Starting a business can be an exciting time but it is also filled with potential risks and pitfalls, according to Chrystal Irons, business development specialist, University of Missouri Extension.
“Your job as a potential entrepreneur is to minimize your risks by researching and planning all aspects of your new business,” Irons said. “One of the top reasons small businesses fail is lack of planning.”
Conducting an honest self-assessment is the first step to deciding whether or not to state a new business.
“It is important to ask if you have the knowledge and skills to own a business,” Irons said. “You have to be honest about your basic skills of self-management, time management, money management, business marketing and human resources. If not, how can you acquire these skills?”
The second step is to understand your proposed product or service and then investigate the potential market and industry. According to Irons, customers buy solutions to their problems. A business owner must be able to communicate clearly and concisely to a potential customer how their product or service will solve the customer’s problems.
“Once you understand your business offerings, you can begin to identify your potential customers and determine if there are enough customers who need your new product or service,” Irons said. “Part of this research should lead to marketing strategy. Decide how you will promote your product or service, what pricing structure customers will find acceptable and how to distribute your product to customers.”
Determining how much of a product you will need to sell is directly tied to understanding all of the potential costs related to a business. According to Irons, both start-up and ongoing operational expenses must be considered. Do not forget to include costs related to employees, licensing fees, insurance coverage, professional assistance and even copyrights and patents.
“When you fully understand your business costs including start-up expenditures you can start to identify sources of financing available to launch your new business,” Irons said.
Funding for a business usually comes in two forms debt and equity. Sometimes family and friends can provided funding. But, another source is a new business owner’s personal savings.
“As soon as you have taken these steps, begin putting your business ideas in a business plan format and work with your local lenders to determine what program might work best,” Irons said. “As an entrepreneur assessing whether or not you should go into business for yourself remember there is no way we can predict the future. However, conducting a thorough investigation about your potential business idea and market can minimize your risks.”
University of Missouri Extension and the Missouri Small Business and Technology Development Centers are available to provide technical expertise and free one-on-one assistance to guide individuals through the process of researching and planning a new business.
For more information or assistance related to a current or future business, contact one of the MU Extension business specialists in the Ozarks: Chrystal Irons at 417-546-4431 or Willis Mushrush at 417-256-2391. There are also three Small Business and Technology Development Centers in southwest Missouri: Missouri State University in Springfield at 417-836-5685, Missouri Southern University in Joplin at 417-625-3128 or Missouri State University in West Plains at West Plains, 417-256-9724.