Checklist For Going Into Business

Starting a new business is an exciting challenge, but can be risky if you aren’t fully prepared. Success starts with the entrepreneur and your willingness to work hard and persevere. The right attitude can make or break a business.

It also helps to understand your strengths and weaknesses relative to the business you are creating. Your odds are better if you choose a business that fits your experience, skills and educational background, and it’s something you really enjoy.

Here are a few tips to help prepare for that giant step into opening your new business:



1. Business Model – Many people rush headlong into what they think is a great idea, only to find out it’s far more complicated to implement than they thought. Gather business intelligence data and study the feasibility of your idea to validate that it can realistically produce a sufficient income.

2. Business Plan – While most banks will want a plan before they’ll loan you money, that’s not the primary reason you need a business plan. If you think you have everything you need to know in your head, you’re asking for trouble. A good business plan will flush out all the issues that need to be resolved before you open your doors and will expose issues that you never even thought of.

At a minimum, the business plan will include projections for income and expenses, assess the market for your product, define the space and equipment requirements, evaluate the competition, and determine how much start-up capital you need. If the marketplace is saturated with the same or similar products, then you need to decide if there’s a way you can differentiate yourself by filling a niche.

3. Legal Requirements – State and local governments have specific requirements and conditions that must be met to operate a business. Check with the town or city administrative office and the secretary of state to determine what permits or licenses are needed. If you are doing something complicated or that requires a variance from the regulations as you understand them, consult an attorney. For example, you need to verify that the building you will be using is zoned for your intended purpose. If you will be working out of your home, make sure you are not violating any local ordinances and that parking is not an issue.

4. Business Type – There are legal and tax ramifications associated with the form of business you elect. Some of the common types are sole proprietorship, partnership, corporation, and limited liability company. While most small businesses start out as sole proprietorships, this exposes you to personal liability for the debts and obligations incurred by the business. Make sure you understand the long-term implications of how the business is set up and get legal advice early in the process.

5. Sufficient Capital – Lack of capital is one of the top reasons why new businesses fail. Because it takes time for a new business to get off the ground and make money, you need enough capital to sustain the business for an extended period. This is even more critical during tough economic times. Early on, establish a line of credit with a bank that you can draw on as needed.

6. Location – Many people operate their small business out of their home. This can save you money, but it’s important that you carve out a dedicated space that will help you focus and avoid distractions and interruptions. Make sure you aren’t violating any local codes and that you keep accurate records for tax purposes.

If you open your business in a separate building, consider renting rather than buying. If things don’t work out the way you planned, you don’t want to be tied to real estate that may be difficult to liquidate. You can always buy later, or rent a bigger space should you decide to expand. Wherever you locate, make sure there is adequate security and purchase liability insurance that is specifically tailored for your business.

7. Vendors – If you will be buying raw materials to make your products, line up critical vendors in advance so that you can accurately estimate your expected costs. It’s also wise to find backup vendors in case your primary vendors can’t meet your demand or if they unexpectedly increase prices. You want vendors you can rely on to support you and help you succeed.

8. Marketing – Unless you have come up with a spectacular new product that will sell itself, you will need an advertising campaign. Thanks to the internet, you can mount an effective campaign at a relatively low cost. Start by setting up a topnotch website that is optimized for search engines. If you don’t have the expertise to do this yourself, hire someone that does. They will also be able to recommend methods for promoting the website to your target customer base.

9. Technology – Today’s consumers want to be able to buy products quickly and without hassles. An initial investment in the best technology will increase your productivity and pay off over time. This includes computers and software, communications systems, automated ordering capability, inventory control, and the ability to accept most forms of payment. Make sure you include enough capital in your business plan to pay for it. Consumers have plenty of other places to go with their business if you don’t measure up to their high expectations.

10. Employees – If you will be hiring anyone to work for you, they made need training. Unless you have the time to do it yourself, this will be an added expense. Employees bring an added dimension and complexity to running your business because of payroll and tax administration. If you haven’t managed people before, prepare yourself for one of the biggest challenges of all.

11. Personal Checklist – Ask yourself these questions:
  • Can I make decisions quickly and without all the facts?
  • Am I organized?
  • Can I deal effectively with customers and gain their confidence?
  • Do I have a reputation for honesty and integrity?
  • Am I willing to take full responsibility for making my business a success?
  • Am I willing to go to work every day without watching the clock?
  • Do I have the financial expertise to keep the books?
  • Can I work without the security of a regular paycheck?
  • Do I have what it takes to negotiate aggressively?
  • Do I have a take-charge personality?
  • Do I have any health issues that might be impacted by stress?
  • Am I easily discouraged if things aren’t going my way?
  • Do I have the drive and self-motivation to sustain the business at the beginning and during tough times?
If you answered “no” to any of these, reconsider your plan. Another option is to bring in a partner who can complement your skills and fill in the gaps. Clearly define your roles at the outset so there is no confusion about your respective duties and responsibilities.

The Small Business Administration is a valuable resource for new businesses. Set up an appointment and talk to one of their counselors about your plans. Another resource is the Service Corps of Retired Executives (SCORE), a free counseling service to small businesses.

Nurturing a business and watching it grow are a source of great pleasure and satisfaction. If you are willing to endure some long hours and hard work, you can be richly rewarded for all your time and effort.


Michael Sanibel is a freelance writer specializing in business, marketing, personal finance, law, science, aviation, sports, entertainment, travel, and political analysis. He graduated from the United States Air Force Academy and is also licensed to practice law in California and New Hampshire. Michael wrote this feature article exclusively for Debbie May.com (www.DebbieMay.com), an organization dedicated to helping small businesses succeed.