What do you need to know when thinking about starting a business? Well, we recommend a number of things.
First, you need to know that you will be dedicating alot of hours to your start up and to running your business in general. Also, that in the initial stages, you may wear alot of hats: bookkeeper, planner, owner, marketer, etc. You need to be prepared for this. It isn’t easy and it’s going to require your persistence and enthusiasm every day.
You also need to sit down and begin to put the “operations” of your business in writing. Often called a business plan, this document will serve as a measuring tool down the road, and a guide for you and others who join the business.
As part of your plan, you will be doing research regarding the type of business you are looking to open. Hopefully, this is something you are interested in, have a background in, and perhaps may have even worked in the field and/or been educated in the field before start up. You don’t have to know every nuance of the field, but you have to be aware of some of the basics involved. For example, a person who worked as a buyer for a local women’s clothing store for five years, would be an excellent candidate to think about starting their own shop. They know the basics of the business, have experience in some of its aspects in terms of management, and have a basic understanding of the market and costs associated with opening this type of concern.
Trade associations are a good place to look for information that is industry specific, such as how much consumers spend in a given industry, sales and outlook forcasts for the industry, and other significant and specific information relative to each sector. To find a trade association geared toward the type of business you wish to start, go here: http://en.wikipedia.org/wiki/List_of_industry_trade_groups_in_the_United_States. While not a comprehensive listing, it is a start. You can also “Google” your industry, plus the words “trade association” to find more associations in your business category. (Example: Womens Retail Clothing Trade Association).
We advise that you explore all the expenses and costs associated with starting your business, to help in the development of a solid CASH FLOW document. A good example of cash flow statements (with an excellent discussion and explanation) can be found at this site: http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P06_6400.
Once your cash flow is constructed, look at the bottom line–the full year of projected cash flow–and ask yourself: “Do I have the capital to cover this activity in my business for the first six months? The first year?” If not, you may need to seek outside sources of funding. To start up without making sure your business is covered financially will mean you will start “undercapitalized” and this can cause problems down the road, such as relying on personal credit cards to finance your business, not being able to pay your accounts payable on a timely basis, etc.
In the State of Pennsylvania, there are three basic items a would-be entrepreneur needs to consider for start-up purposes. These include: (1) registering the name of your business; (2) obtaining an Employers Identification Number; and (3) obtaining a sales tax number. There may also be some local or municipal concerns in terms of business start up. It all depends on where you are located and what type of business you are starting. For example: If you decide you would like to start a car wash in a given municipality, there will most certainly be zoning and environmental issues surrounding this type of start up.
The University of Scranton SBDC can assist you in your start up, by guiding you through the steps discussed above. For more information on how you can become a client, contact our Center at (570) 941-7588 or 800-829-SBDC. You may also fill out an online “Request for Counseling” form on our website: http://www.scrantonsbdc.com/.
(1) Fictitious Name Registration in PA
(2) Employers Identification Number
(3) Pennsylvania State Sales Tax