Preparing To Succeed When Launching Your First Small Business
When launching your first small business, there are a number of pre-opening activities that need to be done before literally setting up shop. As a small business owner, you can't underestimate the importance of making the right preparations. Success doesn't just happen; you must plan for it.
The first issue we'll examine is establishing your business's identity. Next, we'll go through some initial marketing considerations for your new business, including analyzing the market, packaging and pricing, and promoting your operation. Then, we'll discuss designing action plans for your new venture. Finally, we'll address business planning.
Establishing Your Business Identity
Very likely, you're going into business because you feel you've developed a product or service that separates you from the pack. Now that you've invented a better mousetrap, and you anticipate people beating a path to your door, you'd be wise to protect your investment.
You can't underestimate the importance of first impressions, and most people initially may encounter your business through the identity you establish for it. Among other things, this identity includes the name of your operation. When picking and registering a name, you may be required to follow certain legal formalities.
In addition, other factors make up your operation's unique identity. Patents, trademarks and copyrights are collectively known as intellectual property and generally refer to the rights associated with intangible knowledge or concepts. Intellectual property may be a concern if your business is developing (or has developed) a product, process or concept you are going to market.
Intellectual property also may be a concern if your business is using a process created by someone else, whether you know about it or not. The laws surrounding this subject are quite complicated. If you have any concerns, you should ask your attorney what to do.
Initial Marketing Considerations
As a small business owner, one of your most important tasks will be to spread the word about your new product or service. The marketing plan is a key component of your business's strategy for success. It summarizes the "who, what, where, when and how much" questions of company marketing and sales activities for the planning year.
To develop the proper marketing plan for your business, you must understand what separates your product from that of your competitors. Then, more importantly, what do these differences mean to the target buyers? Positioning is the perceived value of these differences, and your goal is to effectively communicate the importance of your uniqueness to those most interested in buying your offerings.
In some cases, there may be little or no difference between your product and others. Or the differences may be very difficult to communicate (think of the difference between Coke and Pepsi). The challenge here is to create some differences through your positioning, and then use that identity to influence buyers.
Packaging represents a very concrete way to communicate with your target market and express the positioning of your business. People often will get to know your product or service, at least initially, by the manner in which it is presented. And this includes the look and the cost of what you're providing.
Pricing must reflect not only your costs to produce the product or service at the expected volume, but also the value your customers place on what you offer. What's more, price is a way to differentiate your business from others, especially in the consumer market.
Moreover, in order for your business to succeed, you generally need to promote your products or services, and their positioning, to the same buyers your competitors are targeting. Even if your business is one-of-a-kind, you still need to tell target buyers your business exists by using some kind of marketing communications. The best way to begin is to construct a comprehensive promotional game plan, expressing the key points you'll include in all promotion, advertising and public relations (PR) programs.
Promotional programs and advertising are popular ways to spread the word about your product or service. Designed, approved and paid for by the business itself, these activities are direct efforts by you to notify target buyers or end users of your availability in the marketplace.
Public relations activities are another way to promote the image or reputation of your product. PR is similar to promotion and advertising, but is more indirect, since some or all of the publicity a company's products and services receive from public relations activities may not be controlled by the company.
Spending on marketing support may range from less than 1 percent of net sales for industrial business-to-business operations to 10 percent or more for companies selling packaged consumer goods. Many small businesses estimate revenues, subtract expenses and use whatever is left for marketing support. A more rational approach would be to estimate what your competitors spend and then try to match it. If you are new to the marketplace, you may have to be more aggressive to establish your operation.
Designing Your Action Plans
Action plans set out the framework by which you will operate and manage your business, in areas not covered by the marketing plan. It covers activities such as:
- hiring and managing employees
- obtaining and working with vendors for needed materials and supplies
- ensuring production takes place as planned
- fulfilling orders
- making collections
- providing customer service and support after the sale
- dealing with unexpected occurrences or changing conditions
These issues can be conveniently grouped into three categories: operations, management and contingency plans.
Developing a Business Plan
All of the preceding information listed here is of vital importance to a brand-new operation. If these issues aren't carefully considered by a prospective business owner, the new venture stands little chance of success. Moreover, the consideration of these issues, and others, make up the content of a formal document called a business plan.
The structure provided by a written plan can make it more likely you'll consider all significant factors and let nothing important slip through the cracks. In short, it increases your chances for success. The planning process is an excellent way of evaluating an idea before committing time and money to it. A good plan also establishes a timetable for the completion of activities essential to getting the business up and running.
When preparing to write your business plan, remember that every plan is highly business-specific. For example, issues relating to location can be a key factor for a retail business serving a local market, so these would be given much attention in a business plan. Location would be much less of a factor for a mail-order business serving a national customer base, so a business plan for this operation would place little emphasis on location.
However, regardless of the type of business, most business plans will address the same issues. The order of presentation should be based on the characteristics of the particular business and the uses to which the plan will be put. A plan used to inform employees about how the business will be run should have a different focus than a plan prepared for submission to a bank in an effort to get financing.