By Charlotte Richter
February is Small Business Month, and starting a small business or any entrepreneurial endeavor takes a lot of time, effort and resources. According to the Small Business Administration (SBA), 99.9% of businesses in the US are small businesses.
Do you have an idea for your own company? Here are some tips:
Know What You’re Getting Into
You and Your Idea
It can take years for a business to get off the ground but don’t get discouraged by the statistics. Owning a small business comes with more calculated risks but also more rewards. This is great news! It often means goods and services are community-based, and goals can be determined quickly in the short term for long term results.
According to the Small Business Administration, an average of over 20,000 startups are created annually, and the figure continues to rise. Cast a wide net in your research; what you’ll need to understand is:
• The market you are entering
o What are the annual trends?
o Is the market in your area big enough to enter competitively or small enough to expand on your own?
o Is there a demand for your product or service?
o How does your idea fit into the market holistically?
• Your target audience
o Who are you serving?
o Are the demographics and psychographics large enough to measure and explore?
• The difference between you and your (potential) competition
o How much of the market does your competition dominate?
o Consider an analysis of the strengths, weaknesses, threats and opportunities for you and your competition.
o To act on anything, you’ll need the money and a budget to guide it! Consider speaking with a financial advisor to assess your situation because many small businesses start self-funded or on bank loans.
Organize what you’ve researched into a business plan. Remember, successfully running a small business will take some time to begin and maintain. According to Fundera, “about two-thirds of businesses survive two years in business, half of all businesses will survive five years and one-third will survive ten.”
Your plans will change depending on the type of business you have, as well as with the financial and legal processes involved - it’s ok to adjust! According to the SBA, there are two main types of business plans: a traditional business plan (more common, especially when you need outside financial aid) and a lean startup plan (a hyper-focused, back-of-the-napkin plan). Things to include in a traditional business plan:
• Cover page & Executive Summary
• Company Information
o Target Audience/Market
• Management Plan
• Marketing Plan
• Financial Plan & Projections
There are a few legalities to take care of before you can begin building your small business. Register your business name with the state after checking trademark and usage policies for your chosen title. Also, check out the SBA’s permitting and registration services to apply for the correct licenses/permits for your business.
As the physical aspects of your business play out while you choose a location and gather employees, remember to take advantage of technology by creating an online space as well. There are many free website builders, including Google Sites and WordPress that allow you to register a domain name and link social media to fast-track marketing efforts.
Cash flow, accordi
ng to Fundera, is one of the main reasons a business will struggle. Look into what grants, loans and investors may be available to help you during times of lean cash flow. Being professional and well-planned is a significant advantage when working with stakeholders in your business.
Don’t forget insurance! Remember, this is a risk you’re taking, so do what you can to protect it! Consider getting Business Income insurance or a Businessowners Policy (BOP) to cover property loss and damage so that you can maintain your new endeavor in peace.
“I really enjoy sitting down with customers to discuss their vision for their new enterprise. It involves a one-on-one review of operations, business plan and coverages so that we can provide the customer with the best options available. Here at TrustPoint Insurance, we are ready to support in protecting all new business endeavors, says Agent Kimberly Skillman-Robrahn.
She continues, “A Business Owners Policy (BOP) is a unique insurance product. It is geared towards small to mid-size businesses, to protect property and liability risks, all rolled into one bundled policy. A BOP can also include coverages such as Business Income Loss, Crime/Fidelity and even Spoilage.”