Auburn, Alabama — Starting a new business venture is difficult in today’s economy. Although some argue that luck is the key, seeking guidance and a solid plan can lay the foundation for a new business to thrive, according to a business expert.
Rick Zapata, a regional Extension agent with the Alabama Cooperative Extension System, describes what it takes to lay a foundation for success and growth for startups.
Have a business plan
Initially, anyone interested in starting a business should generate an idea. From this idea, he or she must formulate a business plan with attainable and measurable goals to guide them.
“Failure to plan will usually lead to failure in the business venture,” Zapata said. “The plan should have short term goals ranging from 1 to 3 years, and long term goals, which range from 5 to 10 years.”
An essential step during the beginning phase of a new business is the continuous execution of the established plan. In order to continue along the path, the owner should first decide who will buy the product or service and where to reach them.
“With limited funds, new owners cannot afford to advertise to everyone. After determining the market, owners should narrow their advertising by finding out where the market lives through the U.S. Census Tracts,” Zapata said.
According to the U.S. Census Bureau, Census Tracts are small, relatively permanent statistical subdivisions of a county that are updated by local participants prior to each decennial census.
During the rush in the early phase, many owners struggle because they underestimate the costs for their startup. The U.S. Small Business Administration reported that in the second quarter of 2014, 2,270 establishments started up in Alabama and 2,376 exited.
“Complying with government regulations is expensive, especially at the startup time when the business is not generating funds to cover those costs,” Zapata said. “Owners should include a cash flow estimate in their business plan to prepare for extra costs.”
Sustain a budget
Once the business is up and running, owners should ensure survival by sustaining a budget.
“Saving money creates the opportunity to re-invest, enlarge the business, cover slow business periods, and to pay taxes on time. Also, conducting a monthly evaluation is important to budget for expenses and make sure the business is profitable,” Zapata said.
A wide variety of businesses and a dense market make it difficult for owners to differentiate themselves.
“A few ways to set a business apart include: out working the competition and offering better prices, added benefits, such as delivery, later or earlier hours of operation, and an accessible website,” Zapata said. “However, nothing is more important than customer service. Having return customers is one of the hallmarks of a successful business.”
Most importantly, new business owners should not pursue this journey alone. ACES business workshops, business development centers at major universities, and libraries all offer resources to help guide small business owners.
Additionally, SCORE, is an association dedicated to helping small businesses get off the ground, grow, and achieve their goals. It has local chapters with mentorship programs.
“Attending the 12-hour Small Business Workshop with ACES would be a great benefit to anyone looking to start a for-profit or non-profit business,” Zapata said.