TIPS FOR MAKING A GOOD BUSINESS START
By Janet Harte, Business Development Specialist, WSU/SBDC

Objectively analyze your personal strengths and weaknesses and why you want to own a business.

• Consider ways you will maximize strengths and minimize weaknesses.
• Assess your familiarity with the product/service and industry and the skills necessary to the specific business.
• Carefully assess your financial health by comparing what you own to what you owe. Available cash is especially important since, in the beginning, most businesses require more money than they pay out.
• Consider the ways you could raise all the money you need without borrowing.
• If considering the business as an investment, seek the advice of an investment professional.

If you need more knowledge or skills, consider employment in a similar business. You will learn more than knowledge and skills, you will learn if it is right for you!

2. FIND A NICHE

Clearly define your product or service and evaluate it as follows:

• Does it satisfy an unfilled need in the marketplace?
• Will it serve an existing market in which demand exceeds supply?
• Will it be competitive based on quality, selection, price, or location?

If you answer “no” to any of these, take time to reconsider your idea and/or ask for advice.

3. IDENTIFY YOUR CUSTOMERS

Make it a priority to thoroughly analyze the potential market to determine if your product/service will sell.

• Who are your customers?
• What are their needs and desires?
• Where do they live?
• How do they meet their needs now? (i.e. who are your competitors?)
• What is their buying behavior for the type of product/service you offer?

To get the answers, supplement your knowledge by doing some research. General statistical information and business resources are available at the library, industry specifics may be obtained through trade associations, books, and periodicals. Perform a search on the Internet to find more. Further research may require business counseling--make an appointment!

4. DEVELOP A BUSINESS PLAN

A business plan will help you identify and prepare for all the components of a successful business. Some questions to answer:

• What is your business strategy and goals?
• How much money do you need to start the business?
• How much money will you need to stay in business?
• What is your marketing strategy?
• What are your location needs?
• Do you have suppliers who are reliable, competitive, and may assist in start-up?
• Are you prepared to maintain complete records of sales, expenses, payables, and receivables?
• Who will advise you on tax decisions?
• What insurance do you need?
• Where will you establish a business banking account?

Start with the “Developing a Business Plan” checklist; a variety of business planning books and guides are available for in-depth analysis. They can instruct you and provide samples. You can get personalized assistance on customizing the business plan from WSU-SBDC.

If you don’t have 25-30% of the business’s start-up costs and/or you have a poor credit rating, you may find it difficult to secure outside loans. (NOTE: The majority of small business loans are made through commercial lenders.)

5. CREATE A LEGAL BUSINESS IDENTITY

Determine a business name and legal structure.

• Is your business name unique?
• Does your legal structure (proprietorship, partnership, or corporation) meet your needs?
• Do you foresee a future presence on the Internet? Secure a domain name as soon as you define your business name.

Register your business in the State of Washington through the Master Business License program.

• Are there other city or county licenses required?
• Do you need a Federal ID number?

Specific licensing questions are best answered by the issuers. If you need general information about legal structure, you can get it at the library or the WSU-SBDC. More complex questions should be referred to an attorney.