You have a plan, now what?
July 21, 2018
Last time we talked about writing a business plan and if you have done that, now what? You don't want to just stick it in a drawer and forget about it. It's time to get busy and get started. Your business plan is only part of the first step to getting started. There are several other things you need to consider. Once you have considered them you will need to create an action plan to get you started.
Most small businesses start off as a sole proprietorship. This is the simplest and most common form of business ownership in the United States. Usually, it's just an individual with no outside owners or investors. Being the simplest, it's also the riskiest. It's you doing business as you. If something goes wrong, everything you own is at risk. If you're working alone, you might just say, "well I can handle the risk," but keep in mind your personal liability also extends to any actions of your employees or agents acting on your behalf. Having proper insurance in place will help protect you and minimize the risk, but usually, there's a point in time when you will want to consider a more advanced legal structure such as a corporation or an LLC. Also, keep in mind that your legal structure will affect your taxation. The help of your accountant or tax professional is imperative when choosing the right legal structure for you.
Your insurance professional should be one of the key advisers on your professional team. Their job is to minimize any risk associated with your activities. No one likes to pay for insurance, but everyone is happy they have it when something goes wrong. Do your research. You should know what type of coverage is needed for your industry. The guy or gal that provides your home and auto coverage may or may not be the right person for the job. Get some referrals from other business owners.
Regulations, Licenses and Taxes
There is a lot to consider here. States regulate how businesses operate within their borders. You need to know the requirements and regulations in the area that your company will be serving. In California, we have an excellent resource at http://www.calgold.ca.gov. You enter the City and County where you are located, and it populates a list of licensing and permitting agencies that pertain to your business. Out of California do a Google search and see what you can come up with. There is probably something similar available.
You may think you know the suppliers you plan to use. But, usually as a new business, suppliers are reluctant to supply to you or provide a line of credit. By making a deposit or posting a credit card you can show suppliers you will be able to pay your bills and as your business develops in the future, you may earn the right to go on open account.
Bank / Investors
In the beginning, you may need some money to get your start-up off the ground. Whether you plan to go to a bank, venture capitalist or angel investor, prospective investors will ask to see your personal finances as well as a business plan when you approach them. I have found that it is extremely difficult to get bank financing for a start-up business. If you don't have any industry and management experience, it will be almost impossible. That's okay. Start small and scale your business. You can come back to the bank after two years of success.
Now you need to take your objectives and break them down into more manageable, actionable steps. Your action plan can help you understand what to do next and when to do it. You can list your key milestones and the objectives you need to achieve to obtain them.
Your business plan outlines your ideas, objectives, goals and much more. When starting your business, read through your plan daily. Everything is mapped out for you in your plan, and so by following it, you will manage your business more effectively, keep yourself organized and stay on track.
Remember that your business plan isn't cast in stone and things change. Your business may change, your market may change and your customers will change. Therefore, it's essential to keep your business plan up to date. Update it promptly with any new goals and objectives to keep you on track.
Jay Thompson is a Business Consultant with the CSU Bakersfield Small Business Development Center. The CSUB SBDC provides premium, one on one, no cost consulting to small business owners in Kern, Inyo and Mono Counties. For more information visit their website at http://www.csub.edu/sbdc.