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Business Ownership

Questions to Answer before Starting Your Business

Starting your own business is a big decision. Before you take the leap, make sure you’re committed to your idea and the work required by going over and answering the following questions.

  • What is my idea?
  • Am I providing a product or service?
  • Who is my customer?
  • Is there a need for my idea?
  • What does the market look like for similar products/services?
  • Who else offers something similar to my idea?
  • How is my idea different than the competition?
  • Do I have the financial resources to start my business?
  • Do I have a financial plan to make a profit?
  • Do I need a location for my business?
  • Will I need to hire anyone?
  • What business structure is best?
  • Do I need to register my business?
  • Do I need any certain licenses or permits?

Once you have a good idea as to the answer to these questions, you can go into more detail by writing out your business plan.

Writing a Business Plan

A business plan is one of the first steps in starting your business. Not only does it lay out specifics and details about what your business is, how it’ll be structured, and your goals, but it is a critical piece when/if you need financing or investors.

If you’re a well-established business, your business plan may look a little different as you have more of a history to include. The information below is geared towards those who are in the early stages of building their business.

Whether you’re a sole proprietor or an LLC, take the time at the beginning to develop your written business plan. If you find yourself in need of assistance, check out a business mentorship program such as Texas State Small Business Development Center or BiGAustin.

Section One: Executive Summary

Often written last, the executive summary is the most important piece of your written business plan. Once you’ve completed the other sections, you’ll pull important highlights from each to add to the executive summary. The goal is to give the reader a brief overview of your business, where you are now, and where you want to go.

This section usually includes:

  • Basic business information such as location
  • Mission statement
  • Management information
Section Two: Company Description

In this section, you’ll go into greater detail about your business. You’ll want to include information about the structure of your company, what the company offers, details about the current industry/market, how your product/service will meet the needs of the marketplace, and information about your ideal customer base. Think of this section as your elevator pitch.

Section Three: Market Analysis

For the market analysis, you will provide a detailed look at the market in which you plan to sell your product or service. The goal is to show your understanding of the market and how your business plans to compete.

Areas to cover:
  • Describe the current industry. What has growth looked like over the past couple years? What predictions are there for the future?
  • Narrow down to your target market. The industry might be large, but your target market should be specific. Avoid being too broad about who you hope to reach. Think about what you offer and who would benefit most from your business.
  • Research your target market. Gather as much information and data about your target market as possible. How big is the target market? What’s the potential? Can you find consumer data on your target market?
  • Research your competitors. Who else is out there? What are their strengths and weaknesses? Where does your product/service fit into this industry/market? Why would a consumer choose you over the others?
  • Determine your pricing. Use the information you gather here to determine your pricing model.
  • Research regulations. Make sure you know what city, state, and federal regulations you need to follow.
Section Four: Organization and Management Description

Think of this section as a combined resume for all your owners. In addition to detailed information about each of the owners (if multiple), this is also the section where you’ll detail your organizational structure.

As you lay out your organizational structure, make sure to include a chart with detailed responsibilities and tasks for each owner/employee/area.

After the organizational chart, you’ll want to list out all the business owners, their role in the business, and information about their history and experience. The goal is to show who is doing what and that the people running the business have experience and know what they are doing.

Section Five: Product/Service Details

In this section, you will provide as much detail about your product or service as possible. Include information about how you plan to make/develop your product/service, how consumers will use it, and where you are in the development process. Be sure to research any existing patents/trademarks, etc. for your product/service to ensure you haven’t crossed any legal boundaries.

Section Six: Marketing and Sales

You will need to include a promotion plan for your business in your business plan. This will detail how you plan to market your product to your target market and how you will handle sales.

Use the market research you have already done to determine different methods for reaching your target market.

  • How much money can you afford to spend on advertising?
  • What types of advertising do you plan to use?
  • How will you track results of your promotions?
  • What’s your sales message?
  • How do you plan to handle sales?
Section Seven: Financial Projections

The final section is used to show financial projections for your business for the future. If you’re presenting to investors and looking for financing, you need to show your plan for income, expenses, cash-flow, and more. Even if you’re not looking for additional funding, this section helps you determine your sales goals to help you cover expenses and, hopefully, make a profit.

As you put together the documents here, include projections for 3-5 years:

  • Income statement
  • Balance sheet
  • Cash-flow statement
Anything else?

There may be other sections you want to include in your business plan. If there are, you can include them as separate sections or as an appendix. These could be additional charts or data, letters of recommendation, etc.

The important thing to remember is to write it down so you have your plan to guide you as you start your business.

Again, if you find yourself in need of assistance, check out a business mentorship/counseling program such as Texas State Small Business Development Center or BiGAustin.