Small businesses must meet several criteria to be successful – especially in the first year of start up.
Establishing a Business Plan
When business owners borrow money, they should have an organized, well thought out business plan. This shows that there is a greater chance the money will be paid back. It’s also important to have a good business plan so that the owner receives the loan at a low interest rat
The owner should not borrow so much money that it wouldn’t be feasible to pay it back; however, they should borrow enough to match both the expected profit plus the start up cost for the first year. Adhering to this concept is a good indication of how much money should be borrowed.
The Small Business Administration supports small businesses and offers to cosign loans for owners.
Positive and Negative Setbacks of a Small Business
Opening and operating small businesses have both positive and negative setbacks.
I Work for Myself
A small business owner no longer has to report to anyone in a normal job for another company, and so many people leave their jobs for this very reason. The idea of having freedom and independence is appealing and can work out favorably on a day to day basis.
However, owners must learn to discipline themselves and keep a strict regimen in order to maintain their own operations. Being the owner can mean longer hours and more stress to stay financially afloat.
Start-Up Cost
Owning a small business is also appealing because of the smaller amount of start-up cost, compared to large businesses and franchises. Although owners borrow money, the risk is smaller. Also, eCommerce businesses can sell products online for little to no cost.
Recently, there has been an upward trend of food trucks, which was based on the idea of having a very low start up cost since its a mobile small business. Because of the different options and access owners have, there is an ability to cater to customers with unique interests. Customers are attracted to this because of specific products that are uncommon in commercial businesses.
Small Business Insurance
Small business owners must make sure they are able to acquire and make payments on the different insurances, whether mandatory or personal. For example, health and disability insurance for oneself and employees if there are any. If there are employees then owners should have workers’ compensation insurance. Other insurances for the business include liability and extra equipment insurance.
Do Your Research
Competition and Target Audience for Small Businesses
It helps to do competitive analysis to ensure that whatever small business you’re establishing, there’s a need for it. Be sure to perform adequate market research by identifying competitors and their products.
Analyse small business data and trends, to find your ideal customer base. There is quite a lot of data to go through so this is just the tip of the iceberg when starting your market research.
When studying the demographics for your target audience, be sure to include factors such as age, gender, geographic location, and income.
Demand of a Small Business’s Product
A huge reason that small businesses fail from the get go is the creation of a product that the market doesn’t need. Aside from identifying a target audience, it helps to do some thorough analysis on the product itself.
Ask yourself questions like:
- Does my product exist already in the market?
- How is my product different from competitors’?
- Does my product solve a problem?
The Bottom Line About Starting a Small Business
Most small businesses fail before even getting started It’s critical that all bases are covered before even beginning. For more information on getting started running a small business, visit https://www.sba.gov/.
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