6.3 Starting a Small Business

Starting a Small Business Every business begins with an idea Hobbies, interests, old jobs Small business owners need special skills Decision making and management skills Gained from experience Finding the right place

Team Approach Owners are often independent…BUT It is difficult to run a business alone Cover extended hours & help grow Each member brings specialized skills

Preparation & Research Most important step is PREPARTION Owner needs information: Customers & competitors Important operations Government regulations Can be found at libraries, universities, small business assistance centers

Developing a Business Plan Business Plan - written description of the business idea and how it will be carried out, including all major business activities. Most plans are developed for one year and then updated the next. It serves as a guide to keep the business on track

Elements of a Business Plan...

Description of The Business Business idea and main products/services Ownership structure Strengths & weaknesses Long & short-term goals

Customer Analysis Customer Analysis Description of customers Demographics of customers Sales forecasts

Operations Plan Operations Plan Organization of the company Describe major operations Analysis of resources needed Human resource plans

Marketing Plan Marketing Plan Describe major marketing activities Schedule of marketing activities Promotions Social media?

Financial Plans Financial Plans Start-up costs Short & long term financial needs Sources for financing Budgets Financial statements

Steps in Developing Business Plan Gather & review information Develop strategic alternatives Back up plans for manufacturing, marketing, staffing, and financing Write out each section of the plan.

Financing Start-up financing – needed to open Short-term financing - $$ needed to pay for current operating activities Long-term financing - $$ needed for the main resources of a business Land, buildings, & equipment

Sources of Financing Owner’s own money – personal savings Borrow Friends and family Banks & credit unions Corporations are owned and financed by shareholders

Offering Credit Companies may offer credit if they are financially stable Be careful about accepting credit though… Take into account: Cost of the credit When payments are due

Use this information to continue work on your own business plans!