Irvington, NY (PRWEB) July 26, 2010
Paul Lewis, founder/president of Start Me Up, a company designed to help get small businesses up and running quickly, cost-effectively, and in a hassle-free manner, breaks down the startup process with a ‘how-to’ guide for aspiring business owners.
PLANNING AND BUDGETING
What’s the first thing every new startup needs? A business plan. Regardless of whether or not outside funding is required, creating a business plan ensures that the owner has gone through the systematic thought process required to run a startup. A good planning process forces that the right questions are asked and adequate solutions found. By doing this, the necessity to “crisis manage” can be minimized once the company is in operation.
While the length of a business plan can vary depending on the company’s industry, size, and scope, there are key sections that should always be covered:
- Executive Summary: A brief, yet thorough overview of the company that includes summarized financials, market overview, market position, and anticipated growth over the next few years
- Description of the Company: Include the market for your product(s) and/or services, as well as an analysis of the anticipated competition
- Description of the Management: This is especially important if the business plan is being used to raise funds
- Marketing Plan: Describe who your prospective customers are and how your company will price, sell, distribute, and promote the product(s) and/or services to those it serves
- Operational Plan: Explain how you plan to carry out the delivery of your product(s) and/or services – from beginning to end. This can include facilities, inventory, distribution, order fulfillment, and customer service.
- Risk Assessment: Expect the unexpected and account for as many foreseeable “what if” scenarios as possible
- Financial Plan: Include projections for the company’s P&L (income statement), balance sheet, and cash flow for a minimum of three years going forward
To avoid becoming overwhelmed, spread out the construction of your business plan over a period of time. Try focusing on one section per week. Once complete, have it reviewed by one or more persons qualified to offer suggestions and revisions. A great deal of angst and aggravation can be avoided by having someone play devil’s advocate early on in the process.
PROTECTING YOUR ASSETS
Even the most promising new startup can fail if its assets aren’t adequately protected. There are a number of things to be considered, such as incorporation and business insurance. Every small business should consider forming an S Corp or LLC. Doing so will separate your business and personal assets and limit your liability (for example, if you are sued).
Business insurance is another form of protection to keep your company out of jeopardy. Depending upon the business, any or all of the following types of insurance should be considered: general liability, product liability, professional liability (E&O), commercial property, home-based business, vehicles, business interruption, workers’ compensation, unemployment, and disability insurance. The last three are frequently mandated by law. Liability insurance is also often required by an outsider (e.g. bank, property leasing company).
FUNDING YOUR STARTUP
Securing funding for a new business can be a source of stress and frustration, especially if things don’t go smoothly at first. Before you begin, determine how much capital you’ll need and how much you can comfortably invest. Check your figures by requesting estimates from key suppliers and keep in mind that owners must budget for everything -- and then some. Inevitably, unanticipated costs will arise. Having a reserve allows for flexibility and will help keep the company on track.
Once you have an accurate number, make sure your sales pitch is solid. Memorize and constantly refine it. Before visiting a bank or seeking out venture capital, consider those closest to you – your friends and family. A loan from a friend or family member should be handled in a professional manner – a business loan with a fixed term and appropriate interest rate recorded on a promissory note. Friends and family are often more flexible and less likely to ask for equity than outside lenders. If large dollar amounts aren’t feasible, try asking for less from a greater number of people.
Other good sources of funding include loans offered by the U.S. Small Business Administration (SBA), small business investment companies and other SBA programs, as well as angel investors. Explore these options thoroughly before considering venture capitalists. To successfully obtain venture capital, a startup must have potential for rapid, high-profit growth and often be willing to give up a great deal of equity.
Finally, don’t risk opening for business unless you’re fully funded. Running out of cash is a major reason for failure among new small businesses.
Once you have started, you want to do your best to insure your funding position stays solid. Establish credit with a company bank account and one or two corporate credit cards. It’s important to always pay bills promptly, keep accurate financial records, and check credit reports once or twice per year to ensure they are current and error-free. Select vendors who will enable you to establish credit with them based on your personal credit and will report your transactions to major credit bureaus.
Flexibility is important for any business, especially a new startup. Maintaining a home office, at least initially, can reduce overhead costs. Consider a virtual or shared office space before transitioning to a traditional office setting. Also, don’t be afraid to make use of short-term solutions early on (e.g. temporary employees, furniture/office equipment leases). Keeping your own books is another great way to conserve cash. Learning QuickBooks doesn’t take much time and can greatly simplify filing tax returns.
Considering a startup? Start Me Up physically handles all aspects of the startup process from beginning to end for businesses in all industries. To learn more about the company’s services, available throughout the NY metro area, visit http://www.startmeup-ny.com or call 914-674-6129 for a free consultation.