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Starting a business is risky. According to US Small Business Administration (SBA) records, 20% of startups fail in the first year, 30% fail within two years, and 50% fail within five years. A solid business plan can greatly reduce and help with this risk.
There’s an old saying, “If you don’t know where you’re going, any road will get you there.” Creating a complete business plan is an important step in starting a business.
The US Small Business Administration reports that businesses with a written plan grow 30% faster than those without a plan. The following steps can improve your chances of success.
Describe your business.
Write a vision and mission statement. What are your products and services?
Choose a legal structure.
This is one of the most important questions to answer when planning to start a new small business. The structure you choose affects everything from paying taxes to allocating liability, from raising capital to sharing profits. Each type of structure has trade-offs that should be fully understood and reviewed with legal and tax professionals.
Determine your target market and choose the specific areas you want to serve.
Think about which groups will benefit the most from your business. This should include demographics and geographic location.
Find potential customers, competitors and suppliers.
Databases such as A-to-Z Databases, http://atozdatabases.com/home have detailed searchable information. All it takes is a library card from a library in Berks County http://readingpubliclibrary.org/. For additional information and assistance, contact the Reference Department in the Main Library at Reading 610-655-6350. Some government data sources include the US Bureau of Labor Statistics https://www.bls.gov/; and National Bureau of Economic Research, https://www.nber.org/.
Prepare a detailed marketing plan and budget for each of your target markets.
This is a critical step because many businesses that fail don’t fail because they don’t know how to make their product or service, they fail because they can’t get enough orders.
Create a network of people who can help you in your business.
Some local organizations that can help: Greater Reading Chamber Alliance https://greaterreading.org/; PA Small Business Development Centers https://www.pasbdc.org/; Berks Launchbox, https://berkslaunchbox.psu.edu/; and Small Business Resource Association, https://www.sbrassociation.com/ Berks and Schuylkill County’s SCORE website https://berksschuylkill.score.org/startup-resources has many resources for entrepreneurs looking to start a business.
Make sure you get appropriate professional advice.
Use the checklist “BLAAIME” to make sure you haven’t missed a key area. B is a banker, L is a lawyer, A is an accountant, I is an insurer, M is a consultant and E is an e-commerce. It is important to comply with local laws and regulations and keep the necessary records, especially for tax purposes.
Provide a monthly financial forecast of all income and expenses so that you can see how both your profits and cash flow are shaping up.
Include a line that some unexpected and unknown expenses will almost certainly arise. Decide how to get the capital needed – whether it comes from savings, friends and family, other investors or a bank loan.
SCORE is a strong believer in a written business plan, and encourages clients considering a startup to make this a critical priority – offering a workbook to help guide them through the process. Some clients approach SCORE thinking that we are consultants writing plans for them. SCORE Consultants are advisors, not advisors, and believe it’s important for clients to write the plan themselves so they can truly “own” it. SCORE advisors go through the process with them and help them query, correct, correct, expand and find appropriate professionals such as lawyers and accountants.
To gather some ideas on business plans, visit https://www.bplans.com/ to view professionally prepared business plans.
Here’s a short quiz to help give you some insight into how strong your entrepreneurial aspirations are. Find that question at http://www.nmu.edu/sites/Drupalceee/files/UserFiles/Files/Pre-Drupal/SiteSections/MarketplaceProgram/how_entreprenuerial_are_you.pdf.
SCORE is a 10,000-volunteer arm of the U.S. Small Business Administration (SBA) that provides confidential, unrestricted, free business advice and support to entrepreneurs starting small businesses.
Burke’s Schuylkill Reading Chapter began in 1965 and has more than two dozen business owners and executives dedicated to helping small businesses start and grow. SCORE consultants understand the needs and challenges of doing business themselves.
For a confidential evaluation and business planning assistance, schedule an appointment with a local consultant by visiting https://www.score.org/# or call the SCORE Berks Schuylkill Counties Reading Chapter at 610-376-3497; 610-327-2673 for SCORE TriCounty Chapter in Pottstown; or 610-344-6910 for SCORE Chester Delaware Counties Chapter.
Willis Canaley is an advisor to the SCORE chapter of Berks and Schuylkill.
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