6.3Starting a

Small Business

Starting a Small Business

• Every business begins with an idea– Hobbies, interests, old jobs

• Small business owners need special skills– Decision making and management skills– Gained from experience

• Finding the right place

Team Approach

• Owners are often independent…BUT

• It is difficult to run a business alone– Cover extended hours & help grow

• Each member brings specialized skills

Preparation & Research

• Most important step is PREPARTION

• Owner needs information:– Customers & competitors – Important operations– Government regulations

• Can be found at libraries, universities, small business assistance centers

Developing a Business Plan

• Business Plan - written description of the business idea and how it will be carried out, including all major business activities.

• Most plans are developed for one year and then updated the next.

• It serves as a guide to keep the business on track

Elements of Bus. Plan

Description of Business

The business ideaMajor products and servicesOwnership structureStrengths / weaknessesLong- and short-term goals

Customer Analysis

Description of customersLocation, number, and resources of customersSales forecasts

Operations Plan

Organization of the companyDescription of major operationsAnalysis of resources neededHuman resource plans

Marketing Plan

Description of major marketing activitiesDescription of resources neededSchedule of marketing activities

Financial Plans

Start-up costsShort- and long-term financial needsSources of financingBudgets and financial statements

Description of The Business

• Description of the business– Business idea and main products/services– Ownership structure– Strengths & weaknesses– Long & short-term goals

Customer Analysis

• Customer Analysis– Description of customers– Demographics of customers– Sales forecasts

Operations Plan

• Operations Plan– Organization of the company– Describe major operations– Analysis of resources needed– Human resource plans

Marketing Plan• Marketing Plan

– Describe major marketing activities– Schedule of marketing activities

• When, where, and how often?– Promotions– Social media?

• Facebook• Twitter• LinkedIn• Instagram• Snapchat

Marketing Activities• Advertising

– Commercial (radio & tv) (Ad in paper)– Flyers (direct mailed or posted in public)– Word-of-mouth– Giveaways: notepads, pens, magnets, etc.

• Promotions– Coupons, special (pricing)

• Events– Grand opening– Contests, sweepstakes, raffles

Financial Plans

• Financial Plans– Start-up costs– Short & long term financial needs– Sources for financing– Budgets– Financial statements

Steps in Developing Business Plan

1. Gather & review information

2. Develop strategic alternatives• Back up plans for manufacturing, marketing,

staffing, and financing

3. Write out each section of the plan.

Financing

• Start-up financing – needed to open

• Short-term financing - $$ needed to pay for current operating activities

• Long-term financing - $$ needed for the main resources of a business– Land, buildings, & equipment

Sources of Financing

• Owner’s own money – personal savings

• Borrow– Friends and family– Banks & credit unions

• Corporations are owned and financed by shareholders

Offering Credit

• Companies may offer credit if they are financially stable

• Be careful about accepting credit though…

• Take into account:– Cost of the credit– When payments are due