Step One: Getting Started
is for your business what the four food groups are for your body:
it is fuel; it is nourishment; it is essential for health and growth.
Before starting a business, the entrepreneur needs to prepare a
business plan. Before preparing a business plan, the entrepreneur
needs to do a little homework, otherwise known as research. Research
provides the "what," "where," and "how much" that every business
owner needs to know to be successful. Keep up with your
homework, and the whole process of starting and running a business
will go much more smoothly. Your research will also create the foundation
for all financial projections that you will make related to your
business. Do a thorough job conducting your research and you will
create a sound foundation for your future financial projections
and for the future health of your business.
What? Where? How Much?
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The first thing an entrepreneur needs to determine
before starting a business is:
do I Want to Sell?
you have already decided what you are going to do, click here
to skip this section.
Look at your interests, your past experience, your
skills. For example, if you spend your weekends taking car engines
apart and putting them back together, perhaps you could operate
a successful auto repair shop. If your whole family raves about
your cooking, you may want to consider opening a catering business.
If you have a knack for creating beautiful flower arrangements,
consider becoming a florist.
If you need help coming up with ideas for your business,
you may want to visit your local library. Ask the librarian for
assistance in finding a helpful book or magazine.
Here are some ideas for books :
201 Great Ideas for Your Small Business:
Revised & Updated Edition
by Jane Applegate
Turn Your Talents into Profits: 100+ Terrific Ideas
Your Own Home-Based Microbusiness
by Darcie Sanders and Martha Bullen
What Color is Your Parachute
by Richard Nelson Bolles
The 100 Best Businesses for the 21st Century
by Gregg Ramsay and Lisa Rogak
Here are some Web sites that might
help you come up with ideas for your small business:
This is the web site for Entrepreneur magazine.
This site will take you to the U.S. Small Business Administration's
on-line reading room. Peruse this site for articles related to
developing an idea for a business to start.
This is the web site for Small Business Opportunities magazine.
This web site contains ideas for starting on-line businesses.
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you know what you want to sell, the next step is finding
out as much as you can about your chosen business. Skipping
this step is like building a brick house without mortar. The research
you complete here will help you determine sales and income projections,
the size of your market, and facts about your competition. In the
United States, all types of businesses are classified with a number.
This classification system is called the North American Industry
Classification System, or NAICS. Formerly it was known as the Standard
Industrial Classification (SIC) system. The NAICS classifies 1,170
industries, of which 565 are service-based. It is very specific
in its classification. For example, a search using the word "food"
produced forty-three matches, ranging from "Food Service Contractors"
(number 722310) to "Food Machinery Repair and Maintenance Services"
(number 811310). Each match is broken down even further. Select
"Food Service Contractors" and the classification is broken down
into seven more specific categories ranging from "Airline Food Service
Contractors" to "Industrial Caterers." For more information about
NAICS codes, visit the Small Business Administration site's relevant
To find out the classification number for
your business, go to the U.S. Census Bureau's web site
You will be prompted to enter a word related to your business. For
example, if you want to manufacture garden furniture, you could
enter "garden." From the list of businesses with "garden" in the
description, there are three related to "garden furniture." Once
you know the NAICS number assigned to your business, you will be
able to find out a lot of information about your specific industry.
To find out more about your industry once you know
your NAICS number, go to the part of the Census site that contains
data from the economic census (http://www.census.gov/epcd/ec97/us/US000.HTM.
On this page, you can find information such as the number of retail
trade establishments in your area. At the top right-hand side of
the page, there will be a drop-down box from which you can select
a location in which you are interested. Then once the data appears,
click on the arrow located on the far left in the row next to the
category in which you are interested. Clicking this arrow will make
your search more specific. Continue clicking the arrow until the
industry you are interested in appears.
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Will My Customers Be?
you know what product or service you want to sell, you will want
to find out who will buy it. Years of experience
may have given you an excellent idea of who your customers will
be. For example, if you are opening a shop that sells designer wallpaper,
you may know that your customers have higher incomes and own their
own homes. If you don't really know who might be interested in what
you are selling, do some homework. In both cases, once you have
a general idea about your customers, you will want to find out their
specific characteristics and where they can be found.
Decide what you know.
The first step of all research is to write down
what you already know. So write down what you now know about
your customer. The next step is to write down what you don't know.
You know that the customers for your designer wallpaper shop have
higher incomes and own their own homes. You don't know their age,
their race, the neighborhoods they live in, their religion, their
education level, etc. What might motivate them to buy your product?
So make a list, and then find the answers to these questions.
Determine what information is already available.
Much of the information you seek is probably on-line, on this CD,
in a book, in a magazine or in some other resource available through
your local library. This information is called "secondary data."
For demographic information in North Carolina , please check here:
For quick facts about North Carolina provided by
the U.S. Census, click
here. This site also allows you to select a particular city
or county within North Carolina and obtain quick facts about that
specific area as well. For web sites that may lead you to the
data you seek, check out "Helpful Links"
at the bottom of this page.
Use the Customers Worksheet
to help answer the question, "Who is My Customer?"
If the information you need is not currently available,
you can gather it yourself. If you're opening a designer wallpaper
shop, stop by the designer wallpaper shop in the neighboring town
and see what its customers look like.
Develop a brief survey and take it to an area of
town where people who would purchase your product shop, live or
congregate. Ask the questions on the survey to some of these people
to gauge their interest in your shop.
Offer coupons for a discount in your store (once
it opens) if they answer the questions. You may also direct your
survey questions to people on a random basis.
For an example
of a survey designed to gain information about your customers, click
here. Surveys can be used to find out more than information
about your customers. You can use them to help you price and market
your product or service and to find out more about the competition,
as well. For an example of a brief market survey, click
Another way to increase your understanding of your
potential customers is to form a "focus group." Gather together
a small number of people whom you think may be interested in your
business. Ask several open-ended questions and encourage a discussion.
The type of information you gather
from this kind of research is known as "primary data."
For more ideas on gathering primary data about your customers, visit:
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Who Are My Competitors?
deciding where to locate your business, you will want to find out
about your competitors. Who are they? How many are they? Where are
they located? Although there are exceptions, you probably will not
want to locate your small business close to someone who would be
in direct competition with you.
Finding out as much as possible about your competitors
will help you in many ways. You may be able to avoid mistakes they
made. You will gain information that will help you with decisions
about where to locate your business, what to charge for your products
or services, and ways to advertise your business.
How do I find out about my
If you have completed research about your industry
and about your customers, you have already done some of the necessary
homework for finding out about your competitors. Industry research
will let you know, for instance, how many other businesses like
yours are operating within your city or county. Customer research
will guide you to where your potential customers are shopping and
why. As part of your competitor research, you may want to ask potential
customers survey questions geared to discover information about
the competition. If they currently use products or services like
yours, where are they buying them? What are they paying for them?
What do they like and dislike about your competition?
your industry and customer research guides you to who your competitors
are, visit their web sites (if they have one).
You can learn a lot from a visit to your competitors' web sites.
For instance, they may have information about prices, services,
locations and contact information. The look and features of the
web site itself will give you an idea of your competitor's professionalism
and possibly his or her resources as well.
After visiting web sites, you may want to call
your competitors directly to find out more about them.
Ask the kinds of questions a customer would: questions about the
prices they charge, the types of products and services they sell,
turnaround time for service, etc. If your competitor has a shop,
visit it for ideas about products and advertising.
Another way to find out about your competitors is
to talk to other business owners who have had dealings with them.
What kind-of service did they provide? What were the pros and cons
of working with them?
Use the Competitors
Worksheet to help identify and document your competitors.
Here are links to web sites that provide information
about researching your competitors:
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Should I Locate My Business?
If you have conducted research on your industry, your potential
customers and your competitors, you have completed much of the homework
you should do before deciding where to locate your business. For
instance, if you find out from your research that your customers
are only willing to travel fifteen miles out of their way to visit
your shop, you will want to open it close to a neighborhood where
many prospective customers live. If you are opening a donut shop,
you will probably want to make sure you do not open on the same
street as a nationally known donut shop.
things to consider when deciding on a location include taxes, laws
and permits, roads and facilities, incentives that might be offered
to new businesses, access to interstates, availability of warehousing,
and complimentary businesses located nearby.
For instance, a shop selling wedding dresses might
do well located close to a bakery selling wedding cakes. Another
consideration is the cost of operating in a certain area related
to the benefit. For example, perhaps your business does not need
to be located in a high-rent mall. Keep in mind alternative locations
One such alternative is a business incubator. Incubators
provide clients access to rental space and flexible leases, shared
basic business services and equipment, technology support services
and assistance in obtaining the financing necessary for company
growth. To find a business incubator near you, go to http://www.sbtdc.org/services/incubators.pdf.
And, of course, many choose to run their small businesses
from home. If you decide to operate from home, make sure you will
be able to meet any city, county and/or state regulations related
to running your particular home-based business.
Here are links to web sites that provide information
about choosing a location for your business:
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How Do I Finance
have a great idea for your business and you have found the best
place to locate it. You know who will buy your product or service
and you know who your competitors are. But starting and running
your business is going to take cash, possibly a lot of cash.
Working capital, otherwise known as cash,
is the oxygen that keeps your business breathing. Without
enough working capital, your business' vital functions will fail.
It won't be able to meet its daily requirements for living, such
as purchasing supplies, paying rent, and paying salaries. In a word,
before creating your business, make sure you will have enough money
to keep it alive. The NX Level Guide for Business Start-ups
(February 2002 by the Community College Workforce Alliance)
states that inadequate capital is the most common reason given for
the high failure rate of small businesses.
Where are you going to find the funds to start
and run your business successfully?
There are several steps to take to ensure that your
business will have enough capital to start and continue running.
1) Complete your Business
The Business Plan includes a section about Financial
Matters. Within this section, you will tabulate financial data
and projections related to your business.
The Financial Plan portion of the Business Plan
includes: a) Start-up Expenses; b) An Estimate of Future Sales;
c) Estimated Cost of Units Sold; d) Fixed and Variable Expenses;
e) Cash Flow Projections (very important); and f) A Break-Even
2) Determine how much capital you will need
to start your business and to keep it running.
Based on the estimated projections contained within
your Business Plan, you will be able to determine how much money
you will need, both to start your business, and to keep it humming.
3) Determine how much cash you have available
through personal sources that you are willing and able to use to
fuel your business.
Personal sources include: savings accounts, insurance
policies, stock and other investments, second mortgages, and donations
from friends and relatives. Note: You will probably need to provide
at least 20% of what you need from personal funds if the needed
funds are coming from a bank.
4) Figure out how much money you will need for
the business after you have contributed all of the personal funds
that you are able and willing to contribute.
5) Find a source for the remaining needed
funds. Other sources include:
a. Debt . Debt is a loan made to you
or your business. Sources of debt lending include banks, credit
unions, federal lending programs and state financing programs.
b. Equity . Equity is ownership rights
and privileges in your business that you give away in return for
capital. Businesses seeking this type of financing must become
a Partnership, Corporation or Limited Liability Company.
c. Alternative Funding . Alternative
means of funding include: suppliers who provide concessions, such
as extended payment periods and discounts; and grants.
*note: Grants, for the most part are only
available for non-profit organizations.
6) Prepare a written Financing Proposal.
The Financing Proposal is used to secure loans
and equity financing. Before preparing the Financing Proposal,
complete the Financial Plan portion of the Business Plan. This
section of the Business Plan will contain much of the information
and data you will need for the Financing Proposal.
The Financing Proposal contains the following:
a) Cover Letter
b) Summary (contains the purpose of the financing, amount and
terms requested, how the funds will be repaid, and collateral)
c) Details on how the capital invested or loaned will be used;
d) Details on Collateral (if seeking a secured debt
e) Information on the financial return for investors (if seeking
equity financing); and
f) Your prepared Business Plan (Financial data and projections
are particularly important).
If you follow the steps above, you will equip your
business with the cash it needs to breathe, both at its creation,
and into what will hopefully be a long life.
additional information on financing:
(Small Business Administration)
(Tips on Financing)
(NC Department of Commerce)
( over 4,000 sources of business capital)
International Center for Assistance, Inc. (ICFA)
(specializes in loans for small and mid-size businesses)
(listing of Economic Development Centers in NC)
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Incentives for Minority and
Women-Owned Small Businesses
and women-owned small businesses face unique challenges. Fortunately,
there are many programs geared to help them meet these challenges
What is a Minority Business Enterprise?
The United States Small Business Administration
(SBA) defines the demographic group that includes minorities as
"socially disadvantaged" and defines that description
within its website as:
"Socially disadvantaged individuals are those
who have been subjected to racial or ethnic prejudice or cultural
bias because of their identity as members of a group. Social disadvantage
must stem from circumstances beyond their control. In the absence
of evidence to the contrary, individuals who are members of the
following designated groups are presumed to be socially disadvantaged:
- Black Americans;
- Hispanic Americans;
- Native Americans (American Indians, Eskimos, Aleuts, and Native
- Asian Pacific Americans (persons with origins from Japan, China,
the Philippines, Vietnam, Korea, Samoa, Guam, U.S. Trust Territory
of the Pacific Islands (Republic of Palau), Commonwealth of the
Northern Mariana Islands, Laos, Cambodia (Kampuchea), Taiwan;
Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei, Republic
of the Marshall Islands, Federated States of Micronesia, Macao,
Hong Kong, Fiji, Tonga, Kiribati, Tuvalu, or Nauru; Subcontinent
Asian Americans (persons with origins from India, Pakistan, Bangladesh,
Sri Lanka, Bhutan, the Maldives Islands or Nepal); and
- Members of other groups designated by the SBA."
8(a) Business Development web site lists the following benefits
of the 8(a) program:
- Participants can receive sole-source contracts,
up to a ceiling of $3 million for goods and services and $5 million
for manufacturing. While SBA helps 8(a) firms build their competitive
and institutional know-how, the agency also encourages them to
participate in competitive acquisitions.
- Federal acquisition policies encourage
Federal agencies to award a certain percentage of their contracts
to SDBs. To speed up the award process, the SBA has signed Memorandums
of Understanding (MOUs) with 25 Federal agencies allowing them
to contract directly with certified 8(a) firms.
- Recent changes permit 8(a) firms to form
joint ventures and teams to bid on contracts. This enhances the
ability of 8(a) firms to perform larger prime contracts and overcome
the effects of contract bundling, the combining of two or more
contracts together into one large contract.
Forms for 8(a) Business Development
and Small Disadvantaged Business Certification are included with
this CD and may be accessed by clicking on the links below:
The 8(a) Business Development Mentor-Protege
The Small Disadvantaged Business (SDB) Certification Program
The SBA offers two additional business assistance
programs for small, disadvantaged businesses (SDBs). These programs
are the the 8(a) Business Development Mentor-Protégé
Program and the Small Disadvantaged Business (SDB) Certification
Program. Companies which are 8(a) firms automatically qualify
for SDB certification. For more information about the SDB Program,
click here. For more information about the 8(a) Business
Development Mentor-Protégé Program, please
For more information about programs and resources
for minority and women-owned businesses, please
click here and please
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The Business Plan
will be able to use much of the research you have completed when
compiling and writing your business plan. The business plan is the
blueprint or map for your business. Compare starting your business
to going on a vacation. Your vacation will go much more smoothly
with a plan. What week is best for the whole family to be away from
home? Where do you want to go? How will you get there? Do you need
a reservation? Will you have enough money for the trip? Without
putting forethought into the trip, you might never leave your driveway.
It's the same with starting a business. In order to have the best
chance of a smooth and successful venture, do some homework, consisting
of research, analysis and planning.
A business plan greatly increases your odds of
success. This CD is designed to make the creation of your business
plan easier. If you would like to get started right now
on your business plan, click here.
Or continue reading if you would like to analyze the research you
have just completed.
Links: Person County, Caswell County,
North Carolina and National
( return to top
North Carolina Links
Person County Economic Development -
Person County Government - http://www.personcounty.net/
Piedmont Community College -
PCC Small Business Center - http://www.piedmont.cc.nc.us/frames.html
Roxboro City Government - http://www.cityofroxboro.com/
Roxboro City Government/Business - http://www.cityofroxboro.com/business/business.htm
Roxboro Area Chamber Of Commerce - http://roxboronc.com/
Person County Cooperative Extension - http://person.ces.ncsu.edu/
Person County Public Schools -
North Carolina Links
|Caswell County Government -
Town Of Yanceyville -
Caswell County Chamber Of Commerce -
Piedmont Community College - http://www.piedmont.cc.nc.us/
PCC Small Business Center - http://www.piedmont.cc.nc.us/frames.html
Caswell County Schools - http://www.caswellschools.org
North Carolina State Department of
Commerce - http://www.nccommerce.com
North Carolina Rural Center - http://www.ncruralcenter.org
U.S. Census Bureau Quick facts on
States and Counties - http://quickfacts.census.gov
North Carolina Department of Agriculture
and Consumer Services -http://
U.S. Department of Agriculture
Rural Development - http://www.rurdev.usda.gov
Assistance to Businesses
on NC Cities and Counties
- Log Into NC
Business & Industry Services
Business License Information Center
Business Taxes and Insurance
Carolina Census Quick Facts
Chambers of Commerce
Employment Security Commission (Labor
Hispanic Chamber of Commerce
Institute of Minority Business Development, Inc.
Corps of Retired Executives (free counseling)
Small Business Center Network
Small Business Technology Development Center (SBTDC)
State Data Center
State Government Agencies
Business Administration (NC District Office)
business link to the US
of Economic Analysis, Survey of Current Business
(related to business activity)
Bank of the U.S.
& Business Opportunities (Federal
Business Development Agency (
U.S. Dept. of Commerce)
Department of Census
Department of Commerce
Department of Labor, Bureau of Labor Statistics
Department of Transportation, Office of Small and
Disadvantaged Business Utilization
Environmental Protection Agency Small Business Gateway
Government Export Portal
Government Web portal (information
on small business development)
Patent and Trademark Office
Business Women's Association
for Entrepreneurial Development
Lowe Foundation (information
Association for the Self-Employed
Association of Home-Based Businesses
Association of Small Business Investment Companies
Business Association (for
Association of Women Business Owners (NAWBO)
Federation of Independent Business
Corps of Retired Executives
Business Advancement National Center
International Center for Assistance, Inc
(ICFA) (training, technical assistance and business
Chamber of Commerce
for home-based businesses)
Wealth Success, Inc . (information
for International Entrepreneurs)
Business Search Engine
World Wide Web Chambers of Commerce
(site for Internet businesses)
Business USA (Resources
Business Center Network
Business Administration (on-line
Department of Labor
Your Final Decision:
Analyzing the Facts
the word "Analysis" makes you shudder and recall hated classes in
science or math: relax. Analysis is just a way to make sense out
of research. Analysis helps you figure out the answers to the questions
you had when you started your research.
Your Business Decision
Look at the list of things you wrote down before
you started your research. If you were uncertain about the type
of business you wanted to operate, start with your list of questions.
Now look at what you wrote down about your skills, interests and
past experience. Compare your personal expertise and passion to
information you gathered about different industries and opportunities.
By comparing your questions (what you didn't know) to the answers
(information you gathered during the research process), you should
be able to come up with a viable business that you would be both
interested in starting and qualified to start.
By looking at the secondary data and primary data
(if needed) that you collected about your potential customers, you
will be able to get a clear idea of who will be interested in buying
your product or service. Knowing your customers will help you decide
if your business idea will work because you will know if you have
enough buyers to be profitable. Knowing your customers will also
help you later when you put together a marketing plan for your business.
A brief form is attached here; once
you fill it out, you should know exactly who your customers will
The information you gathered on your competitors
is invaluable. From it, you can find ideas about what you should
charge for your product or service, how you should market your business,
where you should locate your business, any area not addressed by
the competition in which you could specialize, and if the competition
is too fierce in your industry. If you decide that your industry
is already choked with competitors, try to come up with a niche
or specialty, or start the research process again, choosing a different
business. A brief form is attached here;
it should help you put your research and thoughts together about
Your Business Location
Again, your research should direct this decision.
After completing your research, you will know where your competitors
are located; the cost versus the benefit of operating in different
locations; and any rules, regulations and incentives for locating
in a certain area. Armed with this knowledge, you can evaluate the
pros and cons of different areas, and decide where to locate your
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Is My Business Objective?
Once you have found answers to your questions and
studied your answers, you are ready to set your business objective.
Your objective is what you want to achieve. It is a mission statement.
For example, if you want to start a house cleaning business, your
objective might be to "offer affordable, reliable, high-quality
cleaning service to families in (your county, city or town)." From
a main objective, you can then decide on short and long term goals
for your business, and the strategies you will use to reach them.
Setting and reaching these goals will be covered in the Marketing
section of the Business Plan you
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A Word About Marketing
After researching your industry,
setting a business objective, choosing a location, and finding out
who your customers and competitors are, you are ready to do some
preliminary marketing analysis. A first step in determining how
to market your business is to prepare a SWOT Analysis. SWOT stands
for "Strengths, Weaknesses, Opportunities, and Threats." Based on
your research, you should be able to list the strengths, weaknesses,
opportunities and threats that apply to your business. Armed with
this list, you will be better equipped to position your product
or service in the marketplace. "Positioning" your product or service
means finding the right way to promote it, package it, price it,
and place (where to sell and distribute) it. A SWOT analysis is
similar to making a list of pros and cons before making a big decision.
Jane Taylor is opening
a pet-sitting service. After doing her research, she prepares
a SWOT analysis.
*20-years of experience volunteering with
animal rescue groups;
*No experience in accounting, computers
or other skills needed to run a business
*People work long hours & travel &
need a reliable person to take care of their pets while they're
*The county in which she lives already
has two pet-sitting services, both focused on the care of dogs
Jane decides to market her pet-sitting
service in a county adjacent to the one in which she lives because
the two most popular pet-sitting services in the region do not
operate there. Because many people in this county commute 45-minutes
each way to Richmond to work, she believes they will need someone
to give their dogs a break while they are working. Jane also
decides to expand her business and offer care for horses, as
well as house pets, since many of the residents in this rural
county own horses. Finally, she decides to hire a part-time
bookkeeper to maintain the business's records, so that she can
focus on what she loves: taking care of animals.
To complete your own SWOT analysis,
Analyzing the research data you collected will help
you make decisions. If you wanted to build a house, you would first
think about the type of house in which you would like to live; you
would research neighborhoods and land prices; you would talk to
architects and contractors. You would do your homework. If you didn't,
you would end up like the pig who built the house out of straw.
You would soon be homeless. Do your homework when building a business:
finish your research and analyze your findings. Your business will
then have a sound foundation. On this foundation, you can build
the sturdy walls of a sound financial plan to hold it together and
the reliable roof of good marketing to protect it from the elements.
Then the wind and rain of competition, changing consumer demands,
and improper planning will not blow it to pieces.
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Two: Operating a Business