Entrepreneurial Blog

Planning is so badly needed by small businesses so that they look ahead to the future.  Planning is the important first step so that the future course of the business is determined.  Planning is setting objectives and procedures to achieve those objectives.   You must know where you are going and how to get there for your small business.  With planning you can inform investors about your chances of success.  A well laid out plan for your small business will interest investors, provide an operating guide for your business, provide direction and motivate employees, and provide the elements needed to attract customers and potential employees.

Small business owners so often neglect planning.  Many reason planning is neglected are due to time constraints, fear of revealing problems or weaknesses, lack knowledge of how to plan, and feeling that the future is unpredictable and cannot be planned for.

The two overall categories of planning are strategic planning and operational planning.  Strategic planning is the long-term direction that is needed to have their mission succeed.  Strategic planning is the definition of the business’s mission and objective and the strategies needed to accomplish these missions and objectives.  The mission is the long-term direction of the business.  The objectives are shorter term actions needed to achieve the mission.  Strategies are the course of actions that will achieve the objectives.  Operational planning is the setting of policies, methods, procedures, and budgets of the business.  The strategic planning usually occurs at the beginning before starting your business while operational planning is continuous occurring before and after the business begins operations.  Strategic planning is also considered long-term planning while operational planning focuses on more short-term.  Strategic planning is the big picture of the business with the operational planning being the intricate details.

Planning involves policies, methods and procedures, budget, and standards.  Policies are statements that guide the managers with their decisions.  They are the plans of actions that guide the decision toward the goals of the business owner.  Methods and procedures are the detailed instructions for employees to perform their jobs.  They are the specific actions in order to follow so that consistent results are achieved.  Budgets are the detailed plans expressed in monetary terms for a future period.  A budget is a list of revenues and expenses which is a plan for spending and saving for a specific future period of time.  Standards are the norm for the business, they are the practices that that he business owners deem acceptable.

The main factors that affect those people who desire to become an owner of a small business are finding the right product, finding the correct market for your product, decide to start a new business, buy an existing business, or buy a franchise, find the right location, and develop and implement a detailed business plan. To be successful you need to choose a product that fulfills a need and can be marketed in the location you wish to be in.  There are several factors to consider when choosing to start your own business; how much capital is required, what is the degree of risk, do you have a competitive environment, and are you prepared to handle all business situations by yourself.  There are several factors to consider when buying a business; why is that business for sale, what are the intentions of the owner, is the location suitable for your purposes, are the employees proficient and help the business, is the product marketable, and are you ready to take over an existing operation.  There are several factors to consider when buying a franchise; is the franchised product marketable in the location you are pursuing, can you handle the limitations that the franchiser imposes, and do you have the capital to purchase into the franchise.  It is the upmost of importance to develop and implement a very detailed business plan.

Define proprietorship, partnership, corporation, limited-liability company, cooperative, and joint venture:

A proprietorship is a business owned by one person who owns all of the assets and receives all of profits or losses and where the individual is liable.  A partnership is where two or more people are co-owners of the business where they share the assets, profits, and losses and where each co-owner is liable.  A corporation is a business that is owned by the stockholders who are a group of people that have given special rights, privileges and limited liabilities.  There are different types of corporations; a C corporation provides the limited liability protection for shareholders but is taxed at both the corporate and shareholder level.  An S corporation has special taxation; only the shareholders are taxed and there is no tax at the corporate level.  A limited-liability company has the advantages of the limited liability protection as well as the tax advantages of a partnership.   A cooperative is a collection of independent businesses such as producers, wholesalers, retailers, or consumers that act together as a business to buy and sell for their clients.  A joint venture is where two or more noncompeting businesses join to form a working relationship to make a profit.

Some basic questions to ask when deciding on the legal form to choose for a small business how large do you see your business down the road, what is the nature of your business, where will you be located, what will you sell or what type of service will you provide, how much control do you want over your business, how vulnerable do you want to be for lawsuits, what are your expected profits (losses), who will your vendors be, what type of insurance do you need, what bank will you use, and what do you want to name your business.