Thursday, November 1, 2007

Where Do I Begin with a Small Business Idea?

It goes something like this...
Your spouse or friend says to you, "Hey, I have an idea for a new business. I want to open a bakery in town. We need a good bakery."

Okay, that's a good start. But before you encourage your friend or spouse to invest any more time or money in his/her brilliant idea, let's consider a few key questions:

1. Realizing that most businesses draw their customers from a five-mile radius (in large metro areas), how many bakeries are currently in business now?
2. Have you visited those bakeries to determine which are independent and which are supported by a large chain? And, did you factor in grocery stores, donut shops, restaurants that sell cakes and pies, and other specialty shops that will compete with you?
3. Do you have a simple business plan that includes potential revenue and expenses. This plan should factor in such costs as lease space, utilities, the cost of good/services for your bakery, insurance, business licenses, taxes, and employees since you cannot physically do everything.
4. Have you spoken to your local chamber of commerce or credit union manager to determine how much this new business will cost? And, did you ask them if anyone else is planning a similar business start-up?
5. Can you make a profit in your first year? If not, you will need to draw down on your savings account. Is your idea worth it? Be sure the answer is an emphatic "yes!" Otherwise, you will be very unhappy if your business idea flops... and most new small businesses don't succeed because they had poor business plans.

These are just a few of the key questions you need to consider before you really start to invest too much time and money in your small business idea. Remember, the more consideration you give it, the better your chances of success. Think it through and get good advice before you launch. Good luck!

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