Q.
I have worked for the same company for 31 years. I plan to retire in 2005 and
want to fulfill a long-time dream of having my own business. Is there anything
I should be doing during the interim to assist in getting my business started
on the right foot?
A. One of
the keys to small businesses getting started and succeeding is thorough
preparation. You are in an enviable position of recognizing, well in advance,
that there are things you could be doing to be prepared to make this major
move.
The
first thing you must do is to determine what type of business you want to open.
It may well be that you have made that decision, but in any event make certain
that it is something in which you have an interest and know a great deal about.
If you lack complete knowledge of the product or service you plan to offer,
begin extensive research into those areas through reference material, data from
trade associations, discussions with people who are familiar with this line of
endeavor and, if appropriate, observation.
Next,
take inventory of your personal life style; the long-term goals of you and your
spouse; your health; and your financial resources. By the time you plan to
start this venture you will have been working for at least 33 years. Are you
and your family certain that you want to enter a phase where the working hours
are likely to be longer than ever before and that time off for vacations may be
impossible for several years? Starting and running a small business is
extremely demanding, so be sure you are prepared to take this plunge.
If,
after giving the matter serious consideration, you still want to pursue your
goal then begin putting together a business plan. Many people associate a need
for having a business plan with the need to borrow money and, at best, that
need is always secondary. The greatest beneficiary of a business plan is the
business owner who writes the plan.
You
indicated in your question that having your own business has been a “long-term
dream” and in many cases where such a dream has persisted for a long time the
individual becomes emotionally involved in the process and that’s dangerous.
When you become emotionally involved you begin to believe that if you could
just get the business started you know it would succeed. That’s not so! The
real benefit of the business plan is that it will force you to take a hard,
objective look at every phase of the start-up and running of the business and
make contingency plans in case things don’t go as originally planned.
In
preparing the plan you will also determine how much money you are going to need
to invest in the business as well as what is going to be the source of that
money. Furthermore you must develop your personal monetary needs requires to
maintain the life style to which you are accustomed with and the projected
income from the business. In doing this you will soon determine is the
projected income can accommodate both the needs of the business and your
personal requirements. If it won’t then you had best re-examine your goal. After all your years of hard work you certainly do not
want to risk any or all of your retirement nest egg in a venture that is not
economically beneficial to you.
Another
major factor that will be required in developing your plan is in defining who
is going to buy your product or service or; in other words, identifying your
target market. The key issues here will involve having good input in
determining your target market and then having a marketing plan that will set
forth how you are going to reach those potential buyers. In working your way
through these evaluations you will become involved in identifying your
competition, evaluating how they are performing and how you can compete with
them. In addition, pricing of your goods or services has to be planned both to
satisfy the need to be competitive and the need to provide a reasonable profit margin.
Further,
as regards your marketing strategy, you must consider the important question of
location. If yours is to be service business and customers don’t come to you,
rather you go to them i.e., air conditioning service, then you can locate
anywhere you want. If, however, yours is a business where customers must come
to you, then location can be critical. In such a case you will need to make an
extensive study as to what the key elements are that
may apply to your business and what type of location can best serve those
needs.
As
you can see these and a lot more important issues need to be resolved before
you make any final decision. Since you have the time to make your plans in a
thorough manner, I encourage you to consult with SCORE counselors and gain all
you can from their vast experience.