Some claim that before launching your business, you must draught a formal business plan. It’s controversial, and I’ll be honest: I disagree. I have almost 30 years of business experience, and I am currently the CEO of Patriot Software, a provider of online payroll and accounting software. You don’t need a formal document that outlines every small detail in MBA-level business speak unless impressing banks and raising money for your venture are essential. You’ll quickly discover that business strategies alter quickly as you go along. Instead, you should consider as many details “in advance” as you can.
Any and any who, what, when, where, why, and how queries that come to mind. As you get ready to create a startup, responding to these questions is an excellent initial step that will provide you the advantages of a business plan without the tediousness of traditional business writing.
Here are the important initial questions that you’ll need to respond to when you launch a startup, whether you’re creating a formal business plan or an informal list of your replies.
Initial Thoughts for Starting Your Business
- So who are you? What is your history? How does your background in education and employment support your new venture?
- Do you like to take risks? Are you prepared to put everything on the line for the company? Or, are you more of a structure-loving rule-follower? Can you handle chaos and constant change?
- Do you possess the physical stamina and health necessary to handle the challenges of beginning and operating a business?
- What kind of familial situation do you have? Will you have enough time to launch or run the company? Is there a danger that their needs will cause you to leave?
- Who work for you most frequently? What is their history?
- Does the company have investors? In that case, what are their histories and connections to you?
- What will each person do, and why? What will you be doing, for example, will you be the company’s sales department? What will your spouse do if you have one (for instance, will your partner be better at managing the internal operation)?
- What is the purpose of your company?
- Why did you decide to launch this company in the first place? What personal motives are there? What is your primary inspiration? What do you feel strongly about? What do you expect to gain from this venture? What are you prepared to give up to make this business a success?
- What sort of business are you considering launching? When it’s up and running, will you be happy “running” this kind of business? For instance, can you envision yourself owning a coffee shop for the next ten years?
- Why are you going to act in the way that you will? Are you enjoying it? Is there a need? Are you jobless and broke? Do you despise your work? Will you quit your career to pursue this full-time if you already have one?
- What are your financial objectives for your business and for yourself? What happens if you never achieve your financial objectives? Will you still be happy managing the company?
- When will you carry this out? after the new year’s first? as soon as you left your job? following your marriage? after you have received an investment from someone? once you’ve found a partner? What needs to occur or be finished before you begin?
- What goods or services do you offer?
- What kind of product—a commodity or a specialty—is your offering? Gasoline is an example of a commodity. Everything is identical, and the cost is the only factor that matters. Whoever offers the most affordable gas wins. A restaurant is an example of a niche product. For superior quality, some people might be prepared to pay more and stand in line.
- How will you deliver the service or create the item? What equipment or supplies are required? What utilities—such as electricity, gas, and water—do you require?
- When may your product be made available or not? Does your product or service have a seasonal component? If so, what are you planning to do when your product or service is unavailable?
- What timeframe do you have for getting your product ready for sale? Are there any parts or components that can prevent you from launching your product right away?
- What will the cost of your product be?
- Who are your current and prospective clients? (It’s advantageous if you can identify precisely the clients you’re aiming for.) Which specialty markets do they cater to? What location are they in? How big is their business? How does their business operate? How detailed can you make your description of them?
- What drives your clients?
- Who are the clients of your clients? Understanding their customers can help you understand your customers far better.
- Do you anticipate having repeat consumers, stable clients, or perhaps one-time clients?
- Where will the source of your growth be?
- What do you predict the rate of client churn will be (for instance, I predict I’ll lose two current customers for every ten new customers I acquire)?
- How will you keep your clients? How do you intend to keep customers?
Demand and Supply
- What does the situation involving supply and demand look like?
- What “market area” should you realistically try to enter? For instance, would you offer your goods or services locally, regionally, statewide, nationally, etc.?
- What kind of demand does your product or service have—for example, strong demand or sporadic demand? How many units are currently sold each month and each year?
- What is the present market supply of your good or service (i.e., will there be many rivals)?
- What gives you reason to believe that there will be a long-term market for your product or service with a high enough demand and low enough supply?
- How much cash do you require? Will you have enough cash on hand to cover both your personal and company expenses?
- Can you forecast your financial flow? How much money flow will you need to have a roof over your head and to be able to survive?
- How much cash flow will the company require to remain in operation?
- What will your salary obligations be, and to whom?
- How much will you be required to pay in fees to professionals (such lawyers, accountants, and contractors)?
- How long will you have to invest in the company before it becomes a profit?
- How much cash do you possess? Or, how much cash do you have? How much cash will you need to borrow if you must?
- Whom (identify them) may you try to borrow from? Will you ask family members for a loan? How certain are you that they will give you a loan? What if your connection with them as a result of borrowing from them changes? What if you’re unable to pay them back?
- Will a small company loan be required? In what degree do you believe a bank will provide you a loan?
- Who are your rival companies?
- What are the prices for their goods and services?
- Which features set your items apart from those of your rivals?
- What gives you the impression that you will outperform your rivals?
- Will you employ people? Who is going to manage, hire, and fire?
- How will you recruit workers?
- How will your staff be paid? Who will manage payroll and calculate payroll taxes (in-house employee, full-service payroll provider, etc.)?
- What system will you use to monitor the time and attendance of your employees (online time and attendance software, spreadsheet, punch cards, etc.)?
- What sorts of employment will you have to deal with?
- What information about the employee must you maintain in their employment file in order to comply with IRS recordkeeping regulations?
- How will your staff respond?
- What (if any) employee perks are you going to provide, and how much will they cost you?
Administration, Accounting, Law, and Insurance
- Which of the following company structure types (LLC, S-Corp, C-Corp, Partnership, Sole Proprietorship) will you establish?
- Do you have legal counsel who can assist with establishing the corporate structure? The price of that?
- Which taxes will you have to pay?
- Who will perform your accounting? Do you possess the expertise necessary to bootstrap your company’s accounting? Will you employ a third-party accountant? Who, if so? What accounting software will you use if you decide to do it yourself? Are you going to employ accrual accounting or cash-basis accounting software?
- How will you keep track of every transaction you make every day? Will you utilise a cash-basis accounting programme to keep track of each transaction involving money coming into and leaving your company? Or are you going to make spreadsheets to keep track of everything?
- Which of you or your spouse will be in charge of the chequebook (or chequebook software) and be in charge of paying the bills?
- How will you choose a bank?
- What address will you use on checks, in your bank account, and on invoices? Will you use a P.O. box or a street address? Are you going to employ a bank “lock box”?
- What printed documents—such as invoices, receipts, and business cards—will you require?
- What type of company insurance do you plan to purchase? What kind of insurance do you consider necessary? From whom are you going to purchase insurance? What will the price be?
- Do you require a service agreement or customer contract? What do you promise to guarantee or not? What format will your service or customer agreement take? Who is going to pen it? The price of that?
- When will you be able to be contacted for business? When will you be closed (for example, late at night, on the weekend, or on a holiday)?
- Who will place the supply order? What equipment do you require? Your suppliers are who? Do you have a backup provider for any supplies on which you are wholly dependent?
- How will you attract customers (for example, paid advertising, SEO services for organic search results, direct mail)?
- How will you carry out your promotion and marketing? Where will you place your ads?
- What budget do you have for marketing and advertising?
- Who will handle your advertising and marketing?
- What outcomes do you hope your marketing and advertising initiatives will produce? What method of advertising produced the best results, and how will you measure the results?
- What do you anticipate your client acquisition costs (such as cost-per-customer acquisition) to be?
- How will you measure the effectiveness of your advertising? Internet Analytics? monitoring the WordPress backend?
- How will you market your good or service?
- Have you ever worked in sales? Cold-calling? sales from door to door?
- Do you plan to handle the sales yourself? If so, how will you manage this given your other obligations?
- Will you employ salespeople? How many salespeople, if any?
- Do you believe that someone other than yourself could sell your good or service? Why do you feel that way?
- Will you hire unskilled salesmen or will you coach them to become salespeople?
- How will your sales team members be paid (salary plus commission, for example)? If so, what will you pay as a wage and how does the commission structure work?
- List every technological device you anticipate utilising in your company (e.g., computers, backups, The Internet, your business website, virus protection software, phone systems, point of sale systems, credit card processing hardware and software, smartphone, pay-per-click, etc.).
- Who will assist you in using your technology?
- What will each of those technological fields cost? List each piece of technology together with its monthly and one-time costs.
- What is the total cost of everything? Machinery? Inventory? Labor? Rent? Shipping?
- What procedures will you employ (i.e., methods to manufacture your good or service; any automated equipment or specialised machinery required to manufacture your good; any required industry quality standards, such as ISO 9000)?
- What unique equipment, tools, or supplies would you require? What are the prices of those equipment or supplies?
- Are there any hazardous materials you’ll be working with that need specific OSHA considerations? (I admit, I’m a little sensitive to that one after blowing up a laundromat.)
- Which market will you serve: the local, regional, national, or international market?
- Where are you going to work? a shop front? Leaving your home? from the basement? What will the price be?
Ready to Start a Business?
In order to be ready for further inquiries along the road, you are responding to these questions. When you establish a business, these questions provide a wonderful framework for introspection, but expanding your organisation may present a completely new challenge. Although there are many questions, this is only the beginning.