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You've got a great idea and the guts to start working for yourself, but where exactly should you start? BECU specialists recommend the following tips as essentials for anyone considering hanging up their own "Open" sign. Contact BECU Small Business Services for more information.
Tips for Entrepreneurs:
1. Establish a Financial Plan
Determine what your personal financial needs are before defining the funds your business will require.
Before you can realistically know what type of financing to secure for your business, you must understand your own financial needs. Start at home. How much revenue will your new business generate so that you can continue or improve your current lifestyle?
"Most potential business owners are used to having a job and to receiving a paycheck," explains Kathleen Tye, BECU Small Business Services Officer. "People may know how to budget and use their paycheck to run their household and save for the future. However, when running your own business, you must rely on your customers for your income. You have to really understand the needs of your family and what you your business generates in terms of revenue so your family is not placed in a difficult situation."
So, how do you go about creating a financial plan? Start by attending the free, in-person BECU seminar Financing your Small Business where one of our Small Business Services Officers will help you:
"We really want to help create better business owners," explains Kathleen. "BECU is looking for people who are committed to conducting the research to better understand their financials, to keep accurate records, and to calculate accurate projections that show us how you've thought through your finances."
2. Develop a Business Plan
You must do more than simply define your vision; you must define how you plan to realize your goals.
Careful planning is fundamental to success. Your business plan presents all that careful planning in one consolidated report. It is a written guide to starting and running your business successfully; and it will help encourage loans, promote growth, and provide a map for you to follow. Your business plan should be suitable for various audiences to read: investors, financing institutions, and yourself.
"A lot of the time, what I see with business plans is that people describe what they envision their business to be, but they don't articulate how they are going to accomplish their business goals in their local market," explains Kathleen Tye. "A business plan should include a timeline with defined steps based on plenty of data supporting how you plan to accomplish your goals and meet the needs of your defined demographic."
When thinking about what to include in your first draft of your business plan, don't forget to:
It takes a lot of research and work to prepare a business plan that will help anyone who reads it understand how you see your business performing on a realistic basis. If you can't do the work required to create a strong business plan, then you're not going to be able to do the work required to run a successful business.
The Small Business Administration offers programs and services to help you start, grow and succeed in your small business. Check out the online Small Business Planner , which includes information and resources to help you at any stage of your business lifecycle and the online Business Plan Workshop designed to help you start and improve your business plan.
3. Do the Required Research
Get educated about your target market, your competition, projected costs and how to reach customers.
"Just think about the dot.com bust," says Kathleen Tye. "Why did so many start-ups fail? It wasn't for lack of money or capitalization; many businesses failed because there wasn't really a market for their products and services. You really must identify and define your business' target market and demographics in your particular location to determine if they can sustain your business. When planning your business, allow time for thoughtful planning, research, execution, and capitalization."
Here are some key questions to consider when doing the necessary research:
"Suppliers are really a good source of information," says Kathleen, "because they want to sell to you. So check with them about the competition. Mystery shop to learn more about your potential customer base. And connect with mentors to help you explore the necessary questions that you'll need to be able to answer in order to create and operate a successful and profitable business."
One of the best ways to protect against business failure is to find and work with a mentor, someone with sound business experience and judgment who can guide and assist you. To find potential mentors, check out the Small Business Administration's online resource page Finding a Mentor.
4. Know How to Manage Finances
You may need a CPA and bookkeeper, but ultimately you must understand what your statements mean.
A defined system of financial management will make it easier for you to accurately assess your financial figures, project income and expenses, and know when it may be risky or profitable to expand, purchase new equipment, or hire more employees. BECU recommends that you invest in an electronic accounting software program to help you keep accurate financial records for your business.
"Keeping receipts in shoeboxes is not going to fly," says BECU Small Business Specialist Carol Friend. "A software program like Quicken, QuickBooks, or Money will enable a small business owner to more accurately and effectively manage their finances and forecast their economic future."
For more information about Managing Business Finances, read our educational article that explores working with bookkeepers, CPAs, accounting software, and using your financial statements as a tool to project expenses and potential income.
Online Banking and eStatements make it easier to keep your business on track. Here are some suggestions to implement when you're setting up a system of finance management for your business:
5. Network for Ongoing Success
Assess your skills, recognize what you don't know, and get help from those who do.
"One of your best resources for small business owners is right here at BECU," says Carol Friend. "BECU Small Business Services Officers are experts at business financing and can help you not only prepare before you start your business, they can also help connect you with helpful resources after your business has started or when you are forecasting your future."
Whether you need help financing your small business or have questions about what to do first, a BECU Small Business Services Officer can help. Schedule your appointment to meet in person and discuss your situation.
Additionally, you can check out the Small Business Resources we've compiled to help entrepreneurs get started or learn more about running their own business. You'll discover links to education resources, governmental agencies, and local legal and tax resources you can contact today to begin networking and expanding your knowledge base and contacts.