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MINDING OUR OWN BUSINESS August 9, 2003 by Linda Hirvonen Delta County Economic Development Alliance Starting Your Own Business The sun is out, the stock market is edging back to comfortable levels, interest rates are low. We’re waiting for consumer confidence to catch up, both business consumers and the public. But forward thinkers are also starting to look into starting or buying a business. Therefore, this is a good time to review some basic questions that should be answered if you are thinking about starting your own business. First question: what’s your plan? Yes, of course at some point you will need a formal business plan, but before that, you must start with a good reason for starting this business. I have heard a lot of “not good” reasons, and the top of my list is that you’re tired of making someone else rich. Getting rich should be the last thing on a start-up entrepreneur’s mind. Finding a need and filling it should be the first. What will it take to fulfill this need? (the who, when, what, where, how & why’s) Then how much? Only now will you be able to tell if you can fulfill this need at a profit. If you think you can make a profit, then you are ready to launch into a formal business plan- you already have most of the thinking done anyway. If you can’t make a profit, you can decide for yourself- will you be satisfied keeping busy and making a small salary? Is this need so great and altruistic that you are willing to supplement its fulfillment with my own savings and time? If so, go for it. But if it won’t make a profit, there’s usually no point in starting this business in this manner. Before you give up, though, what can you change that will alter your results? Maybe you can start smaller. Maybe you don’t need to build a building right away but can lease for a few years. Maybe you can expand your product, service, or customer base. Maybe your pricing structure is not realistic. Maybe a new vehicle is really not a necessity for the first few years. If this idea is really something you want, and it really fills a need, there are usually ways to re-think your plan to make it work. Some other considerations to make when planning your business: assuming you are not going to make a profit in the first year, how will you feed your family? How will you insure them? Having a back-up form of income and insurance, for instance a spouse, keeping your day job, or having set aside 6 month living expenses plus the down-payment for a business loan and some resource for additional operating capital is important when you start out. Have you realistically considered all the expenses you will incur? Have you budgeted enough for marketing? Have you fully considered your competition? How about Internet and Green Bay? Can you think outside my own experiences well enough to understand that you are not as typical a customer as might be assume? Have you talked with people in related businesses about whether this is a good idea and not just my friends? “If I build it, they will come” does not work for businesses. Considerable time, expense, and energy must be given to getting and keeping your name in “top of mind” consideration- a natural disadvantage for things that are new. Do you have the personality, time, and support from my family to work 60 hours a week and then be the lowest paid person in the company, if you get a paycheck at all that week? Do you have the self-discipline and management abilities to handle the business aspects and not just the skills needed to perform the service or make the product? What is the best legal structure for your business? Should you be a sole proprietorship or should you incorporate? How about a Limited Liability Company? Will you have employees? Have you taken into account the added expenses beyond their salary? What will the tax responsibilities be? There are many, many more questions to ask and answer before setting out on this adventure of starting your own business- like those concerning forms, registrations, licenses and so forth. Fortunately, those are easily answered. There are several resources for help in this process. The Delta County Economic Development Alliance has many handouts, contact lists, a lending library, and most importantly, someone to talk to- whether that is a one of our dozen SCORE volunteer counselors or myself (786-2192). First Step, an SBTDC program also provides free assistance (786-9234). Bay College (786-5802), Michigan Works (789-9732) and Northern Initiatives (800-254-2156) all offer classes in small business management. A lot of planning and thinking should happen before you even start considering signing a lease on a building or ordering inventory. But, by doing a good job of planning, you will find that you have either saved yourself a lot of grief by not going into an unprofitable business in the first place, or increased your chances of success when your idea does in fact become a reality. Come Grow with Us in Delta County! Linda A Hirvonen, Executive Director Delta County Economic Development Alliance 230 Ludington Street Escanaba MI 49829 (906) 786-2192 or fax (906) 786-8830 |
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