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 Bus. Plan Description of Business The business idea Major products and services Ownership structure Strengths / weaknesses Long- and short- term goals Customer Analysis Description of customers Location, number, and resources of customers Sales forecasts Operations Plan Organization of the company Description of major operations Analysis of resources needed Human resource plans Marketing Plan Description of major marketing activities Description of resources needed Schedule of marketing activities Financial Plans Start-up costs Short- and long- term financial needs Sources of financing Budgets and financial statements

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

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

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

Marketing Plan –Describe major marketing activities –Schedule of marketing activities When, where, and how often? –Promotions –Social media? Facebook Twitter LinkedIn Instagram Snapchat

Marketing Activities Advertising –Commercial (radio & tv) (Ad in paper) –Flyers (direct mailed or posted in public) –Word-of-mouth –Giveaways: notepads, pens, magnets, etc. Promotions –Coupons, special (pricing) Events –Grand opening –Contests, sweepstakes, raffles

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

Steps in Developing Business Plan 1.Gather & review information 2.Develop strategic alternatives Back up plans for manufacturing, marketing, staffing, and financing 3.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