After the beginning of every year, it seems that our office gets quite a bit busier. Perhaps starting a business has become a more popular resolution for the New Year, or perhaps people see it as the right time to get started. Whatever the case, we field more telephone calls and see more new clients in the first three months of the year than any other.
When starting a new business, the number one reason cited by the Small Business Administration is the poor planning. You have heard it often enough from me that preparing a strong business plan is a vital component of new business’ success.
So, to all of you who may also be thinking about entrepreneurship, here are five things to think about when putting your plan together.
First, begin generally. It’s okay to start with rough estimates on things like start-up costs, monthly revenues and monthly revenue expenses. A good exercise is to write a list of one-time start-up costs. Continue with broad estimates of your sales for the first twelve months and then follow with estimates of your monthly expenses. If the numbers seem feasible, then you know you have a base from which to start and will also find renewed interest in pursuing this goal.
Second, don’t complicate things. Many clients put off writing their plan because just the idea of it is daunting enough. But it doesn’t need to be complicated or perfect. As with any other large project, start by breaking it down into smaller, manageable pieces. Remember, there really is no right or wrong way to begin. You don’t do it in any special order. Start wherever you want and work on it as long as it helps you manage.
Third, don’t go it alone. There are numerous resources and experts to help you get started. You can attend a program; work with a mentor; avail yourself of the oftentimes free business advising services through educational, non-profit and government entities; or use one of the many of the online tools. There are plenty of resources at your disposal. Trying to do it all by yourself can just be an exercise in frustration.
Fourth, talk with your banker. Don’t just meet with a banker when you are looking for money. Your commercial banker can be a wealth of knowledge and can help guide you to options you may not have considered. Additionally, you want to ensure you have enough funds to begin with. Using all of your own money, whether it is your savings or personal finances, can have a detrimental effect on the business. It’s hard to get financing once you’ve run out of money. Make sure you have enough capital to withstand any unforeseen challenges or longer periods of time between reaching specific financial goals.
Finally, don’t forget about the marketing. The marketing plan tells everyone, including you, how you are going to make money. Revenue generation is the expectations of the marketing plan. By clearly showing how your business will make money and pay its bills, you can assess the success of the organization. It’s an important component that is frequently overlooked and can lead to problems down the road.
Here is one more, a freebie, if you will, as you continue your plan. Don’t let that first “no” stop you. Don’t even let the fifteen after that stop you either. Do not get discouraged if a banker or other investor turns you down. Learn from them and fix what the problems may be. Many things that might lead to a denial — such as incomplete financial information or lack of collateral or even lack of experience – can be fixed.