Questions to Ask Yourself Before You Start a Business
While you are thinking about starting a business of your own, there are many questions to ask yourself before you make a commitment to entrepreneurship.
Among issues you need to consider are financing, location, planning, development of customer relationships, and meeting legal requirements.
- How can I best finance the business?
Bootstrap with my own savings? Take out a personal or business loan with a bank? Go into a partnership in order to share the risks and costs? Get a loan from the Small Business Administration?
- How much financing do I need?
Many businesses fail because they are under-capitalized. Others fail because of over-spending on rent, furnishings, inventory, personnel, and advertising.
- Where is my market?
Just in this town, region, nationwide, or international? Mail-order and Internet-based businesses enable you to expand your market nationwide, whereas retail and service businesses tend to be confined to particular communities and neighborhoods.
- Who are my suppliers?
How many must I work with? What about credit arrangements and payment terms? Are some suppliers willing to ship directly to my customers?
- Where is the best location for my business?
Should I open a store, operate from my home, or conduct a virtual (Internet) business? If I need a store or office, is it conveniently located for my clientele?
- How should the business be legally structured?
Sole proprietorship, partnership, or corporation? Each has certain advantages and disadvantages.
- What licenses and permits do I need?
These consist of local business licenses and permits, federal employee identification numbers, state sales tax number, state occupational licenses, federal licenses and permits, and special state and local regulations which vary from state to state and from community to community. What type of insurance do I need? Fire, theft, liability, workers' compensation, and auto?
- How many employees do I need and how do I find them?
Can I do without personnel initially until my business expands? Should I use part-time and temporary help? How should I recruit? Should I use the Internet, classified ads, employment firms, headhunters, or network?
- What business name should I use?
If incorporated, is anyone else using the name? If a trade name, is it registered?
- What accounting system should I use?
Cash or accrual? Can I handle the books or do I need a part-time or full-time accountant? Who will handle the timely calculation and payment of payroll, sales, and corporate taxes as well as insurance, retirement plans, and workers' compensation?
- What technology and communications decisions do I need to make?
What type of website should I develop? How much business should I expect to do online? What types of computer and telecommunication equipment should I acquire? Is it best to buy or lease business equipment?
- Do I need a lawyer?
What type of lawyer? What legal work can I do myself?
- How do I develop a business plan?
A business plan should include a definition of the business, a marketing strategy, operational policies, purchasing plans, financial statements, and capital-raising plans.
- Should I put together a board of advisors?
It's always good to include respected individuals who can contribute expertise and perspective to your operation.
SOURCE: Adapted from Military Transition to Civilian Success (Manassas Park: Impact Publications), pages 448-450. Copyright 2006. All rights reserved. Copying strictly forbidden.