Basic Small Business Start-Up Principles
by Tom Egelhoff
At long last the time has come to make a decision. You want to start your own business. Be your own boss. If that's the case, then you have to ask yourself one very important question. Are you really ready to open your own business? Have you done your homework or do you just have a business license?
In my opinion there are some "business ducks" that must be put in a row in order for you to, not only have a successful launch, but a long successful business life. The principles I'm going to talk about aren't the only ones you should consider but these should put you on the right track. Each business is different and each small town is different (although the experts don't want you to believe that). You will have to do some adapting as your business grows and prospers and as circumstances in your town change.
The Small Town Business Plan
If you were in Fairbanks, Alaska could you find Galesburg, Illinois without a map or asking for directions? Eventually you probably could but I would venture to say that it might take a long time. Your business plan is your map to success. It shows that exact route you need to take to make your business successful.
It will force you to define your competition, your products or services, how you will sell your product, suppliers and much more. Your plan may be a simple 10 page plan or it may grow to 50 or more. You can't have too much detail in a business plan.
The very nature of a business plan forces the new business owner to face a wide variety of challenges that they might miss in starting a new business. Need help to get started? Turn to your local S.C.O.R.E. (Service Corps Of Retired Executives) Office. They have 389 chapters in all 50 states, Puerto Rico, Guam, and The Virgin Islands. And, best of all there is no charge for their services. Contact the SBA (Small Business Administration) at 800-827-5722 or the national SCORE headquarters at 800-634-0245 to locate the SCORE office nearest you.
Controlling the Start-Up Costs of Your Small Business
For the first five years of your business, money is going to be an issue at one time or another. It takes at least that long for you to understand your customers, test your advertising, establish supply lines and perfect your business operation.
During this period you want to keep your business lean and mean but that doesn't mean don't spend any money at all. What it does mean is to take a little extra time in decisions involving cash outlay. If I spend this money how will my business benefit? Will it be an immediate benefit or will it pay off down the road? Do I have to do it now or should I wait three months... six months?
Relationships With Small Town Business Bankers
In my business I use two banks. Each one for different things. One bank is a home owned bank (very rare these days with all the banking mergers going on). The decisions at this bank are made locally by people who know me and I know them. They aren't made in a board room in some other city by people I'll never meet.
The second bank is a national chain. They are able to process the online credit card purchases of my book that come in from around the world. At the time I set up the web site the local bank didn't have that capability. There are also some advantages in having branches in other cities when I travel.
Another reason for multiple banks is competition. They can both compete for my business with incentives or "perks." Develop a good relationship with your banker now before you need it. Don't wait until hard times to start trying to borrow money. They will lend money much faster to those they know and have a good history.
Applying for Small Business Credit During The Start-up Period
I don't think I need to stress the importance of maintaining a good credit history with your bank. In fact I would recommend borrowing money even if you don't need it. The reason being that you need to develop that relationship that I spoke of in the above section. But even more important your business is going to grow over time and so will your monetary needs. We would all like to operate our businesses debt free but that's just not always possible.
Being able to borrow what you need when you need it may make the difference between success or failure or your business.
Keep Your Suppliers Informed
Your suppliers want you to succeed but they too need some assurance before they will grant credit or go the extra mile for you. If you are written up in the newspaper send them a copy. Let them know of your successes. These little victories will go a long way in developing a positive working relationship with these folks.
On the other side of this coin make sure you check prices periodically to keep everyone honest. Try and negotiate a price based on what you will purchase in a year rather than order by order. You may need to develop a track history with them before they will allow this.
Customer Feedback Is Critical
During the start-up period you have got to be sure that you are satisfying customer needs. Try and ask customers everything. "How did you hear about us?" "What are we doing right?" "What are we doing wrong?" "How's our quality?" "How were you treated in our business?"
In a small town, people are going to talk about your business. What they say will determine the perception of your business. See: How To Promote Your Business By Word of Mouth." It doesn't take long to acquire a negative perception and even longer to reverse it. In fact, you may never completely reverse it.
Make sure you create ways of generating feedback from customers as soon as you open the doors.
Create A Positive Track Record Within Your Small Business
One of the problems with a new business is that you don't have any numbers to compare your business to. You can't look at what you did last year because you weren't in business last year.
I recommend a series of short term attainable goals. Set daily, weekly and monthly sales goals and work toward improving those numbers. This will give you a measurable yardstick to evaluate and grow your business.
I keep track of book sales of course but the other thing I do that I feel leads to the success of those sales is setting daily goals. For example: Every day I try to do one thing that will help my business grow. I make a phone call, write a letter or press release, send an email or make some contact to let just one more person or persons know about this site.
The Last Word On Basic Small Business Start-Up Principles
A new business is like a small child. At first you have to do everything for them. Feed them, change their clothes, etc. But as time goes by they learn to do these things themselves. Before long they are pretty self sufficient and don't need as much help from you.
For at least the first five years you are going to have to babysit your business to a great degree. This is the critical time for most new businesses. According to Dunn & Bradstreet at least 85% of all business start-ups fail in the first five years. Mostly from cash problems or poor management.
You can avoid both by creating a sound business and marketing plan and taking good care of your financial status. (See: Financial Statements: How To Read And Profit From Them) Keeping your head above water often requires a lot going on beneath the surface.
Return to the "How to Start a Business" Directory
Top : Home
Listen in on Tom's weekly radio show "Open For Business" on AM 1450 KMMS Radio, Bozeman.
Have a business question for Tom? Click here to get Tom's advice for free.
Stay up to date on business issues. Join Tom's Blog.
This article may be reproduced for your non-profit group or organization provided it is not altered in any way and the following is attached:
Used With Permission
© Eagle Marketing PO Box 271, Bozeman, MT 59771-0271
http://www.smalltownmarketing.com - (406) 585-0219 - Toll Free (888) 550-6100
Based in Bozeman, MT, Tom Egelhoff is the author of How To Market, Advertise & Promote Your Business Or Service In A Small Town, and The Small Town Advertising Handbook: How To Say More And Spend Less. He is also a seminar and workshop presenter and trainer. He may be reached at 888-550-6100 or PO Box 271, Bozeman, MT 59771-0271
Would you like Tom Egelhoff to speak at your business function or convention?
Click here for information, topics and pricing.
Top : Home