Continued from Starting Your Own Business – Be Willing to Commit.
Before starting up a new business, it’s important to have a plan. This may seem obvious, but all too often young entrepreneurs incorrectly believe that the idea itself is good enough. They are hungry for success and anxious to get started. In many cases, an important facet of the new business is in place providing a false sense of security. For instance, it may be that a head chef discovers an ideal restaurant space is for lease. He or she knows the broker and learns that excellent commercial lease terms are being offered. Rather than diligently examining the business’ prospects, the excited chef dives in taking out loans with unfavorable terms, entering into oral partnerships, engaging the services of the first vendors that come along and/or exposing his or her personal assets without the benefit of adequate insurance or the formation of a corporation or limited liability company.
If the head chef’s plans for a successful restaurant are sound, they won’t depend solely on the restaurant’s location. It is best to first diligently analyze all aspects of the business and develop a business plan before starting any business venture. Consult with trusted advisors such as your business attorney, accountant, banker and insurance agent to ensure that you are prepared for all of the professional requirements of business ownership. In the above case, this is true even if it means losing out on the favorable lease terms being offered. The development of a sound business plan includes: identifying the target market for the goods and services being offered; developing a marketing strategy that includes an examination of the prospects for capturing and maintaining a profitable share of that market; strategies for growth; securing funding and capitalization; consideration of employment and management structures; personal income needs; analysis of potential risks; and consideration of alternatives such as purchasing an existing business or franchise. This is not an exhaustive list and an in-depth analysis of the development of a business plan is beyond the scope of this article. See Writing an Effective Business Plan.
When starting a new business, consider the competition. Successful competitors have well developed plans and proven systems in place. They remain acutely aware that entrepreneurs are poised to challenge their market share at every turn. They are ready for any contingency because they understand that even “the best laid plans of mice and men often go astray”. Diligent preparation and thoughtful consideration are necessary if one plans to seize market share from these dedicated capitalists. Consider contacting a San Diego Business Attorney for assistance with your initial planning.
Part Three of this series “How to Fund Your New San Diego Business” examines funding options.