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"There is nothing worse than a sharp image of a fuzzy concept," said Ansel Adams, the photographer known for his majestic images of the American West. It is not likely Adams was talking about failed entrepreneurs, but the quote applies.
Lack of planning and preparation on the front end is how would-be small-business tycoons most often explained their failures to me when I was an employment counselor. "I wish I knew then what I know now," they would often tell me, as they set aside dreams of entrepreneurship and started looking for a job with a paycheck.
We are all familiar with a convenience store, so let us look at questions a person thinking of starting a convenience store should ask. Your business idea may be in a different field - and there's a good chance it has a URL in addition to a physical street address. But with some thought, it's possible to apply most of these questions to any business.
What hours and days will you be open? What hours are competing businesses open? Will being open 24-7 be worth the potential additional costs for staff and overhead? The businessperson must think of their own availability. What hours do you plan to work? Will you schedule yourself to work nights, weekends and holidays?
How will you attract new customers and lure established customers away from competing businesses? Will you spend your advertising money on newspaper ads, direct mail, online promotion, TV, radio or circulars? How will you measure the effectiveness of your marketing? Where will you get help with your advertising? How do similar businesses attract customers?
What will you stock? How will your stock compare with a grocery store or your competing convenience stores? Do you have a plan for finding out what customers want? What should be your starting inventory? Is franchising the way to go? If independent, will you have trouble lining up suppliers?
How many employees will you need? Where will you find these people? Prospective employees will be wondering about benefits - especially health benefits. Will you provide health insurance and how will you pay for it as a start-up? How many taxes will you have to pay? What forms do you need to complete? How will you pay employees and report wages?
Two coffee shops opened the same month in my hometown, both aimed at college students. Both were close to campus, but one was several blocks further away. The more distant shop closed in several weeks. Location is that important. Will your convenience store be located on a heavily traveled commuter route? It would have to be to attract customers on their way to or from work. What competition will you have on your route?
How big will the store be? Will it have sufficient parking for this type of traffic? Will it offer gasoline?
Will you renovate an existing structure or build a new building? Will you own or lease? Whatever choice you make it will be a major part of your start-up costs. Will zoning, septic or water issues be an issue?
Other start-up costs for a retail store includes shelves, refrigeration and cash registers. These costs are incurred before the first customer enters the door.
"My business failed and now they might foreclose my mortgage because I financed my new company with a home equity loan," said one distraught job seeker I counseled. Another used his retirement savings to finance his business. It failed. The would-be entrepreneur must ask himself or herself, How much money will I need to start? How much of your own money can you afford to invest in your business? Can you afford to lose all of it? Where will you be able to borrow money if you need to?
There are legal issues, too. The start-up must deal with licenses, permits and other matters of business law. It is likely you will need the assistance of a lawyer.
Entrepreneurs should know something about the businesses they plan to start. One counselee told me he was planning to start an electrical business based on his recent technical school training. Newcomers to a field may quickly get in over their heads. The entrepreneur should ask, Have I worked in any business that is like the one I want to start? Have you worked as a supervisor or manager?
Most of the job seekers with entrepreneurial aspirations who participated in workshops where I presented these questions didn't want to bother with them. They wanted to jump right in and start their businesses. Does this sound like you?
My advice is, answer these questions and write a business plan. And before launching a new business, contact a local Small Business Association office (www.sba.gov) for information and support. Good luck!
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