Getting Started in your own Business Five main areas of focus: Planning, financing, marketing, managing employees, accounting Businesses fail due to: Lack of planning or marketing Unrealistic financial expectations Wrong business partner Lack of business knowledge See Learning Objective 5: Describe the five main areas of focus when starting a small business. See text page: 160 Getting Started in your own Business There are five main areas of focus when stating a small business: Planning Financing Knowing customers Managing employees Keeping records This section will address each of these areas and provide insight into how you can begin your own business! Businesses usually fail due to one of the following reason: Lack of planning Lack of marketing Unrealistic financial expectations Wrong business partner Lack of business knowledge

Getting Started in your own Business Planning Business plan Executive summary Intrapreneuring Financing Venture capitalists Angel investors Small Business Administration (SBA) See Learning Objective 5: Describe the five main areas of focus when starting a small business. See text page: 160-163 Getting Started in your own Business Planning It is amazing how many people are eager to start a small business but have only a vague notion of what they want to do. A business plan is a detailed written statement that describes the nature of the business, the target written statement that describes the nature of the business, the target market, the potential for customers, the advantages the business will have in relation to competition, and the resources and qualifications of the owner(s). A business plan forces potential owners of small businesses to be quite specific about the products or services they intend to offer, which helps them get their feet on the ground in a realistic way. A business plan is also mandatory for talking with bankers or other investors. The executive summary has to catch the reader’s interest, as it is usually an overview of the business in the first few pages of a business plan that may be all potential investors ever look at. Finding funding requires research. Finding money is of course one of the major factors when starting a business. Before we discuss the funding part of entrepreneurship, it is important here to mention intrapreneuring, which may be described as a kind of internal or ongoing entrepreneurship once the business gets rolling, and how necessary it is once an entrepreneur starts to grow his or her business. In other words, in intrapreneuring, an entrepreneur is constantly finding ways to improve and expand his or her business. Financing An entrepreneur has several potential sources of capital: personal savings, relatives, former employers, banks, finance companies, venture capitalists (a person or investment company that loans money to businesses), and government agencies such as the SBA. There are also angel investors. Angel investors are individuals, usually wealthy, who invest their own money in a business for a share of the company. Angel investors are different from venture capitalists, in that venture capitalists usually invest other people’s money, while angel investors invest their own funds. The Small Business Administration (SBA) is a U.S. government agency that advises and assists small businesses by providing management training, financial advice, and loans. Rather than base the awarding of loans on collateral, credit history, or previous business success, these programs decide worthiness on the basis of belief in the borrower’s integrity and the soundness of their business idea. A venture capitalist is a company that has money to invest in small and large businesses.

Getting Started in your own Business Knowing Your Customers (Marketing) Know and fill market needs Managing your Employees Small company employees more satisfied Recruit and groom Record Keeping Effective systems save grief More time to focus on business Computers simplify process See Learning Objective 5: Describe the five main areas of focus when starting a small business. See text page: 163-168 Getting Started in your own Business Knowing your Customer (Marketing) One of the most important elements of small-business success is knowing the market. In business, a market consists of people with unsatisfied wants and needs who have both the resources and the willingness to buy. Once the market and its needs have been identified, you must set out to fill those needs. The way to meet customers’ needs is to offer top quality, at a fair price, with great service. One of the greatest advantages that small businesses have over larger ones is that ability to know their customers better, and to adapt quickly to their ever-changing needs. Managing your Employees As a business grows, it becomes impossible for an entrepreneur to oversee every detail, even if he or she is putting in 60 hours per week. It is not easy to find good, qualified help when your offer less money, skimpier benefits, and less room for advancement than larger firms. Employees of small companies are often more satisfied with their jobs than are their counterparts in big businesses. Quite often they find their jobs more challenging, their ideas more accepted, and their bosses more respectful. Sometimes the experience of operating family businesses can cause deep-rooted problems in families, which is why the relationship as a family member should be kept as separate as possible from the relationship as a business colleague. Entrepreneurs can best serve themselves and the business if they gradually recruit and groom employees for management positions. Record Keeping Small-business owners often say the most important assistance they received in starting and managing their business involved accounting. A businessperson who sets up an effective accounting system early will save much grief later. Hiring an accountant allows the entrepreneur more time to focus on her occupation, rather than focusing on those things that may not be her strength. Computers simplify record keeping and enable a small0business owner to follow the progress of the business on a daily basis. A good accountant is invaluable in creating such systems and showing you how to keep them operating smoothly.