There are a number of ways to evaluate your chance of success, including whether you are an entrepreneur with the “right stuff” or if your business has the “right stuff.”

The following evaluation should be made before making any new start-up business decisions:

A)      Market assessment

B)      Securing realistic funding sources

C)      Forecasting sales, expenses and cash flows

D)      Potential profitability

E)      Regulatory, legal issues

F)      Personal costs

Arguably, the most important issue revolves around determining who or what your market niche is. You need to quickly address a market review that indicates who are your clients, where are they located, how will you reach them and what are the costs associated with this process.

Secondly, start-up businesses require varying amounts of cash. Figure out how much it will cost to get your business open on its first day and then determine how much working capital will be needed to keep it running for a period of time - typically 90 to 120 days. Be prepared to personally provide a great deal of this early money from your own finances, and then work to secure traditional funding (banks) or from possible angel investors.

When you have completed your market assessment, it is vital that you work with an accountant or local economic development agency to develop projections which will include sales, expenses and burn rates. This information is not only vital when determining potential profitability, but will also help guide you in your effort to secure the proper amount of financing, and also timing as well.

Most businesses have either regulatory or legal issues that have to be dealt with at some point,  such as OSHA, the FDA, health departments, city, state and federal laws, etc. The sooner you identify them, the better prepared you will be.

Last but not least, very few entrepreneurs take into consideration the personal “life” costs associated with starting their own business. How does this impact your family, your personal financial situation, your “day” job, personal and legal risks?

Although there are many more issues you should work through before making a decision, this exercise will certainly help you decide if you have the “right stuff!”

Daniel P Slifko

Typically the first question most new business owners face when looking for funding or seeking advice is: “Do you have a Business Plan?” So what is a business plan, what should be included in it, why is it important and how much time should be spent on it?

A business plan is a necessary document that will turn your entrepreneurial dream into a commercial success. Additionally, a good plan should be used as an important management tool which will provide a blueprint and “step by step” instructions leading to commercialization and hopefully a profitable business.

When deciding what information should be included in a business plan there are many web sites, libraries and economic development organizations that can provide examples, formats and outlines. However, whether your business is technology based, lifestyle or traditional, there are five essential building blocks that all plans should address:

1. Product/Service - include information regarding uniqueness, life cycle, quality, competition, benefits and solutions.
2. Money - How much money is needed to start-up and what kind of working capital will be needed going forward? Where will the money come from, what will it be used for and will you be personally investing?
3. Management - What is your teams’ personal experience? Do you have good operating, management and human resource skills? Most importantly are you a great salesperson and fundraiser?
4. Marketing - Do you understand your market niche? Have you done your research on the competition and can you integrate the 4 P’s of marketing (promotion, product, place and price) into a successful launch?
5. Planning - your business modeling should answer the basic questions of “Who, What, Where, When, Why and How,” and make sure to include your personal goals!

The value of a business plan is that it identifies the essential events that must occur and actions that must be taken in a specific time frame to achieve a specific result. It should also provide a foundation for tracking the progress of your business and allows you to make adjustments or changes to specific operations which will help you maximize your chance of success.

As for how much time should be spent on planning, I will paraphrase what a noted economist, professor and business author once said; “The beauty of not planning is that failure comes as a complete surprise with little or no grief or remorse” In other words there is little or no chance that you will be successful in business without planning.

Dan Slifko
Business Development Manager, Rocket Ventures
slifko@rgp.org