Frequently Asked Questions About Starting A Business

 01  What kind of person makes a successful entrepreneur?

Research of successful entrepreneurs has documented that successful small business people have certain common characteristics. This checklist cannot predict success, but it can give you an idea of whether you will have a head start or a handicap with which to work.

How do you measure up? Ask yourself these questions:

  • Can I persevere through tough times?

  • Do I have a strong desire to be my own boss?

  • Do the judgments I make in life regularly turn out well?

  • Do I have an ability to conceptualize the whole of a business?

  • Do I possess the high level of energy that is sustainable over long hours?

  • Do I have significant specialized business experience?

While not every successful business owner starts with a “yes” answer to all these questions, three or four “no” responses and undecided answers should make you think twice about going at it alone right now. But, don’t be discouraged. Seek extra training and support, and enlist the help from a skilled team of business advisors such as accountants, bankers, attorneys and SCORE counselors.

 

 

 

 02  How do I determine whether I am capable of starting a business?

Small business owners have many things in common. Below are some of the qualities you will need to be successful.

  • Willingness to sacrifice—If you enjoy working the nine to five, do not go into business for yourself. Entrepreneurship often requires many more hours beyond the forty-hour work week.

  • Interpersonal skills—You will be required to interact with a host of people other than customers, such as lawyers, employees, and salespeople. If you do not like talking to people you do not know, it might be better to keep your day job.

  • Leadership ability—You will be the one everyone turns to for the answers. Are you ready to call the shots?

  • Optimism—Being able to hang in there when business gets tough is an important quality in small business owners.

Compare your skills and expertise with others who are successful in similar businesses. Can you duplicate and surpass the capability of other successful businesses? What unique skills or “edge” can you provide to obtain a sufficient share of total market?

Review business journals, trade magazines and other comparative studies that identify the requirements to operate the business. From that information, derive a formula for the skills and traits you plan to incorporate into the business operation.

 

 

 

 03  Why is a business plan important and who should write it?

A business plan is important because it summarizes both your vision for the company and your blueprint for the company’s operating success. The business plan is a written guide that details the startup and the future direction of your company.Who should write the plan? You, the entrepreneur. No one else knows your business idea and goals better. Yes, there are services that can do the work for you, however, you are the one who must present this business idea to bankers or other investors. Therefore, it is best if you are very familiar and comfortable with the plan.

Although there’s no set format, a good business plan typically includes:

  • Cover page—Identifies your business

  • Table of contents—Organizes information for the reader

  • Executive summary—Provides a “big picture” view of the plan, highlighting the factors that will lead to success

  • Business background—If it is a brand-new business, include your background and skills

  • Marketing plan—Relates the business’s marketing strategy

  • Action plan—Summarizes how you will create and deliver your product or service

  • Financial statements and projections—Illustrates how the business will perform financially based on the plan’s assumptions

  • Appendix—Includes statistical analyses, marketing materials, and résumés.

 

 

 04  If I am not planning to apply for a bank loan, why do I need a business plan?

The fact that a bank or lending institution requires a well-executed business plan is a secondary consideration. The primary purpose of the business plan is to guide the owner or manager in successfully operating the business. Preparing the plan forces the writer to consider all aspects of the business and to confront any problems the plan highlights. For example, a monthly compilation of all known costs, over time, will indicate the revenue necessary to support these costs, plus a profit. This leads to the question of whether or not this revenue number is reasonable. If not, it may cast doubt on the viability of the venture itself. The business plan is a vital management tool that enables the manager to anticipate situations before they become problems—or worse yet, emergencies.

 

 

 

 05  How do I determine my startup costs and other expenses?

It is wise to find out what startup costs you will incur before starting the business. Many a budding entrepreneur takes his or her life savings, or will borrow on the equity on their home before figuring these financial factors, only to find that they don’t have enough money. There are many web sites and other resources (including SCORE offices and Business Information Centers) that provide guidelines and worksheets to help determine costs for your business. Each item on your proposed budget sheet should be researched. Closely estimated costs can be obtained from utility companies, trade associations, and networking with other business people who may have already gone through this experience. Do not start buying until the investigation shows this venture is viable and you have all the information needed.

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