Running a Business

Posted on May 05, 2022 by Dick Huiras, One of Thousands of Business Coaches on Noomii.

There is no way to eliminate all the risks associated with starting a small business. However, you can improve your chances of success with good planning and preparation. A good starting place is to evaluate your strengths and challenges as the owner. Plan for sustainable success
Is your drive strong enough to maintain your motivation?

Running a business can wear you down. Some business owners feel burned out by having to carry all the responsibility on their shoulders. Strong motivation can make the business succeed and will help you survive slowdowns as well as periods of burnout.

Are you a self-¬starter?

It will be up to you – not someone else telling you¬ to develop projects, organize your time and follow through on details.

How well do you get along with different personalities?

Business owners need to develop working relationships with a variety of people including customers, vendors, staff, bankers, and professionals such as lawyers, accountants, or consultants. Can you deal with a demanding client, an unreliable vendor, or cranky staff person in the best interest of your business?

How good are you at making decisions?

Small business owners are required to make decisions constantly, often quickly, under pressure, and independently.

Do you have the physical and emotional stamina to run a business?

Business ownership can be challenging, fun and exciting. But it is also a lot of work. Can you face 12-hour workdays six or seven days a week?

How well do you plan and organize?
Research indicates that many business failures could have been avoided through better planning. Good organization ¬of financials, inventory, schedules, production ¬can help avoid many pitfalls.
How will the business affect your family?
The first few years of business start¬up can be hard on family life. The strain of an unsupportive spouse may be hard to balance against the demands of starting a business. There also may be financial difficulties until the business becomes profitable, which could take months or years. You may have to adjust to a lower standard of living or put family assets at risk.
Getting Started
You must ask yourself if going into your own business is really a passion or just a band aide until the next thing comes along. There is a major difference in the outcome of your business if the business is a “passion” or simply looks like the “means to an end”.

Before starting out, list your reasons for wanting to go into business. Some of the most common reasons for starting a business are:
You want to be your own boss.
You want financial independence.
You want creative freedom.
You want to fully use your skills and knowledge.
Next you need to determine what business is “right for you.” Ask yourself these questions:
What am I truly passionate about?
What do I like to do with my time?
What technical skills have I learned or developed?
What do you know you are good at?
How much time do I have to run a successful business?
Do I have any hobbies or interests that are marketable?

Then you should identify the niche your business will fill. Conduct the necessary research to answer these questions:
Will it give me a sense of fulfillment?
What is my competition?
What is my business advantage over existing firms?
Can I deliver a better-quality service?
Can I create a demand for your business?

The final step before developing your plan is the pre-business checklist. You should answer these questions:
What business am I interested in starting?
What services or products will I sell? Where will I be located?
What skills and experience do I bring to the business?
What will be my legal structure?
What will I name my business?
What equipment or supplies will I need?
What insurance coverage will be needed?
What financing will I need?
What are my resources?
How will I compensate myself?

Your answers will help you create focused, well¬ researched business plan that should serve as a blueprint. It should detail how the business will be operated, managed, and capitalized.

Types of Business Organizations
When organizing a new business, one of the most important decisions to be made is choosing the structure of a business. Factors influencing your decision about your business organization include:
Legal restrictions
Liabilities assumed
Type of business operation
Earnings distribution
Capital needs
Number of employees
Tax advantages or disadvantages
Length of business operation

STARTING A BUSINESS PLAN OUTLINE AND STATEMENT OF PURPOSE
In General:
What is the business structure: (sole proprietorship, general partnership, limited partnership, C corporation, or Subchapter S corporation)
Who is (are) the principle(s)?
What is to be done?
Why will it be successful?
For A Financing Proposal:
• Who is asking for money?
• How much money is being requested?
• What is the money needed for?
• How will the funds benefit the business?
• How will the funds be repaid?
• Why does the loan or investment make sense?

MANAGEMENT QUESTIONS:
• What is you business background?
• How does your background/business experience help you in this business?
• What management experience do you have?
• Do you have managerial experience in this type of business?
• Do you have managerial experience acquired elsewhere-whether in totally different kinds of
business, or as an offshoot of club or team membership, civic or church work, etc.?
• What challenges do you have and how will you compensate for them, i.e., will you hire
employees or pay consultants who have management abilities/expertise that you do not have?
• What education do you have (including both formal and informal learning experience) which
have bearing on your managerial abilities or knowledge of the industry?
• Personal data: age; where you live and have lived; special abilities and interests; and reasons
for going into business?
• Are you physically suited to the job? Stamina counts.
• Why are you going to be successful at this venture?
• Do you have direct operational experience in this type of business?
• Who is on the management team?
• What are the duties of each individual on the management team?
• Are these duties clearly defined? how?
• Who does what? Who reports to whom? Where do final decisions get made?
• What and how will management be paid?
• What additional resources have you arranged to have available to help you and your business
(accountant, lawyer, et al.).

PERSONNEL QUESTIONS:
• What are your personnel needs now? In the near future (3 to 5 years)?
• What skills must they have?
• Are the people you need available?
• Will your employees be full-time or part-time?
• Will you pay salaries or hourly wages?
• Certain employee benefits are mandatory. Find out what they are.
• Will you provide additional fringe benefits? If so, which ones? Have you calculated the cost of these additional fringe benefits?
• Will you utilize overtime? If so, you may be required by law to pay time and a half, double
time, and/or other extra costs.
• Will you have to train people for both operations and management? If so, at what costs to the
business?
DESCRIPTION OF THE BUSINESS
GENERALLY, EXPLAIN:
• What will the business be
• What market you intend to service, the size of the market, and your expected share.
• Why you can service what market better than your competition.
• Why you have chosen your particular location.
• What management and other personnel are required and available for the operation; and
• Why your investment or someone else’s money (debt/equity) will help make your business
profitable.

QUESTIONS:
• Type of business; primarily merchandising retail, manufacturing, wholesale, or service?
• What is the nature of the product(s) or service(s)?
• Status of business start-up, expansion of a going concern, or take-over of an existing
business?
• Business form: sole proprietorship, partnership, or corporation?
• Who are the customers or clients?
• Why is your business going to be profitable?
• When will (did) your business open?
• What hours of the day and days of the week will you be (are you) in operation?
• What have you learned about your kind of business from outside sources (trade suppliers,
banks, other businesspeople, publications)?

FOR A NEW BUSINESS
• Why will you be successful in this business?
• What is your experience in this business?
• Have you spoken with other people in this type of business about their experience,
challenges, and rewards? What were their responses?
• What will be special about your business?
• Have you spoken with prospective trade suppliers to find out what managerial and/or
technical help they will provide?
• Have you asked about trade credit?
• If you will be doing and contract work, what are the terms? Reference any firm contract and
include it as a supporting document.
• Do you have letters of intent from prospective suppliers or purchasers?

FOR A TAKE-OVER:
• When and by whom was the business founded?
• Why is the owner selling it?
• How did you arrive at a purchase price for the business?
• What is the trend of sales?
• If the business is going downhill, why? How can you turn it around?
• How will your management make the business more profitable?

THE MARKET
Generally, explain who needs your product or service, and why.
QUESTIONS:
• Who exactly is your market? Describe characteristics: age, sex, profession, income,
• What is the present size of the market?
• What percent of the market will you have?
• What is the market’s growth potential?
• As the market grows, will your share increase of decrease?
• How are you going to satisfy the market?
• How will you attract and keep your share of the market?
• How can you expand your market?
• How are you going to price your service or product, to make a fair profit, and at the same
time, be competitive?
• What price do you anticipate getting for your product or service?
• Is the price competitive?
• Why will someone pay your price?
• How did you arrive at the price? Is it profitable?
• What special advantage do you offer that may justify a higher price? (You do not necessarily
have to engage in direct price competition).
• Will you offer credit to your customers (accounts receivable)? If so, is this really necessary?

Can you afford to extend credit? Can you afford bad debts?

COMPETITION QUESTIONS:
• Who are your five nearest competitors? List them by name.
• How will your operation be better than theirs?
• How is their business: steady? increasing? decreasing? Why?
• How are their operations similar and dissimilar to yours?
• What are their strengths and/or challenges?
• What have you learned from watching their operations?
• How do you plan to keep an eye on the competition in the future?

LOCATION OF BUSINESS
• What kind of building do you need?
• What are the attributes and/or outstanding features of your present or desired business
location?
• Why is this a desirable area?
• Why is this a desirable building?
• Does the community around which you intend to locate the business show enthusiasm for you
and your business?
• What are the advantages and disadvantages of the site in terms of wage rates, labor unions,
and labor availability?
• How much space do you need?
• Do you need a long-term or short-term lease?
• Is the building accessible by public transportation?
• Is the building close to customers or suppliers?
• Is free or low-cost parking nearby?
• What are the state and local taxes, laws, utilities, zoning, and variables that may affect the
location of you business?
• How do you plan to keep an eye on any demographic shift in your area?