Things to Consider Before You Start Your Business

Sources: Colorado Business Resource Guide & Small Business Development Center (SBDC)

Starting a business can be risky. Understanding the risks and minimizing them through careful planning can improve your chances for success. Please consider the following:

Personal and Financial Considerations

  • I am a highly motivated self-starter.
  • I have the emotional stability to deal with the stress of being a business owner.
  • I have all of the practical experience and skills required for success in my own business.
  • I am financially positioned to leave my current employment. In other words, I have savings to cover my salary for a period of time or I am able to guaranty my business will have enough cash flow to cover my living expenses.
  • I have the ability to cover my own health insurance expense.
  • I am willing to deal with the possibility of working longer hours for less money until my business becomes profitable.
  • My friends and family understand what I’m considering as a business and are they supportive of my commitment.

Basic Start-Up Considerations

  • My business concept is feasible.
  • I have thoroughly researched the products and/or services I plan to provide.
  • I have determined there is a market for my product and/or services and have a sound marketing plan.
  • I have identified my competitors and have a sound strategy for dealing with them.
  • I have a reputable attorney; accountant, banker, and insurance agent and I have sought and carefully considered their advice.
  • I am thoroughly informed about business licensing requirements, zoning issues and tax reporting and payment responsibilities.
  • I have thoroughly researched the best business structure for my operation.
  • I have thoroughly researched my financing options and am able to access the start-up and operational capital I need.
  • I have, or someone I trust has, the organizational and bookkeeping skills to keep my financial and administrative requirements current and accurate.
  • I have thoroughly researched location, leasing, and purchasing options.
  • I have developed a brand/logo and trade name.
  • I have thoroughly researched my brand/logo, trade name, patents, and/or copyrights in all relevant categories and have registered them in a manner to insure legal protection.
  • I have completed a comprehensive business plan that includes:

Summary
1. Statement of Purpose and Objectives of the Business
2. Business Structure
3. Definition of the Market Served/Customer Profile
4. Description of Products and/or Services
Market Evaluation/Marketing Strategy
5. Location of the Business and Map of Competitors
6. Advertising and Promotional Programs
7. Market Analysis
Owner/Management Team
8. Owner/Management Qualifications for all Partners
9. Owner/Management and Partner Functions
Operations
10. Location is Relationship to Ideal Customer Base
11. Location and Facilities Requirements
12. Staffing Requirements/Organization Chart
13. Training Requirements/Initial and On-Going
Financial Summary
14. 1st Year Financial Analysis
15. 1-5 Year Profit/Loss Projections
16. Breakdown of Start-Up Costs and Capital Expenditures
Risk Analysis
17. Primary Areas of Risk and Viable Solutions
18. Identification of Potential Business Difficulties and Viable Solutions

Partnership and Investor Considerations

  • My partner(s) and I have complementary skills and compatible personalities.
  • My partner(s) and I have a written understanding of our place in the organizational structure and our respective responsibilities.
  • My partner(s) and I have a well-drafted and legally binding partnership agreement that includes and “buyout” clause.
  • The partner(s) buyout agreement is funded (e.g. escrow funds, whole life insurance, etc.)
  • My investor(s) and I have a well-drafted and legally binding agreement.
  • I am able to provide current and accurate financial information to my partners and investors.
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