6.3
Starting a Small
Business
Starting a Small Business
• Every business begins with an idea
– Hobbies, interests, old jobs
• Small business owners need special skills
– Decision making and management skills
– Gained from experience
• Finding the right place
Team Approach
• Owners are often independent…BUT
• It is difficult to run a business alone
– Cover extended hours & help grow
• Each member brings specialized skills
Preparation & Research
• Most important step is PREPARTION
• Owner needs information:
– Customers & competitors
– Important operations
– Government regulations
• Can be found at libraries, universities,
small business assistance centers
Developing a Business Plan
• Business Plan - written description of the
business idea and how it will be carried out,
including all major business activities.
• Most plans are developed for one year and
then updated the next.
• It serves as a guide to keep the business on
track
Elements of Bus. Plan
Description of Business
The business idea
Major products
and services
Ownership
structure
Strengths /
weaknesses
Long- and shortterm goals
Customer Analysis
Description of
customers
Location, number,
and resources of
customers
Sales forecasts
Operations Plan
Organization of the
company
Description of
major operations
Analysis of
resources needed
Human resource
plans
Marketing Plan
Description of
major marketing
activities
Description of
resources needed
Schedule of
marketing
activities
Financial Plans
Start-up costs
Short- and longterm financial
needs
Sources of
financing
Budgets and
financial
statements
Description of The Business
•
Description of the business
–
–
–
–
Business idea and main products/services
Ownership structure
Strengths & weaknesses
Long & short-term goals
Customer Analysis
•
Customer Analysis
– Description of customers
– Demographics of customers
– Sales forecasts
Operations Plan
•
Operations Plan
–
–
–
–
Organization of the company
Describe major operations
Analysis of resources needed
Human resource plans
Marketing Plan
•
Marketing Plan
– Describe major marketing activities
– Schedule of marketing activities
•
When, where, and how often?
– Promotions
– Social media?
•
•
•
•
•
Facebook
Twitter
LinkedIn
Instagram
Snapchat
Marketing Activities
• Advertising
– Commercial (radio & tv) (Ad in paper)
– Flyers (direct mailed or posted in public)
– Word-of-mouth
– Giveaways: notepads, pens, magnets, etc.
• Promotions
– Coupons, special (pricing)
• Events
– Grand opening
– Contests, sweepstakes, raffles
Financial Plans
•
Financial Plans
–
–
–
–
–
Start-up costs
Short & long term financial needs
Sources for financing
Budgets
Financial statements
Steps in Developing Business Plan
1. Gather & review information
2. Develop strategic alternatives
•
Back up plans for manufacturing, marketing,
staffing, and financing
3. Write out each section of the plan.
Financing
• Start-up financing – needed to open
• Short-term financing - $$ needed to pay
for current operating activities
• Long-term financing - $$ needed for the
main resources of a business
– Land, buildings, & equipment
Sources of Financing
• Owner’s own money – personal savings
• Borrow
– Friends and family
– Banks & credit unions
• Corporations are owned and financed by
shareholders
Offering Credit
• Companies may offer credit if they are
financially stable
• Be careful about accepting credit though…
• Take into account:
– Cost of the credit
– When payments are due