Starting A Business – 2

Michael Lodge – listen to my PodCast   You can also listen to me on IHeart Radio.

This is brought to you by Lodge & Co. – a business and tax advisory service for small business and start-ups.  Visit our web site at www.lodge-co.com and learn more about us and what we can do for you.

Over the next few days you and I are going to talk about starting a business.  What is the processes we need to go through and questions we need to ask, and the planning that needs to be done.  We will go through the step by step process.

20 Questions Before StartingSo you’ve got what it takes to be an entrepreneur? Now, ask yourself these 20 questions to make sure you’re thinking about the right key business decisions:

1. Why am I starting a business?  From the very beginning of an idea for a business you need to know why you are doing it and that will build your commitment.
2. What kind of business do I want?  Don’t jump around, make sure you know what kind of product or service you want to provide.  No this and that and some more of that, but one single driven idea of what kind of business you are going to build
3. Who is my ideal customer?  Who are you going to tell your story to, what type of client / customer do you want for your specific product or service.
4. What products or services will my business provide?  So what are you going to provide?
5. Am I prepared to spend the time and money needed to get my business started? Remember, even a part-time business takes a lot of work, are you going to be prepared to commit hours of you and your family’s life to build this business.  Remember what I have said before, to build a business it takes commitment by you.
6. What differentiates my business idea and the products or services I will provide from others in the market?  Know who you are competing with, what services or products will stand out better than your competition.
7. Where will my business be located?  Are you going to operate in your home or are you going to have to operating out of a store front or office?  Have you looked that the foot traffic past your proposed place of business or are you just looking at pure costs, remember you have to combine both of them together.  Where are you going to place your business that will be better at driving in business to your business.
8. How many employees will I need?  You need to know what kind of manpower you will need to do the job to your clients.  Remember this, payroll is the largest expense, apart from rent, that drives your businesses bottom line.  You will need to identify what type of employee you need to bring into your business that will provide value to your business.  The key word is “Value” in everyone that you hire.
9. What types of suppliers do I need?  If you are going to make something or provide a service you will need suppliers.  Suppliers of products, internet services, accounting services, materials, and the list goes on.
10. How much money do I need to get started?  When you have answered questions 1 through 9 you should be able to know what expenses need to be covered to provide your product or service.  Your projected expenses should tell you how much money you will need to get the business up and running.  Forecast it out over months and look at both projected income/revenue, costs of goods, and general operating expenses.  And you need to know in your projections when your break-even point is.
11. Will I need to get a loan?  Do you have enough cash to get your business up and running or do you need to get a business loan?  And perhaps you don’t need a loan but you should look at crowd-funding opportunities or an investor taking a percentage of the business, and you can negotiate that in many different directions.
12. How soon will it take before my products or services are available?  Schedules are important and in dealing with your clients and knowing when you will be ready to provide products or services, has X, Y & Z been done so that you are at the point to unlock the doors and servicing your customers.
13. How long do I have until I start making a profit?  You need to know at what point will you break even or make a profit.

Other Questions that you should be looking at all the time is:

1. Who is my competition?
2. How will I price my product compared to my competition?
3. How will I set up the legal structure of my business?
4. What taxes do I need to pay?
5. What kind of insurance do I need?
6. How will I manage my business?
7. How will I advertise my business?

All of these are part of looking at your forecasted expenses at the beginning of your business and yearly.  And once you know how to read your financial statements and meet with your accounting team, you can look at these expenses and make adjustments where needed.
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Get your legal pad out and start answering the question above.  Sit down with your accountant and tax advisor and go over what is needed to create a financial forecast, budgets, and reporting process to know where you stand month by month.  Know your financial statements.