The Successful Business Plan - Part 1

2008-01-15T20:53:00.000-07:00

Starting Your Own Business

Operating a successful business of your own can bring a sense of independence, an opportunity to use your own ideas, be your own boss and many other satisfactory benefits. You can't be fired. You will have an opportunity to earn a greater income because you can earn a salary plus a return on the money that you used to start your business known as return on investment. You will experience pride of ownership. You can achieve the great satisfaction of building a valuable investment for your future.

As a small business owner, you naturally are an entrepreneur (risk-taker). As owner you will wager your business acumen against larger, very likely, more heavily financed business organizations and other free spirited, self-employed individuals like yourself. There will be excitement, and, many challenges in such a venture.

To succeed you will need:

Good management skills
The ability to manage people
Excellent product knowledge
Inner strength to be decisive to make many informed decisions
Starting capital
A market for your goods and services

By operating your own business you can adopt new ideas quickly. If an idea doesn't work, drop it just as quickly. This opportunity for flexibility will be one of your greatest assets.

Some challenges to overcome (cash flow).

The above are some of the advantages and pleasures of operating your own business but let us take a look at the challenges you will need to overcome.

Having employees means you will need to meet payroll week-in and week-out as well as associated payroll taxes. If you choose to purchase goods and materials on credit from suppliers, you must have money to pay those creditors on time. If they are not paid in a timely fashion you may find your business without suppliers. When you are in the start up phase, you will need to make a list of the office equipment and furnishings, project tools, equipment and vehicles which must be purchased. On time payments not only give you peace of mind but in the words of an old saying "a good name is to be chosen over riches."

Here are just a few other monthly cash outlays you will need to consider:

Advertising
Rent or mortgage
Phone
Bookkeeping expenses
Office supplies
Vehicle expenses
Utilities

You must accept sole responsibility for all decisions. A bad decision can result in losses not only to yourself, your employees, creditors but your customers as well. Moreover, you must withstand (many times alone) adverse situations caused by circumstances beyond your control. Do you have the stamina?

Some examples of uncontrollable circumstances:

Depressed economic conditions
Financially stronger competitor
Change in legislation
Declining population
Overall poor business conditions
Relocations of highways
Sudden changes in employees life style
Replacement of existing products by new products
Local labor situations

To overcome these challenges and keep your business profitable means long hours of hard work. This is most critical in the early years of your business. Although you will be sole owner of the business, you will not be entirely your own boss. No matter what business you choose, whether new construction, remodeling, plan and spec, design/build or service business, customer satisfaction is of utmost importance. Customer satisfaction alone will take up a great deal of your time and will determine your long term success.

Occupational safety and health administration (OSHA) and state insurance requirements will demand that your business follow their regulations. You will be required to abide by wage and hour laws and keep records in accordance with federal and state tax laws. This can mean an outlay of cash that was not foreseen.

What are my chances of success?

One of the largest single causes of business failures is attributed to poor management. There are factors over which you have little control that can affect your business, but in the final analysis, your management skills are in your direct control and there is no adverse condition which you cannot overcome with shrewd management. It is up to you. Business management courses are available at local colleges and universities. SCORE has programs and workshops to give you plenty of start up advice. Self help books proliferate bookstore shelves. Will you take the required time to improve your management skills? Will you be able to satisfy your customers? Can you do this efficiently so the risks that are beyond your control will be more than compensated for? This accomplishment requires expert management. Will you become self-educated in business management?

(stay tuned for Part 2)

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The Successful Business Plan - Part 1