Development of a Strong Foundation for a Profitable Business
Regardless of how a person comes to be an entrepreneur, none start out knowing all the ins and outs. In fact, the challenge of learning on the job is one of the most exciting aspects of being an entrepreneur. It also can be one of the most intimidating.
Although naming your business, designing a perfect logo and investing in a website typically are some of the first actions an aspiring entrepreneur may take when starting a business, these really are not as important as writing down your business plan. I’ve met many entrepreneurs who have started without a plan and more than a few who never get around to writing a plan — ever. This could be a big reason why many small business owners struggle to succeed. Taking the time to work on a plan not only will put you in a better position to obtain funding, it will help you stay laser-focused on your vision and know the clear steps you need to take to achieve your business goals.
I’ve listed some of the items I advise my clients to address in their plans. This is by no means a comprehensive list:
1. SWOT Analysis
The first analysis you should undertake is a SWOT analysis, which stands for strengths, weaknesses, opportunities and threats. Every business has each one of these, and you will need to evaluate each one thoroughly in regards to your business. Do not bury your head in the sand or focus only on your strengths and opportunities without taking a hard look at your weaknesses and threats. Denial could quickly lead to the death of your company and your entrepreneurial dreams.
Be sure you know what type of licenses you need to operate your business and the associated costs. Only after you are approved for your state license may you apply for your county and city occupational licenses.
3. Legal entity and all associated documents
Depending on the entity, documents required could include bylaws, shareholder agreements, articles, minutes, partnership agreements, operating agreements, etc. Also, don’t forget to obtain an IRS Employer Identification Number (FEIN). It’s free and necessary even if you don’t intend to hire employees now or at any point.
4. Pay Taxes
Be sure to register with the city or county and pay your Business Tax Receipt. Register with the Department of Revenue to pay unemployment, sales taxes, etc., if applicable, and with the IRS for payroll taxes.
5. Fees and pricing structure
There are many methods for determining your fee structure. Do some market research before you set your fees. Take into account your experience level, what you absolutely need each month to cover costs (both personal and professional) and break even, and your overall revenue goals. Regardless of the method you choose, the key is to prepare your pricing schedule before you have the first conversation with potential customers. If you do this, it will help you talk with more confidence. It also will keep you from taking on work without reasonable compensation. Remember, if you are not making money in your business, then you are running a hobby.
6. Funding your business
A business plan is critical if you are planning on applying for a loan — even if you are asking friends and family to invest in your business.
7. Marketing and advertising
Quite simply, this answers the questions: Where are my prospects? How will I tell them about my business? How will I convert prospects to paying customers? A significant portion of your business plan should be about how you plan to get the word out to your target audience about your company, generate leads and convert those leads to high‐value customers.
There are many other considerations you might want to take into account in developing your plan — the list goes on. The more research, information and thought you put into your business at the outset, the better off you will be down the line.
However, do not get caught up in analysis paralysis. Do the best you can and then take action. As critical as it is for the development of a successful, profitable business, a plan does not a business make. As any business owner will tell you, there will be many unanticipated events along the way that will shape your business — good and bad. We do the best we can with the information we have at the time, and no matter what, we persist.
Suzanne D. Meehle is the founder of Meehle Law, focusing solely on providing legal advice, guidance and support for small business owners and entrepreneurs. Meehle Law is committed to being the first choice of small business owners. For more information, visit www.meehle.com