some good, and some bad. I will present you with information and some personal examples of my own that I hope you will take and make good use of.
Introduction – Business Is Not Easy
For you readers who are already business owners, I congratulate you and wish you continued success in maintaining your operation. For those of you who have the entrepreneurial dream, I do not want to scare you but the grim reality is that, running a successful business is hard, especially in these economic times. Please do your own due diligence before proceeding with your business ideas. From what I have personally observed, it seems that 50% of new businesses close within the first year, 30% close within 2 to 5 years and only 20% of the initial startups remain open for over 10 years. Just as there is no one reason why a business fails, there is no one reason why it succeeds. To be successful, you need a multitude of things, including but not limited to, knowledge, drive, and honestly, luck. I hope after reading this as well as my upcoming articles, you will be better equipped to handle issues that will, inevitably arise regarding your business. With that said, let's begin.
The Business Plan
Okay, so you have an idea. Great! Now what? The first thing I would suggest you do is to come up with a business plan. You need to think it through. Not just in your head - You need to write it down. First, jot down notes. Will you be providing a service? Are you selling something? Do you need a license, or a permit to do this? Think about your clients/customers. What niche are you targeting or gearing your business to? These are just some of the things you need to consider at the get go. You do not want to just jump in and start a business with just an idea. I recommend you start your process by creating your business plan.
A business plan is generally your way of setting your goals for the business and your ideas of how to achieve those goals. The exact content of your business plan will depend on your target, whether it is strictly internal for you and your team, or for external purposes such as when submitted for financing or leasing options. In such cases, the business plan will have to be more detailed, often including a market analysis, competition research, operations and management plan, just to name a few. The creation of the business plan will provide you with a detailed picture of potential costs and drawbacks so that you can better make decisions. Ben Franklin is often credited with having said, “By failing to prepare, you are preparing to fail”. From what I have seen, this is so true…especially in business. You need to come up with a business plan. Start with jotting down your ideas. As you begin to study, research and do your due diligence, expand on these notes. In no time, you will have the basis of a business plan. Of course, just having a business plan will not guarantee that your business will be successful, but it will increase your chances.
Again, some questions you will need to ask yourself:
1) What is it that I will be selling? Or what service will I provide?
2) Should or could I operate my business from my house? Or shall I find a location elsewhere?
3) Do I need any special license or permits to conduct my business? And if so, how do I obtain this license or permit?
4) Will I hire employees? If so, what issues do I have to deal with? (IRS, Immigration, etc)
5) What will be my operational costs? (Consider: Rent, Utilities, Insurance, Employees, etc)
6) Do I need outside financing (i.e. loans) or do I have sufficient funds for my startup?
Now that you have some things to start thinking about, go do your homework. As I mentioned in the beginning of this article, this is a multi-part series. In the upcoming weeks, I will cover Licensing, Permits, Location, Business Structure and Entity Formation.
Disclaimer: The information contained herein have been prepared for informational purposes only and are not to be considered legal advice unless otherwise specified. All opinions expressed are those of the author and in no way shall be associated with Sereechai Newspaper. If you have a specific question regarding your personal case, please contact the Law Offices of Joseph Chitmongran for a full consultation.