There are nearly 30 million small businesses across the United States of America, accounting for almost half the country’s Gross Domestic Product (GDP). That’s the good news. The bad is that no more than half will survive beyond their first five years of existence. This statistic alone should be sufficient motivation for anybody thinking of setting up on their own to do some serious study and ensure that they are going into their new venture with their eyes wide open and with the many predictable pitfalls already considered and addressed.
The first thing that any prospective small business person needs to do is research. Nobody should set up in business without some knowledge of the market into which they are venturing and the extent of the investment – in time and money – that will be required of them in order to have even a chance of success. In particular it is necessary to consider who else is offering the same product or service and at what price, and what it is about what the proposed business offers that will meet a demand that is thus far not entirely satisfied.
Financing Your New Business
The second consideration is whether any funding will be required and, if so, where that investment is going to come from. Is it possible to secure a loan from a bank or another investor and, if so, on what terms? Can any loan be comfortably repaid on schedule and will the business still be viable when any interest payments on borrowed finance are factored into the equation?
Thus the need can be seen for the budding entrepreneur to begin with a traditional business plan, incorporating all the various possible scenarios and providing solutions to whatever difficulties must inevitably be met along the way. Data protection issues must be understood and taken into account, along with any other relevant legislation.
Recognizing Limitations and Pioneering Solutions
One good example of a business which began small and which has steadily grown, withstanding the test of time, is Heat-Line, a heating technology company founded by entrepreneur and inventor Lorne Heise in 1988. Recognizing the limitations imposed by seasonal fluctuations in temperature upon the lifestyles of those who enjoyed their summer days at the family cottage, Heise set about designing solutions which could extend usage beyond the months of the peak season. Click here now for some more information on this highly successful enterprise and its work.
Once your plan has been drawn up and sources of finance identified it just remains to complete the basic housekeeping. But whilst this may appear to be the “easy” bit it should not be neglected and it is essential that due care and attention is paid to it. For example coming up with a name for your business is important for all manner of reasons, not least where it is going to appear in directories and whether it has the potential to be confused with other, existing companies. Careful consideration should also be given to which structure your business should take, that is should it be a sole proprietorship, a partnership or a limited company.