5 Tips When Planning a Small Business

Having been your small business consultant for many years, I've come across a huge selection of individuals starting out independently with the dream of utilizing a particular trade or knowledge to build their own business. Several individuals have impressed me making use of their genuine passion to succeed, but have lacked the simple business theory had a need to become successful. Below I have listed 5 ideas to planning a small business, which include expectations, timing, capital, knowledge and risk/rewards.

Expectations:

When opening your small business it's important to first set up a realistic revenue goal and then divide that goal by 3. For instance, if you're checking a restaurant and expect sales to begin at $24,000 monthly, count on $8000. The main mistake I've encountered with new businesses is really a gross exaggeration of just how much revenue a new business provides in its first couple of months of business. This is often because of businesses estimating their revenue based on other comparable firms operating in your community at that time. As you may have guessed, an estimation of the sort fails to take into account the good will and established clientele those firms have developed over many years.

Don't get swept up in the hype. I cannot tell you just how many times I've had a glass or two with a new business owner and have paid attention to discussions of checking their first store, but then quickly growing into multi-store chain. Before you can grow, you must first succeed. I'm not saying to curb your dreams, but keep centered on your first store or business!

Remember that in nearly every business you obtain into, you will see competition. These competitors, like everyone else, want to gain market share and lure customer's money into their pocket as opposed to yours. Even if there's very little competition when you begin, be aware firms will enter the marketplace eventually and steal business if it's perceived money could be made. Research how you will sustain your competitive advantages as the pieces of the pie get smaller.

In the current economic crisis facing our country, be certain you have the ability to gather enough cashflow away from your competitors to satisfy your basic financial needs. This boils down to just how much research you did in your market and how strong your business model is. Again don't get caught up in the hype to become rich, but rather spend your time more wisely planning never to fail. Remember most companies are out of business within three years.

Just to illustrate, if your truly want to achieve success spend just as much time as possible researching and better understating how you plan to get someone's dollar in your pocket. Plan to succeed, but review every scenario and establish answers to ways you should possibly fail. Keep focused!

Timing:

Timing is everything when opening a new business. Industries which have been hot over the past 5 years could grow cold for the next 5. With an economy taking a recessionary track without a clear result in sight, analyze if your product or service is a need or perhaps a want. If times are tough families may rent a movie rather than going to the theater, cook at home rather than venturing out to a restaurant and so forth. Is the market you're entering saturated with businesses left from the booming market making profit opportunities extremely difficult? By researching trade magazines, which are available for most industries, you can find out rapidly what the current trends are and how healthy it really is. A fascinating characteristic of timing can be your business may have succeeded better 2 years before you plan to start or perhaps 2 years into the future. Be cautious with your home based business as there is a time and place for everything.

Capital:

Another pitfall and the kiss of death for some companies is not getting the capital resources to survive. Believing that your company will become profitable within the first 6 months is frequently not realized. With any home based business, you need to gain market share from your own competition and that does take time and money. Making just a couple of mistakes with your business model or research data can create a catastrophic chain reaction or even anticipated and accounted for.

Give yourself at least per year of resources to make it through the mistakes and learning curves you will come across, which includes enough money to cover your fixed cost as if you earned no income from the business at all. It is a very vague rule and often involves a large amount of cash, but you get the idea as you will need time to maneuver. As the saying goes if you ever want to see time fly, sign a retail location lease. The initial of the month appears to creep up almost every other day.

Knowledge:

Are you knowledgeable about the business enterprise you're starting? I always recommend that you have worked in the industry you're getting into for at least 5 years and so are fully competent in the major areas of that sector. Engaging in a particular business sector your unfamiliar with is often a path for destruction. Again there is absolutely no substitute to value of time and experience gained through practical application.

Given that you're knowledgeable, are you aware how to manage yourself and others? Do you know how exactly to sell? These are other issues that appear as your work environment and capability to persuade others to execute your vision is essential to success.

Risks and Reward:

A question to ask yourself when contemplating a fresh business is excatly why you're doing it. Opening up a new business not only requires capital, but also requires huge amounts of hard work on your part. Avoid being surprised if you're required to work over 70 hours per week for an indefinite amount of time before you're able to take a break. What is the earnings potential of one's business? Instead of spending thousands of dollars and hours you will ever have developing a new business that could ultimately fail, just how much can you earn working for an established business by means of salary or commission? I've seen lots of business owners work seven days a week making less overall than they could doing work for a more established company. Of course you may grow your business over time right into a large more profitable company, but at what cost to your friends, family and most importantly your own sanity. Remember the rewards of an effective business can provide your family with unimaginable riches, but these success stories are few and far between.

Conclusion:

The purpose of this article isn't to scare anyone from fulfilling their dreams of owning a small business, but to add some insight in to the pitfalls that occur frequently with new start ups. For me the most effective feelings on the globe is running a successful business that grows over time and allows you the flexibility and financial freedom to call your own shots. I hope by reading this you may add these suggestions to a long list of ingredients to opening your own successful small business!

Author Mark Sanders continues to consult smaller businesses on ways to improve their business model and efficiency. Additional info can be part owner of Levita Fashion Jewelry, a new make of jewelry distributed nationwide and operating in Tamarac, FL. You might reach Mark Sanders with questions or comments at sales@levitaonline.com or the comment box of his website