Guide to Starting and Operating a Small Business | 2018 Guide to Starting and Operating a Small Business - Page 10

Visit and “shop” the competition. Observe your closest competitors from the perspective of a customer based on what matters most to customers related to purchasing this product or service. Compare their business model to yours: Strengths that you’ll have to work hard to overcome; weak points that may be opportunities of which you could take advantage. View similar businesses’ advertising and websites. Study what they do, the image they present, the character of their marketing. Talk to successful business owners. Find a mentor, if you can, with someone who owns a successful business like the one you want to start, preferably someone who won’t be a direct competitor and is outside the geography of your intended service area. Hired or paid research. There are many companies that will conduct market research for a fee and can easily be found through the internet. Keep in mind that high quality research costs a lot. The good news is that you can get all the information you need for free if you’re willing to put in the time and effort. There’s lots of information available but it’s scattered among various resources. Just be sure that the source is valid, whether paid or free! College or university marketing students. Some schools offering business courses in marketing are looking for “real world” projects in which to involve their students. Identify the professors teaching those courses at nearby schools and contact them directly, or ask your SBDC Consultant if they might introduce you. Timing may be an issue as they would have to plan your project into their course and it might take a term before that could happen. Becoming a good market researcher is a valuable business skill for you to acquire. Market research is the basis for evaluating potential opportunities and ever-changing factors that affect your business – at start up and periodically as you continue on your business journey. 3. Startup Cost/Financial Resources Analysis (Feasibility). The business you have imagined may not be the business model you can afford. One of the most common reasons businesses fail is “hitting a financial wall” either before opening or soon thereafter, as a result of one or more contributing factors such as: • An insufficient estimate of the true cost of starting what you have in mind; finding out you need to spend more than you have to get it open or keep it going; • An unrealistic expectation about resources you might tap into; grants, tax incentives and startup loans are scarce, competitive and difficult to obtain; • A misconception about how quickly you will start making money, meaning you might need sources of cash to keep a business afloat until it does start making money. You need a well-researched estimate of what it will cost to start the business you have in mind so you can match it to the reality of your available resources and/or your ability to get conventional financing. This may lead to refining your idea to make your startup possible, based on your personal financial situation. The good news is that where there’s a will there is a way! Determining that you would not be able to pull together or be loan-eligible for a specific level of funding resources does not mean you won’t be able to start the business. It does mean you will have to rethink how you’ll start. The majority of businesses start by “bootstrapping” – starting with what you have at hand, perhaps working at it part time, building slowly but steadily. Every large business started as a small business, many of them building and growing one success or customer at a time. The next page shows a summary of categories of common startup costs. Depending on your business, some may apply to you, and some may not: 8