Business startups are risky. The U.S. Small Business Administration (SBA) records show that 20% of startups fail in their first year, 30% fail in two years and 50% fail within five years. A robust business plan will greatly reduce and help manage this risk.
There is an old saying: “If you don’t know where you are going, any road will get you there.” Developing a complete written business plan is an essential step in launching a business.
U.S. Small Business Administration records show that businesses with a written plan grow 30% faster than those that do not have a plan. The following steps can improve the odds of success.
Define your business.
Write a vision and mission statement. What are your products and services?
Select a legal structure.
This is one of the most important questions to answer when planning a new small business startup. The structure you choose will affect everything from paying taxes to assigning liability, from raising capital to sharing profits. Each type of structure has trade-offs that should be fully understood and reviewed with legal and tax professionals.
Determine your target market and select the specific niches you want to serve.
Think through which groups will benefit most from your business. This should include demographics and geographical area.
Research potential customers, competitors, and suppliers.
A data base like A-to-Z Databases, http://atozdatabases.com/home has information that can be searched in detail. All that is needed to gain access is a library card from a library in Berks County http://readingpubliclibrary.org/. Contact the Reference Department at the main library in Reading, 610-655-6350 for additional information and assistance. Some government sources for information are the U.S. Bureau of Labor Statistics, https://www.bls.gov/; and the National Bureau of Economic Research, https://www.nber.org/.
Develop a detailed marketing plan and budget for each of your target markets.
This is a particularly critical step because many businesses that fail do not fail because they do not know how to make their product or service, they fail because they cannot get enough orders.
Develop a network of contacts with people that might help you in your business.
Some local organizations that can help include: The Greater Reading Chamber Alliance https://greaterreading.org/; the PA Small Business Development Centers https://www.pasbdc.org/; The Berks Launch Box, https://berkslaunchbox.psu.edu/; and The Small Business Resource Association, https://www.sbrassociation.com/. The Berks and Schuylkill Counties SCORE website, https://berksschuylkill.score.org/startup-resources, has several resources for entrepreneurs looking to start a business.
Make sure you have the appropriate professional advice.
Use the check list “BLAIME” to make sure you have not overlooked a key area. B is banker, L is lawyer, A is accountant, I is insurance, M is mentor and E is e-commerce. It is essential that you conform to local laws and regulations and keep the required records, particularly for tax purposes.
Make a financial projection by month of all income and expenses so you can see how both your profit and cash flow may turn out.
Include a line for some unexpected and unknown expenses that are almost certain to arise. Determine how you will obtain the required capital — whether it will come from savings, friends and family, other investors, or bank loans.
SCORE is a strong believer in a written business plan, and encourages clients considering a startup to make this a critical priority — providing a workbook to help lead them through the process. Some clients approach SCORE thinking we are consultants that will write a plan for them. SCORE mentors are counselors, not consultants, and believe it is very important for clients to write the plan themselves so that they truly “own” it. SCORE mentors go through the process with them and help question, edit, correct, expand, and get appropriate professionals like lawyers and accounts involved.
To gather some ideas on business plans visit https://www.bplans.com/ to view a selection of professionally prepared business plans.
To check on how strong your entrepreneurial ambitions are, there is a short quiz available to help provide some insight. Find that quiz at http://www.nmu.edu/sites/Drupalceee/files/UserFiles/Files/Pre-Drupal/SiteSections/MarketplaceProgram/how_entreprenuerial_are_you.pdf
SCORE is a part of the U.S. Small Business Administration (SBA) with 10,000 volunteers nationwide that provide confidential, unlimited, free business counseling and mentoring services to entrepreneurs starting or growing a small business.
The Berks Schuylkill chapter in Reading was started in 1965 and has more than two dozen business owners and executives dedicated to helping small business get started and grow. SCORE mentors understand the needs and challenges of managing a business because they have done it themselves.
For a confidential review and assistance developing a business plan, schedule a meeting with a local mentor by visiting https://www.score.org/# or call 610-376-3497 for the SCORE Berks Schuylkill Counties chapter in Reading; 610-327-2673 for the SCORE TriCounty chapter in Pottstown; or 610-344-6910 for the SCORE Chester Delaware Counties chapter.
Willis Kanaley is a mentor with the Berks and Schuylkill SCORE chapter.