When I decided to open a retail store in Old Town Alexandria, I was looking for an opportunity to do something that I loved, be my own boss and be able to walk to work everyday with my dog. What I quickly realized was that starting my own retail business was indeed as rewarding as everyone says it is. But planning and opening the business was also one of the most stressful periods of my life. Owning and operating a business is definitely not for everyone, and taking the time to properly plan and build a strategy can provide you with the best foundation for a successful venture.
The SBA reports that one third of businesses with employees will fail in the first two years and half will fail in five. With these kinds of odds, I recommend making sure that you know what you are getting into before starting off on your own and cutting ties with your steady paycheck. Here are some tips:
Know your strengths and weaknesses. Take the time to sit down and evaluate what you are good at and what you should learn or hire out. Do you know basic book keeping and accounting? Do you know how to create and manage a marketing strategy? Have you ever done inventory management? Do you know how to set up a database or point of sale program? Not having these experiences doesn’t necessarily mean that you can’t start a business, however knowing your weaknesses will help you to hire the right help or take the right classes before you open.
Join a local business organization. Meeting other small business owners can provide you with referrals, resources and energy. There is no need to spend time trying to figure out the best local insurance agent when you can ask your fellow business owners who they recommend (and who they don’t). Business organizations also provide wonderful encouragement and support for start-ups, which you don’t always get from your coworkers, family and friends. Which leads me to …
Take the criticism with a grain of salt. Not everyone can understand striking out on your own and operating your own business. They may not know your skills, passion or planning process or anything about your industry. I found that the friends in my life who were the least satisfied with their own profession were also the most critical of my decision to change mine. Listen to the naysayers; gather what tips you can from their concern and then move on.
Utilize your local and/or free resources. The Alexandria Small Business Development Center is a free resource for existing and new businesses. They can provide everything from sample business plans to referrals for legal advice. Join a professional association for your trade, which will likely be able to provide market data and national sales data for your industry in addition to referrals and others in your field that may be willing to talk about your business concept.
Write your business plan. Once you have these support systems in place, start writing a business plan. The process of writing the business plan is what will help you determine the best legal entity for your business, your start-up costs and cash flow needs for the first five years, the services and products you plan to provide and pricing structure for them, your market and how best to reach them, your employee mission and purpose and so much more. There are many sample business plans online, and the SBA can provide you with one as well, but no one should write your plan except you. It is your guide for opening the business and should serve as your work plan long after you have opened.
Continually update your business plan. I spend a few days each year updating my business plan with new market research, a new marketing calendar and financials. The updated plan helps me to evaluate what we are doing and adjust my operations accordingly. The best way to not be one of the 50 percent of small businesses that do not survive five years is to do your diligence in carefully planning your business.