Written by Robert Claypool, LSB’s Chief Lending Officer.
The entrepreneurial spirit can strike from anywhere. A friend says, “Your cakes and cookies are always so beautifully decorated—you should open a bakery!” Or you’ve noticed a need for a landscaping company in your town, and you want to step up to the plate. Or you’ve been making rocking chairs and dining tables on the side for years, and you want to take your side hustle full-time.
Every small business starts with a great idea. But how do you turn that idea into something that will thrive? Something that will support you financially for years to come?
Stage 1: Pre-Planning
When inspiration strikes, it’s tempting to dive in and start brainstorming names, buying supplies, and thinking up marketing strategies. But before you start on the details, you need to set your objective. Ask yourself: Will my small business be my main source of income? Or is this a hobby that will bring in extra cash?
[Callout text=”If you plan to live off the profits of your small business, you need to set measures for success.”]
Go through your annual and monthly expenses and determine how much income your business must generate to support you and your family. This number is the linchpin of your planning and your baseline for success.
Stage 2: Planning
You’ve set your objective, now it’s time to develop your plan and learn the language of business.
Develop Your Business Plan
There are many questions you need to answer, including:
- Where is your capital coming from?
- What will be your business’s operating expenses?
- What will be your base of operations?
- Will you be a team of one, or will you hire staff?
- What equipment and supplies will you need to purchase?
- What will you charge for your goods and/or services?
- What is your launch date?
- How will you market your business?
Once your plan has taken shape, refine it with help from an accountant, an attorney, and a banker. Choose people and organizations who understand your objective and have experience and success in your industry. You should also have a strong rapport with your team of experts. The goal is to find partners you will work with for many years.
Learn the Language of Business
To lead your company, you need to have a basic understanding of accounting—the language of business. Even if you plan to hire a bookkeeper, you will need to be able to understand your business’s balance sheet, income statement, and cash flow. Become familiar with generally accepted accounting principles, then look for a basic accounting class. Your local community college may offer one, and there are numerous online courses.
Stage 3: Execution
Hit the ground running on your chosen launch date. Focus on doing your work well and building strong relationships with your customers, staff, banker, accountant, and suppliers.
Keep a close eye on your business’s finances—it’s a good policy to check them monthly, if not weekly. This will help you stay ahead of any shortfalls or spot potential areas of growth.
Finally, be prepared to work hard.
Running a small business takes extraordinary commitment, but if you’re diligent, plan ahead, and surround yourself with an excellent team, you can build something great that supports you, while benefitting your community and the next generation.
If you’re ready to talk to a lending officer about starting your small business, Leighton State Bank is here for you. Email us or call 641-628-1566.