Before Starting a Small Business

By: Louis Cepeda Youve just been down-sized or the future of your present employer looks shaky in this new era of globalization and the exodus of American jobs to foreign countries with cheaper labor. Or you are working for a corporation doing the job of two or three people with little chance of improving your position or increasing your salary. Or you are working for a successful firm but hate your job. Or youve been unemployed now for a lengthy period of time with little hope of finding a comparable position elsewhere. If you are one of these individuals, at one point or another, you have probably thought of owning a small business and becoming part of the American Dream. Though you may already have a good idea of what kind of business you would start, the truth is that for most of us, our lifes experiences do little to prepare us for the many challenges involved in being self-employed. Starting a small business usually means a major commitment of time and energy, big changes in your life style, and a considerable monetary investment. So before you set out to start a business, do some serious thinking about yourself as a person and answer the following questions as honestly as possible. o Do you have the personality to run a business? o Do you enjoy being around people? o Are you good at handling stress? o Can you manage employees if you had to? o Are you willing to delegate some responsibilities to others? o How do you generally handle disappointments? o Do you tend to learn from your mistakes? o Are you tech savvy enough to meet the new challenges of our modern technology? o Can you make quick decisions? o Are you a positive person?

o And probably most important of all, do you like selling? After youve gone through this process of self-evaluation, take the time to jot down your interests and turn-ons, your dislikes and weaknesses. Again be honest with yourself. Since motivation and satisfaction are integral parts of small business ownership, you dont want to open just any business. You want to start one that you can get excited and enthusiastic about. Now that youve decided that you have the personality to take on the sometimes daunting task of running a small business, you need to consider a few more very important things. The following steps wont necessarily guarantee success in your business venture, but ignoring them will only make your goals harder to accomplish. In business, the more you plan ahead the less likely you are to be unpleasantly surprised. 1. Choose a business that best matches your key skills and experience. You dont have to be an expert in every phase of running a business to be successful. Still a careful and thorough evaluation of your best skills and those abilities you lack can help determine the kind of self-employment you are best suited for. For example, if your background is sales, maybe a business where you are constantly interacting with people or the public is ideal for you. On the other hand, if you have enjoyed working independently from home in the past, you might consider a home-based business like web designing, writing or bookkeeping. 2. Do a lot of market research as objectively as possible. Before making a final decision on the business you want to start, you need to do as much market research as possible. It is important to be objective about the information you gather. Your market research should help you answer the following critical questions. Are there enough customers interested in the product or service you are offering? Is there a niche for the business you plan to open or is the industry youve chosen saturated with similar businesses?

Will projected revenues produce enough potential income to cover your expenses and your salary? If you are opening a business outside your home, does the location provide adequate traffic and visibility? Will you be selling primarily to other businesses or the general public or both?

3. Write a business plan to help track the progress of your business. A business plan should be a must for a small business owner. There are two key purposes for writing a business plan. One, it can make it easier to borrow startup money from a bank or a microloan program by providing an overview of the market, your sound planning, fiscal forecasts and the talents you bring to the business. Two, and probably most important for a small business owner is the fact that a well-written plan will lay out a clear path of where your business is heading and what to look for in terms of progress or obstacles along the way. A smart business owner checks his or her business plan on a monthly basis to see if things are going according to schedule or if there is a need for changes because of unforeseeable problems. 4. Create a company strategy that distinguishes you from your competition. After you do your market research and determine the kind of business you want to start, come up with one or two key factors that make your firm different from others offering similar products and services. Are you using better technology in your products or services? Is your pricing lower than competitors? Will you offer a higher degree of customer service? Do you intend to reach out to a smaller niche market rather than the general public? Can you charge more because your product or service is superior in quality? Will you be offering products with brand names versus generic?

5. Keep A Diligent Eye On Your Cash Flow.

Make sure to keep an attentive eye on your cash flow. Cash flow is the ongoing stream of cash going in and out of a business. Successful small business owners know that they need to skillfully plan and manage the money coming in and going out in order to maintain a positive cash flow. Positive cash flow is the result of forecasting and carefully managing your money on hand so that more funds are coming into your company faster than going out. 6. Find effective, inexpensive ways to get the word out about your business. Marketing your business once you get started should be priority number one for any small business owner. While advertising and some of marketing can be expensive, smart business owners know that there are plenty of free or inexpensive ways to get your business known quickly and effectively. The trick is to substitute your time and creativeness for the advertising budget you lack. Marketing approaches that work with little or no money invested include extensive networking, press releases, coupons, contests, cross-trading, telemarketing, the Internet, company brochures, business cards, writing a column for a local publication, guest speaking at seminars and sharing trade show expenses with a non-competitor. 7. Make sure you know how to sell. Sales are the backbone of any company, and the better you are at selling, the more likely your business will succeed. When you start out, you will probably have to do a lot of selling yourself to get the company off the ground. Take into consideration all the factors you need to sell you product or service, and then decide on what sales process you intend to use. Successful business owners understand the importance of being the best salesperson you can be, and take classes, attend seminars, watch videos and read books on an ongoing basis to improve their selling skills. 8. Excellent customer service is the best way to keep present customers and attract new ones. More and more Americans today feel that good customer service has been replaced by shoppers disservice. In fact, almost everybody you know has probably been

a victim, at one time or another, of a rude salesperson, a defective product, or a company that just doesnt care whether you are happy or not. As a small business owner you have the advantage of giving your customers the very best customer service available and exceeding their expectations with every sale you make. Encourage customers to let you know if they are unhappy with your products or services. Make it easy for them to reach you by telephone, mail, fax or email. 9. Use the business resources available to you. There are literally thousands of resources small business owners can use to efficiently start and grow their company, and many are free. From the Small Business Development Center near you, to the printed material offered by U.S. Small Business Administration (SBA), to free counseling and expert advice provided by the Service Corps of Retired Executives (SCORE), small business owners have available a wealth of free information they can use to learn all facets of business development and improve management abilities. In addition, there is plenty of supporting material at local micro loan organizations, the Internet and the business section of your citys library. Finally, while starting your own business can be challenging and stressful at times, it can also be one of the most rewarding adventures you will ever take. Chances are you will learn a broad range of new skills, deal with people from many walks of life, and create a situation for yourself where you are making the decisions and shaping a lot of your own destiny.