Starting a Minnesota business can be both a stressful and exhilarating experience. Starting a new business opens the doors to new opportunities and financial success. However, where some Minnesota businesses succeed, many others fail. The leading reasons for start-up business failures are:
Failure to develop a comprehensive business plan;
Failure to define the target market;
"BUSINESS PLANS ARE THE BACKBONE OF A START-UP"
A business plan is your road map to operating a business. It outlines:
the purpose of the business;
the market the business is seeking;
short term and long term income projections and goals.
Set Your Business Apart
The purpose of your business should define how you intend to set your business apart from those currently existing. This can be an important part of your business plan. For example, if you intend to open a fast food restaurant, you will have limited success if you set up "Bob's Burgers" next to an established enterprise like a "McDonald's". However, if you define your business as having "personalized service" or offer a secret recipe, larger portions or fast deliveries, you may set yourself apart from the existing establishments. Do you remember when "Burger King" advertised "have it your way" or "flame broiled beats frying"? Those were part of a business marketing plan to distinguish their services from McDonald's Restaurants.
Define Your Market.
Defining the particular segment of the population that will make up your client base is equally important. You may define this group by any number of criteria - by geography, by age, by financial status. Perhaps your business wishes to target individuals or perhaps business owners. You may wish to market to people with computers, baby boomers or some combination of different groups. Despite a growing preference for businesses with specializations, it is important to target a large enough audience to support your business enterprise.
Goal setting is also an integral part of the business plan. Every book that is available on the market relating to business success defines goal setting as, perhaps, the most essential element of success. Stephen Covey's "The 7 Habits or Highly Effective People" is one such book and is highly recommended for anyone who wishes to succeed in starting a business or working for a corporation.
Your business plan should define long term and short term goals. How much must you earn to continue operating your business? What is your break even point? What are your goals to market your business including detailed time lines? How much do you hope to earn in one month, six, a year? These are important considerations in starting a business. All should be a part of your business plan. Moreover, your goals should be regularly reviewed and modified based on the current performance of the business. Some of the answers that you develop while outlining the goals of your business plan will help you determine how much money you will need to start your business.
Define Capitalization Needs
Very few businesses make a profit in the beginning stages. This is because operating a business is like building a house. You must start with a foundation and build on that structure. Over time business will increase through continued advertising or increasing word of mouth. Approach your capitalization needs cautiously. You must be prepared for down turns in the market. Some issues you may wish to consider in developing your business plan include:
Do I need Insurance? Whether you need insurance depends on your business activities. Additionally, if your business will have employees, you must consider the financial consequences of providing worker's compensation insurance, state disability insurance, or unemployment insurance.
Do I need a Federal Tax Identification number? If your business will have employees (other than yourself), it must have a Federal Tax ID number. A Tax Id number is assigned for tax reporting purposes.
What is my optimal business location? Where you locate your business must consider accessibility, your defined target audience and, of course, expense. Even the best business will fail if its customers cannot find them. This is one of the primary issues with regard to internet or e-commerce businesses. Too often the internet is viewed as an ideal market place. Anyone can set up a web page. Anyone can sell services or products. However, if customers cannot find your website, your wonderfully thought out business will fail. By placing your business on existing internet malls with established internet traffic, you may be able to increase the number of hits on your site.
Do I need a license or Permit? This depends on the type of business you start as well as the location of your business. Your business may be affected by state, federal or municipal laws. You may wish to consult an attorney regarding local rules.
For a consultation call 612.240-8005
Tuesday, 06 April 2010 07:19
Starting a Business - The Importance of the Business PlanWritten by Rizwan Butt
Published in Workers Compensation
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