Congratulations on taking the first steps towards owning and operating your own small business. The fact that you are reading this is a sign that your business will have a chance to succeed. When it comes to small business development, the most important thing you can do is plan well!
The Towne Lake business community embraces entrepreneurship and we want your business to be successful. But we want you to understand that operating a small business is hard work. It takes dedication, patience, specific skills and adequate funding.
This information has been compiled to help you in your process of opening a small business. It takes you from a process to determine if entrepreneurship is for you to a discussion on hiring and firing employees and everything in between.
You may also contact the Towne Lake Business Association at 678-389-3887 for further assistance or for a referral to an appropriate resource.
Congratulations. Starting your own business is exciting and we wish you success!
What is an Entrepreneur?
Definitions of an entrepreneur:
- An innovator. One who recognizes opportunities and organizes resources to take advantage of the opportunity.
- One who assumes the financial risk for the initiation, operation, and management of a specific business or undertaking.
- Someone who attempts to profit by risk and initiative.
- A person who starts a business. Does this sound like you?
There is no way to eliminate all the risks associated with starting a small business. You can improve your chances with good planning and preparation. A good starting place is to evaluate your strengths and weaknesses as the potential owner and manager of a small business.
Carefully consider your answers to the questions below. Be sure to answer honestly! You are the only person evaluating your responses – just as you’ll be the only person responsible for your business.
- Are you a self-starter? It will be up to you – not someone else – to be successful. You will be responsible for developing projects, organizing your time and following through on details. Think of your past work experiences. Will you be able to do this?
- How well do you get a long with different personalities? Business owners need to develop working relationships with a variety of people including customers, vendors, staff, and professionals such as lawyers, consultants and bankers. Can you deal with a demanding client, an unreliable vendor or employee?
- How good are you at making decisions? Small business owners are required to make decisions constantly, quickly, under pressure and independently. These snap decisions will often affect the future of your business. Do you feel comfortable doing this?
- Do you have the physical and emotional stamina to run a business? Business ownership can be challenging, fun and exciting. But it is also a lot of work! Can you face 12-hour work days six or seven days a week if necessary? Are you that committed to making your business work?
- How well do you plan and organize? Research indicated that many business failures could have been avoided through better planning. Good organization of financials, inventory, schedules and production can help avoid many pitfalls. Are you good at planning an organizing?
- Is your drive strong enough to maintain your motivation? Running a business can wear you down. Some business owners feel burned out by having to carry all of the responsibility on their shoulders. Strong motivation can make the business succeed and will help you survive slowdowns as well as periods of burnout.
- How will the business affect your family? The first few years of business start up can be hard on family life. The strain of an non-supportive spouse may be hard to balance against the demands of starting a business. There also may be financial difficulties until the business becomes profitable, which could take months or years. Have you included your family in this decision process? Make sure to have their support!
Self Biz Quiz
Are you the type of person who should open their own business? Take this short quiz and see how you measure up. An assessment scoring sheet follows the quiz.
CHART GOES HERE
How did you do?
One Year Plan for Entrepreneurs
Starting your own business is not something to rush into. Careful, advanced planning can ensure the success of your venture. The following is a suggested one-year plan.
One Year Before You Start-up
- Refine your business start-up ideas in writing. Determine exactly where you want to go.
- Decide exactly what business you want to start. Be specific in your business definition. What makes it different, special or unique?
- Assess the impact on your family and personal life. How will this affect your relationships?
- Will your family support the use of finances and time?
- Begin research. You must determine if there is a need for your product. This research can be performed by students, professionals, or even on your own.
- Build your personal skills by taking formal management/business courses. Contact Northwestern Technical College or Dalton State College to see what is available.
- Meet with the UGA Small Business Development Center for assistance in writing a business plan, mentorship, funding sources and other business start up services.
- Understand what help is available to you and take advantage of it.
- Contact the Georgia Department of Labor for information on educational seminars regarding labor/safety issues.
Six Months Before Start-up
- Determine the specific focus of your business. What do you want to specialize in? It is easier to excel at one area than at many.
- Start writing your business plan.
- Define your target markets. Who is your intended clientele? To whom should you aim your advertising?
- Research business and trade organizations. Most areas of business have agencies and organizations set up to facilitate business. Take advantage of what these groups have to offer.
- Start looking for the best location for your business. Do you need little or lots of space?
- Would your business be better suited downtown or in a rural part of the county? Is a store – front location needed or can you work from your home? Location can make or break a business. Conduct the search on your own, contact a real estate agent, or visit the Entrepreneur Resource Center at www.walkercochamber.com for a list of some available buildings for small business and offices.
Four Months Before Start-up
- Name your business. Be careful in deciding on a name and be aware that someone may already be using the name. Have a few back-up ideas. You can check to see if a name is being used by contacting the Georgia Office of the Secretary of State.
- Make a final selection of the business location. Make sure that the location you choose is within your budget and also fits into your business plan. Cheaper rent may cost you more in the long run. Remember: Location, location, location.
- Select outside advisors. This will be a very hectic time. It will be beneficial to have people you can call on to listen to your ideas, problems, and plans and provide feedback. These people should be able to provide you with guidance, constructive criticism, and feedback. They should be people experienced and knowledgeable in business.
- Set up a network of mentors. Select people who can help you by giving you insight and ideas.
Choose your business’ legal form. Will you be a partnership, sole proprietorship, or corporation? Legal form should be chosen very carefully as it can impact your business in many ways.
- Set up bookkeeping, accounting and office systems. How are you going to operate your
office? If you are going to keep your own books, make sure your skills are adequate. Will you need to hire a bookkeeper or bookkeeping firm?
- Seek outside demographic information on your targeted customer base. Gather secondary information. Continue working on your business plan.
Three Months Before Start-up
- Determine your cash needs. How much money do you need for your start-up? What will be your monthly variable and fixed costs? What is your break-even point? These are all questions that must be answered. You must estimate your cash flows.
- Review preliminary financial objectives. How much profit do you expect to make? Are you planning on making investments? What is your intended cash flow?
- Decide on your pricing strategy. After determining your variable and fixed costs, decide what your markup rate will be. You will also need to consider demand and competitive factors in setting your price.
- Forecast sales. Reconnect with the SBDC or others in your field to help you forecast accurately.
- Determine your company’s employee needs. How many people do you need on your staff? This is important to decide as it effects your requirements for insurance, cash flow, etc.
- Project your cash flow. Write out an estimated statement of all revenues and expenditures. This statement should cover one calendar year. Also project your net cash flow for the entire year.
- Have a logo designed and begin preparing your letterhead, envelopes, business cards and other collateral as needed.
- Begin a website design and purchase a website hosting plan.
- Continue working on and refining your business plan
Two Months Before Start-up
- Prepare your marketing plan. How are you going to market your product and how much will it cost? Are you going to use publicity? Are you going to use paid advertising? You must decide how you will go about introducing your business to the public.
- Get your business license. (See Occupational Tax)
- Review non-financial objectives (public image, legal questions). How do you want the public to see your business? Are you a family establishment or geared towards adults?
- What form is your business taking? Do you have all legal documents needed?
- Prepare a preliminary balance sheet. Contact the SBDC again for assistance.
- Secure necessary financing. Whether through a private lender or through other sources, you must obtain the necessary amount of start-up capital.
- Secure insurance coverage if applicable. (See Labor/Safety)
- Determine advertising, promotion, and public relations strategies.
- Order opening inventories. Talk to your suppliers for estimated opening needs.
- Complete improvements to your facility or home office.
- Start your hiring process. (See Labor/Safety)
- Refine your business plan.
It is suggested that you not proceed with the following steps unless you have received a firm commitment for all necessary funds.
One Month Before Start-up
- Fine tune your cash flow budget.
- Schedule and prepare for your grand opening. The Walker County Chamber of Commerce can be of assistance in planning your event. Be creative but practical.
- Send out invitation utilizing your new logo.
- Consider delaying your official grand opening/ribbon cutting until you have been in business for a couple of weeks. This will give you a chance to work out all of the “kinks” and make sure things are running smoothly.
- Set up your office, display areas, etc. Have everything exactly as you want it. The last few days before opening are not the time to do this. The look of your store or office sets the tone for your business. You should put thought and time into it.
- Review your final checklist.
- Hire your staff. (See Labor/Safety)
- Make sure everything works. It is better to find out that your equipment does not work in advance. In that case, you can make any necessary repairs and be ready to open your doors on time.
- Join the Chamber of Commerce to ensure your business is seen by others. The Chamber will publish your new information as well as a picture of your ribbon cutting in its bi-monthly magazine Chamber News.
- Make plans to attend upcoming membership luncheons. Remember: Word of mouth is your most powerful publicity! It’s also the least expensive, so start spreading the word!
- Implement marketing, promotion, and opening plans. This will be a good time to start advertising in local newspapers, radio, and television if your budget permits.
Start-up and After
- Budget your time. As a new business owner your time will be precious. Schedule your time wisely. It is important to get the maximum out of time you have available. You might consider reading some time management materials or speaking with someone who you think manages time wisely.
- Continuously update your product/service. What is good about your product? Make it better. What doesn’t work with your product? Eliminate the problem as much as possible. If people patronize your business for the original product, an improved product can only increase that.
- LISTEN to your customers, advisors, and vendors. The customers are your cash flow. It is important to gather their opinions and put them to use. Their ideas can be helpful in updating your product. LISTEN to your advisors. You asked them to advise you for a reason. Let them guide you. LISTEN to your vendors. These vendors have been in the business much longer than you have. They can possibly provide you with money-saving or money-making ideas.
- Check cash flow budget against actual performance.
- Maintain good communications with your bankers and vendors. By keeping the lines of communication open you are helping yourself. Should you need their help in the future, you will be more likely to receive it.
- Continue to improve the 5 C’s of credit (Character, Collateral, Capacity, Capital, and Condition).
- Work with investors. Make sure you are in contact with them. Make sure that you understand the conditions of your repayment.
- When are payments due?
- Make sure you fulfill all obligations to investors. You may need to call them again someday.
Check cost of living budget. If you are drawing money from the company for living expenses, be sure to take only what is necessary. Stick tightly to your budget.
- If you have delayed your grand opening or ribbon cutting, consider hosting it now.
Your Business Plan
A business plan defines your business in precise terms, identifies your specific goals, and serves as your firm’s resume. The basic components of a business plan include:
— An introduction and overview of the business
— The skills and experience of the business owner
— Details on the products or services offered
— An analysis of the potential market for those products or services
— Specific information that sets the business apart from the competition
— Information on how the public will learn about the business
— An income statement and cash flow analysis for the business
— Details on how the business will be managed on a day-to-day basis
— A summary of why the business is likely to be successful
The business plan helps you organize your thoughts and plans for the business and requires you to formalize and commit to those plans. It helps you allocate resources properly, handle unforeseen complications, and make good business decisions, while staying focused on the entity’s goals. The plan can also be used to inform sales personnel, suppliers, and others about your operations and goals and portray your professionalism.
Business plans are used to keep invested parties (yourself, your partners and/or investors) informed about the company’s operations and goals. Perhaps most importantly, a business plan will be a crucial part of any business loan package. It provides specific and organized information about the company and can explain how a loan will eventually be repaid.
The following outline provides more details of a typical business plan and can serve as a guide. You should adapt it to your specific business. Breaking down the plan into several components helps make drafting it a more manageable task.
- You should give a detailed description of the business.
- Outline the business goals.
- Discuss the ownership of the business and provide the legal structure.
- List the skills and experience that you personally bring to the business.
- Discuss the advantages you and your business have over your competitors.
- Discuss the products/services offered.
- Identify the customer demand for you product/service. Who will buy it any why?
- What are your sources for this information?
- Identify your market, its size and locations. How far will people come for your service?
- Can they buy it online? What are the ages, income ranges or other demographic information of your primary customer? Is your primary customer male, female, retired, teenaged, rich, poor, educated, uneducated, a veteran, a homeowner? Do they drive a car? Do they go to a gym? Define your customer and determine how many of those potential customers are in your area.
- Explain how your product/service will be advertised and marketed.
- Explain the pricing strategy. How much will you charge and why?
Explain your source of initial funding and the amount of the initial equity capital.
Develop a monthly operating budget for Year One.
Develop an expected return on investment & monthly cash flow for the first year. If someone lends you money, how soon will they be paid back?
Provide projected income statements and balance sheets for Year One and Year Two.
Discuss your breakeven point. At what point will you have recovered your own initial investment in the business, and at what point will other funders recover their investment?
Explain your personal balance sheet and method of compensation. How will you pay yourself? How often and how much?
Discuss who will maintain your accounting records and show they will be kept.
Provide “what if” statements that address alternative approaches to any problem that may develop.
Some lenders may ask that you provide a tax return for the previous year.
(Templates for these financial statement may be found at https://www.score.org/content/browse-library)
Explain how the business will be managed on a day-to-day basis.
Discuss hiring and personnel procedures. How many employees do you need? Will they be full time or part time?
Discuss insurance, lease or rent agreements, and other issues pertinent to the daily operation of your business.
Account for the equipment necessary to produce your products or services.
Account for production and delivery of your products and services.
Summarize your business goals and objectives and express your commitment to the success of your business.
Once you have completed your business plan, review it with a friend or business owner/mentor. Make an appointment to review it with the local representative of the SBA.
When you feel comfortable with the content and structure, make an appointment to review and discuss it with your lender. The business plan is a flexible document that should change as your business grows.
There are many online sources that can also guide you on your business plan. Some of these include:
Common weaknesses in a Business Plan
Appalachian Community Enterprises offers the following suggestions as to what will make a business plan, as part of a loan application, weak. Do not let any of these happen to you!
1. Typos and spelling errors.
Your plan doesn’t have to pass muster with an English teacher, but it should be presented professionally. Spell check and have a friend proof the final version of the plan carefully.
2. Unrealistic cash flow projections.
Credible financial forecasts are very important. Be conservative with your estimates. Use footnotes to show how you arrived at those figures. Don’t underestimate the difficulty in growing a business. Remember to include an owner’s draw in your projections. Ask for help.
3. Unidentified competition.
Every business has competition. If you say yours doesn’t, look again. Sometimes competition is not a literal business but a competing concept in the larger marketplace. For example, you may own the only dry cleaning
business in town, but if the trend is higher for at-home dry cleaning methods then your business could suffer.
4. Unidentified market niche.
If you say your product or service is for everybody, think again.