to pay for her help.
“Do you think there’s other women down here who would?” Maggie asks Ella. “Are you kidding? Scads,” is Ella’s response. Maggie says she’s thinking of “doing it like a business.” Ella’s response? “Well, that’s an excellent idea.” Maggie admits she isn’t good with numbers, to which Ella replies, “Well, I’m good with numbers. I could help. If you like.” “Yeah, sure, that’d be good,” Maggie says, and a business is born. Within days, the lineups start — Maggie is busy full time and finally has a direction to her life and money in the bank. I love movies with happy endings like this!
While you’re researching the business you want to start, you should also keep the following questions in mind:
• Do you enjoy doing the work? It is a lot easier and more satisfying if you choose something you enjoy doing. Don’t make your decision purely for financial reasons or you may find yourself giving up before long.
• Will you be getting repeat business? If your services are needed only once or infrequently, you will constantly need to bring in new clients to maintain your current profitability. That means you’ll spend a lot of time and effort marketing your business. It is much easier to run a business where your clients will need your services over and over again.
• Is there a franchise available? If you are interested in getting into a business you know little about, you may wish to consider purchasing a franchise. These businesses already have a proven record, so your chance of success increases dramatically. I’ll explore franchises in detail in Chapter 12.
• Could you volunteer at another company to gain experience? My first employee became my first employee because he called and offered to work for free. This posed little risk for me, as all I had to invest was the time it took to train him. He was good at his job, so after only a few weeks I started paying him for his work. This may be something for you to consider if you don’t have much experience in your new business.
The Business Plan
Once you have decided what product or service you are going to offer, it’s important to continue the planning process. Put your thoughts down on paper in the form of a business plan. This does not have to be a 100-page document. It could be an informal summary of your intentions for the business that fills less than a dozen pages.
A business plan is also not set in stone. Most of the people I know who created a formal business plan did not stick to it. Many did not even bother to update it after they got the business up and running. The point is that it’s the best place to start. The more time and effort you spend documenting what it is that you are trying to accomplish, the greater your chances of success. You may even find, during this process, that you come up with a better idea than the original product or service you had decided on. Or you might see additional opportunities arising from your original idea.
Besides describing how you intend to market your product or service, the business plan should include the following information:
• A description of the products or services
• A summary of the start-up costs
• A projection of sales and expenses for at least the first few years
• An analysis of your own strengths and weaknesses — will you need help with some aspects of the business?
• An analysis of the industry — is it steady, declining, or growing?
• A marketing strategy — how do you plan to find customers or clients?
If you are planning to establish a large entity that will require external financing from banks or possibly investors, your business plan will need to be formal and detailed. You will probably require the assistance of a lawyer, an accountant, and possibly a business adviser. It will be difficult to obtain financing if you have not researched and documented all the details of how the business will work. (Keep in mind that no matter how well-written a business plan may be, you may still be turned down by the bank. See Chapter 5 for more information about financing your business.)
It’s easy to find sample business plans on the Internet. I just Googled “business plan templates” and got over 42 million hits. Look for examples of award-winning plans. There are many available, and some may even deal with your specific product or service.
Elements of a business plan
A good business plan is concise and written in plain language. It contains charts, illustrations, and graphs placed appropriately. It uses realistic assumptions about future income and expenses and provides detailed information in appendixes.
It should include the following basic components:
• Cover page. Include the company name, address, telephone and fax numbers, website URL, and email address, as well as the names of key company contacts.
• Table of contents. Summarize the major sections of the plan.
• Executive summary. Write a brief (one- or two-page) summary of the major points in the plan.
• Company summary. Include the company’s goals and its objectives as well as the amount of financing required.
• Management. Summarize the experience and qualifications of all key people who will be involved.
• Marketing strategy. Outline your market research, the strategy for attracting customers or clients, and the pricing strategy (i.e., will your products/services be inexpensive or premium priced?).
• Financial projections. Set out what start-up costs you will incur, and include five-year income-and-expense projections and a loan repayment plan.
• Advisers. Include the contact information of your lawyer, accountant, and other advisers.
• Conclusion. Summarize your goals and objectives, the required financing, and the reasons why this is a good investment.
• Appendixes. Include detailed management résumés, any product illustrations or literature, any financial statements, detailed cash-flow forecasts, and any major customers or clients you may have.
Research Should Never End
Once you’ve started your business, don’t stop thinking about what changes you’ll need to make to keep it viable. A product or service that is in hot demand today may be collecting dust on store shelves tomorrow. Think of film processing. Ever since I bought my digital camera, I haven’t touched my 35 mm film camera. Those companies in the film production and processing industries that did not anticipate this change are no longer around.
Even in a service business, it’s crucial that you keep thinking about the specific services you offer now and what you will be offering in the future. This is known as identifying your niche.
Niche Today, Gone Tomorrow?
Dictionary.com offers one definition of niche as “a situation or activity specially suited to a person’s interests, abilities, or nature,” and another as “a special area of demand for a product or service.” If you
