Starting a Small Business - Twelve Questions to Consider

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					Starting a Small Business - Twelve Questions to Consider
Here are twelve questions that you should consider when starting a new
business.
1. What is your product or service idea? Are you making a product or
delivering a service? What is the need in the market that you will
serve? This is the "what". If you can define the specific product or
service you want to deliver in a paragraph or two, it will help you to
focus on the "how". Try not to be too general. Instead of
"Photography" consider refining it to "In-home baby, child and family
photography" or some other more specific area. You can always broaden
it later.
2. What geographic area will you serve? If you intend to run a mail-
order business, you may not have geographic limitations. However, if you
have a product or service that is locally deliverable, such as a store,
restaurant or in-home service, a pin on the map will define where your
business will exist, but from what demographic areas will you draw your
customers? Will these demographics change during the week or year? If
you have a business where you travel to your customers, consider making a
map to clarify your served area. Draw a shape to enclose the area where
you want your primary market to be, from which you expect to get most of
your business. Make another larger one which would be areas you would
consider servicing but in which you would incur higher costs or longer
times to deliver your product or service. And then define the third
area, in which you may consider delivering services for a higher price or
other consideration.
3. What is your competition? Do some research. The phone book,
internet, chambers of commerce and personal contacts are all good sources
of information. Try to identify each of your competitors' strengths and
weaknesses, and think of ways you can operate your business that will
overcome their strengths and will take advantage of their weaknesses.
4. What skills are needed to operate this business? Think beyond the
actual craft or product. You'll need marketing, selling, customer
service, accounting and bill paying, web and computer skills and more.Â
beside these tasks and skills, note which things you do well and don't do
well. Be honest, and think about a plan that will either improve your
skills, or will bring into your business someone who can coach your or
will do these things for you.
5. What equipment or resources do you need? Again, thinking in terms of
three levels is helpful. First level, what do you need to barely
operate the business out of your home or a small space? You may have
most of all of these things now. You don't want to go into large debt
just starting your business, so keep this level "bare bones". Next
level, what would you need to establish a firm base for growth? That
may be better equipment, a better place, or more machinery. You can
take this list and make it your "grow as you go" list - as your sales
come in, you can divert those early profits to growing your business to
the second level without incurring additional debt. Third level, think
about if your business was making $1 million per year, or per month.Â
What would that business look like? That distant view may help you lay
a stronger foundation in the first two levels to support growth.
6. How will you enter the market space? Few businesses succeed without
an initial push. Do you have friends, relatives or local businesses
upon whom you can count to give you some business and exposure? How
about a press release and grand opening celebration? TV coverage is
good, as are reviews in the paper and online. You may want to think
about some initial marketing and advertising strategies to get your word
out there. Also think about the best time of year to start, where your
investment is most likely to generate sales and awareness.
7. How will you define and market your brand? Every business has a
brand identity. People will associate your brand in different ways.Â
Are you tailoring your product or service to a value market or upscale
crowd? Will your customers come from retail, commercial, government or
industrial areas? Naming your business and products will impact how
people perceive your business. Would you rather buy from "Joe's
Cheesecake" or "The Cheesecake Wonderland?"Â Describing your lower cost
offerings as "value-oriented" instead of "bargain" creates a completely
different customer impression.
8. What processes to you need to define and standardize? Regardless of
what you do, customers will expect you to do it the same all the time.Â
Consistency or the lack of it will very much impact how much repeat
business you receive. Some key processes are customer contacts (phone
answering, greeting), delivering the product, cleaning or preparing your
business, soliciting and accepting customer feedback, pricing and
specials, just to name a few.
9. What are your compliance obligations? Do you need to collect sales
tax? If so, how much and in what areas? How often do you need to
report tax and income? Do you have licensing and permitting to deliver
your product or service? Do you have medical or board of health
compliance requirements? Do you have to notify customers of any
potential risks? Are you required to have specific insurance coverage
or law enforcement clearances? Sometimes, a conversation with a similar
business owner in a non-competing market will open your eyes to
compliance issues that you did not originally know. You may also want
to talk about how to structure your business: Sole proprietorship,
partnership (lots of risk), Limited Liability Corporation (LLC) or other
structure. If you run a business from your home, there are tax,
permitting and zoning implications.
10. What pricing and policies do you want? Pricing will of course
affect your profitability. Make sure you can clear a profit after all
of your costs are covered. As a new business, you probably don't want
to be the highest or lowest price in your served area. Set prices too
high and you may not get any business. Price too low and you risk being
ignored by all but the most value-conscious customers, and being branded
as "cheap". Your policies will influence your customers' experiences.Â
Will you refund money? How do you handle scheduling, deposits and
cancellations? Will you accept credit cards or bill the customer? How
will you deal with past due accounts? Will you offer discounts, and if
so, to whom? Will you have employees? What policies do you need to
define for them?
11. How will you fulfill the customers' needs? Imagine the moment you
deliver your product or service to the customer. How will they receive
it? Will there be packaging or presentation technique that must be
followed? If you deliver a service, how will your appearance,
professionalism and quality of work be observed? Where will you obtain
your supplies or services? Can you get samples and make contacts at
trade shows or other venues to develop your supply chain?
12. How will you measure your success? Sales and profitability are just
two measurements of success. How about customer satisfaction? Will
you perform formal or informal surveys? Will it be obvious to you if
your customers are happy or not? What is their rate of referring you to
their friends and associates? If you don't know how your business is
doing from the outside, you can't fix it from the inside.
Don't let these questions intimidate you. Instead, use them to build a
more complete business plan, expose your weaknesses and highlight your
strengths.Â
To continue your business journey, consider joining a chamber of
commerce, industry group or web forum where other like-minded business
people can offer support and feedback. Good luck with your business!
John Huegel is a photographer in the Erie, Pennsylvania area who
specializes in Seniors, Dance Studio, Families and other groups. He is
active in many charitable and volunteer activities in the Erie area. His
work can be seen at http://jhphotomusic.com

				
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