One of the major challenges facing any entrepreneur is
understanding all the various nuances involved in preparing to, and
actually opening a new business. In discussions with many graduating
college students, as well as many professionals (physicians, dentists,
etc.), I have often been told that while the individual feels completely
(or mostly) prepared with the "academic" and technical subject matter,
they feel inadequate when it comes to the business aspects themselves.
One of the major omissions seems to be a lack of familiarity with the
basic components of a business plan, and how to use these. Consider also, the need for this skill and mindset, as it relates to performing as a successful independent contractor, such as a real estate or financial planning professional. How well each individual is organized and/ or prepared, often determines the ultimate success, and this is important, not only to the realtor or financial planner, but also to their potential client, etc.
1. The first question one must ask, before even beginning to create a business plan, is what is the owner's "vision" for the business (or practice). What does the individual want from his business that might differentiate it from the "pack?"
2. One of the most challenging items to many novices seems to be the ability to identify costs, particularly startup costs and reserves. What if the business takes longer to open than anticipated (for example, awaiting permits, licenses, etc)? What if the revenue flow is lower than expectations? One of the biggest identifiable errors, and the overwhelmingly biggest cause for the demise of new businesses, is being under- capitalized. Businesses with insufficient reserves cannot pursue many effective strategies, and often resort to disastrous or at least disadvantageous crisis management instead of forward looking planning. Those involved in commissions - based industries or endeavors, must factor in how long things take to close, and be prepared for the early, lower cash flow phases of any business.
3. Part of a business plan must include in- depth financials. This information must include forecasts for revenues (which should be done with at least three different scenarios; optimum, average, and below average. The listing and analysis for revenue must include a discussion of why these revenues are anticipated, and how these numbers are devised. Next, a complete list of expenditures must be included. These expenditures must include start- up costs (including renovations, equipment, tools, labor, licenses, inspections, etc.), an in- depth marketing plan including a timetable and all expenditures related, fixed expenses such as rent, taxes, fees, salaries, benefits, shipping (if applicable), etc. Start- up business plans should include a starting take home salary for the owner, because if the owner is not compensated from the onset, many delay taking a salary (which causes undue stress and pressure, often creating burnout scenario).
4. A thorough, comprehensive marketing plan, with particular emphasis on the first three months, six months and one year must be developed as part of this plan. These expenses must be planned for and considered part of the start up plan, at least for this preliminary period. Many businesses make the mistake of saying they will market, but because they are under- capitalized, fail to expend sufficient funds to this endeavor. Invariably, if there is any type of financial shortfall, the marketing is often the victim, which then also adversely impacts revenues, etc. Abandoning marketing is generally short- sighted. So is over - advertising or entirely focusing on one type of vehicle (for example, while Social Media is important/ essential, it must not be the sole way one markets).
In over three decades of counseling start up businesses and practices, I have come to the conclusion that one of the major faults of many educational programs is not academic, but instead an insufficient emphasis on needed and necessary business basics. I urge colleges, universities, etc. to reconsider, and include more business related information, so that their students are better prepared for the real world.
1. The first question one must ask, before even beginning to create a business plan, is what is the owner's "vision" for the business (or practice). What does the individual want from his business that might differentiate it from the "pack?"
2. One of the most challenging items to many novices seems to be the ability to identify costs, particularly startup costs and reserves. What if the business takes longer to open than anticipated (for example, awaiting permits, licenses, etc)? What if the revenue flow is lower than expectations? One of the biggest identifiable errors, and the overwhelmingly biggest cause for the demise of new businesses, is being under- capitalized. Businesses with insufficient reserves cannot pursue many effective strategies, and often resort to disastrous or at least disadvantageous crisis management instead of forward looking planning. Those involved in commissions - based industries or endeavors, must factor in how long things take to close, and be prepared for the early, lower cash flow phases of any business.
3. Part of a business plan must include in- depth financials. This information must include forecasts for revenues (which should be done with at least three different scenarios; optimum, average, and below average. The listing and analysis for revenue must include a discussion of why these revenues are anticipated, and how these numbers are devised. Next, a complete list of expenditures must be included. These expenditures must include start- up costs (including renovations, equipment, tools, labor, licenses, inspections, etc.), an in- depth marketing plan including a timetable and all expenditures related, fixed expenses such as rent, taxes, fees, salaries, benefits, shipping (if applicable), etc. Start- up business plans should include a starting take home salary for the owner, because if the owner is not compensated from the onset, many delay taking a salary (which causes undue stress and pressure, often creating burnout scenario).
4. A thorough, comprehensive marketing plan, with particular emphasis on the first three months, six months and one year must be developed as part of this plan. These expenses must be planned for and considered part of the start up plan, at least for this preliminary period. Many businesses make the mistake of saying they will market, but because they are under- capitalized, fail to expend sufficient funds to this endeavor. Invariably, if there is any type of financial shortfall, the marketing is often the victim, which then also adversely impacts revenues, etc. Abandoning marketing is generally short- sighted. So is over - advertising or entirely focusing on one type of vehicle (for example, while Social Media is important/ essential, it must not be the sole way one markets).
In over three decades of counseling start up businesses and practices, I have come to the conclusion that one of the major faults of many educational programs is not academic, but instead an insufficient emphasis on needed and necessary business basics. I urge colleges, universities, etc. to reconsider, and include more business related information, so that their students are better prepared for the real world.
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