Business Posts

Startup Basics: Choosing a Business Location

Choosing a location is a crucial step in starting a business. There is more to identifying the right location than just finding an available structure to occupy. How you go about choosing your business's location will define your organization.

A business location strategy takes planning and research and a willingness to thoroughly vet all your options. Finding the right location involves both identifying the desired qualities of a potential space and considering your needs as a business owner.

Here are some key factors to consider when selecting a location for your small business:

  1. Location Type and Zoning Restrictions

    The location you choose will depend on the type of business you operate. Consider the location type that makes the most sense for your business and customers, whether it’s home-based, retail, mobile, commercial, or industrial.

    In almost every case, where you can locate will be dictated by local zoning ordinances. Contact your city and/or county clerk’s office for information about ordinances or zoning restrictions could affect your business, as well as any special considerations such as required structures and taxes.

  2. Costs and Budget

    When weighing business locations, it’s important to the overall cost, not just the rent or mortgage. Costs that can vary significantly by location include standard salaries, minimum wage laws, property values, rental rates, business insurance rates, utilities, and government licenses and fees.

    In addition, income, sales, property, and corporate taxes may vary significantly from place to place. Some state and local governments offer special tax credits for small businesses; you might also find state-specific small business loans or other financial incentives.

  3. Customer Demand and Competition

    Consider who your customers are and the importance of their proximity to your location. If your customer base is local, does a sufficient percentage of that population match your customer profile to support your business? Does the community have a stable economic base that will provide a healthy environment for your business?

    Research different demographic aspects about your local area, particularly around your desired location, for example, purchasing power and disposable income, means of transportation, average age and population, recreational activities and hobbies, and family status. This information will help you determine the potential demand for your product or service.

    In addition, knowing where your competitors are located will allow you to better gauge demand for your product or service compared to other companies. Ideally, you want to secure a location that’s not saturated by your competition. Look for areas where your product or service is in high demand and/or where your competition is low. If possible, you’ll want to find a location where the other businesses on the block are complementary, to ensure that your business fits into the local market.

    Library resources such as Gale Business: DemographicsNow and Reference Solutions are helpful for finding information about individuals and businesses in a particular geographic area.

  4. Employees and Recruitment

    Finding high-quality employees is crucial to your business success. What skills do you need, and are people with those talents available? Consider what is most important to your current or future employees. Does the community have the resources to serve their needs, such as restaurants and grocery stores, childcare, banks, or schools?

  5. Accessibility and Parking

    Consider how accessible the facility will be for everyone who'll be using it, including customers, employees, and suppliers. Find out about the days and hours of service and access to locations you're considering. No matter how attractive your business is, sufficient parking should be a key consideration.

    When considering your options, ask yourself which location site makes it easier and cheaper for you to get the raw goods you need to operate. What sort of deliveries are you likely to receive, and will your suppliers be able to easily and efficiently get materials to your business?

  6. For more information about this and other topics, consider registering for the NaperLaunch Academy workshop series or scheduling a one-on-one appointment with a business librarian or NaperLaunch coach.

Posted: 
Tuesday, September 14, 2021 - 16:00

4 Key Components of a Business Plan

In a previous blog post, we described 5 main purposes of a business plan. But once you decide to write one, what should it include? While the level of detail will depend on the specifics of your business and whether you’re writing the plan for yourself or to use as part of a pitch for funding, any business plan should include these four components.

  1. Company Information
    Your business plan should provide detailed information about key aspects of your company. Some of the information in this section and the next one will grow from your lean business model canvas:
    • Ownership: What is the company’s organization structure (eg, sole proprietorship, partnership, LLC, S corp., corporation)? You should understand why you’ve selected that structure.
    • Mission: Why are you going into business? What impact do you intend to have in your community or marketplace?
    • Value proposition: What is your unique offering? What makes your service or product a better value to a customer? (This blog post explains what should be included in a unique value proposition.)
    • Key Partners: Who are your business partners and your potential strategic alliance partners? Who are your professional advisers and investors? Who are your coaches and mentors? All of these people are as much a part of your team as your employees.
    • Key Resources: What are the resources you will tap into to be successful? What past experiences qualify you to operate this business? What are the organizations that will support your efforts (eg, incubators)?
    • Revenue Streams: How will your business make money? Identify your services or products.
  2. People
    Your business plan should identify key people and businesses connected to your business. These may include:
    • Strategic Partners: These people are not owners or employees of your business; instead, they own or represent other businesses that can align their marketing with yours to help you grow. (For example, a realtor may have a strategic partner who is a loan officer.) Your plan may identify types of businesses until you know specific businesses entities that will align with you.
    • Investors: Identify any individuals who have invested sums of money into the capital needs of your business. They may be equity owners or other financial investors.
    • Officers and Employees: In the early stages of your business, your plan will identify positions until actual names are known.
    • Vendors and Suppliers: Identify every entity that will provide services or materials to your business. This may include banks, accountants, attorneys, insurance agents, other professionals, manufacturers, retailers, wholesalers, utilities, car dealerships, schools, government agencies, and so on.
    • Customers: What types of customers or customer groups will you target? List specific names if known.
    • Competitors: Identify your business’ competitors, including what they offer and their strengths and weaknesses. How will you compete against them?
  3. Strategy
    Your business plan should outline your business strategies. Begin with your vision statement: where you will take the business and what it will be in the future. Then identify the key objectives you will achieve to fulfill your vision. As described in this blog post, this information is the start of a strategic plan that will include:
    • Management and Oversight: How will the business be organized, who will do what, when, how, and why.
    • Product or Service Delivery: How will the business perform its mission of delivering products and services – what channels, methods, and quality?
    • Sales Forecast: Predict the financial benefits of opening this business. The plan should show expected sales by product or service.
    • Staff Hiring and Management: Who will you hire and what qualifications will you be looking for? How will they be managed, and what are your expectations of staff?
  4. Finances
    Your business plan should include numbers to back up what you’ve described in the narrative sections of your plan. These financial projections should include:
    • Funding request: How much capital will you need and how will you raise it?
    • Capital infusions: List expectations for specific rounds of investing and specific investors.
    • Debt: Will you use debt financing? In what ways? How much? What are your expectations?
    • Equity: How much of the company’s equity will you and your partners retain and how much will be given up to investors? Begin to identify the valuation of your business.
    • Expenses: Account for expense categories and specific expenditures.
    • Revenues: Account for revenue streams and amounts.
    • Profit: Forecast all financial aspects, including profitability.
    • Financial Statements: Create pro-forma financial statements based on the expenditure and revenue forecasts you’ve developed.
  5. For more information about this and other topics, consider registering for the NaperLaunch Academy workshop series or scheduling a one-on-one appointment with a business librarian or NaperLaunch coach.

Posted: 
Friday, September 3, 2021 - 08:00

5 Reasons to Write a Business Plan

The value of a business plan is gained from writing it, not necessarily what you produce at the end. Whether it’s five pages or twenty-five, here are five good reasons to write a plan for your business.

  1. To set a road map to the future.

    Your business plan provides a map for your business to follow. Thinking through the various sections of the plan and gathering the necessary information will help you:

    • Thoroughly understand your business and market environment. Knowing the marketplace is more than just having a good idea. Have you done anything to prove the concept? Do you really understand who your competitors are and what advantages they have?
    • Chart specific strategies. How will you beat those competitors at the game they are already engaged? What must you do to win and keep a customer? Identify that in your plan so that you can share it with others and see what they think about it.
    • Detail alternative future scenarios. What are the alternative methods to deliver your product or service? How can it be marketed? What would be the most effective way to market based on your potential customers’ needs and buying behaviors?
    • Set objectives and action steps. Establish some short-term and intermediate goals, not just the long-range profitability objective. What must be accomplished and by when? Set small goals to lead up to the ultimate successes, and then identify resources needed to achieve your goals.
    • Manage more effectively. Knowing where you are going means avoiding side trips along the way. Spend time now to get to know your mission so that you can doggedly stay on course!
  2. To support growth and secure funding.

    If you are seeking funding to grow your business, your business plan will be an important tool in your pitch to investors. It will help you:

    • Identify the advantages of investing in your business. What the investor will gain by investing in your business? What makes your business a better investment than some other small business?
    • Create a unique selling proposition. What makes you unique enough that you have a recognizable advantage over your competition? Going through the planning process will help you figure that out. Why will people buy from your business? What will make customers want to buy from you instead of your competitor? How many of those customers are there that will choose you instead of the other guy? A little market research now will guide you in the marketing process later and give you a much better chance for achieving the growth necessary for success.
    • Build clear evidence of downstream profitability. What evidence can you develop in your research that clearly demonstrates your opportunity for success? If you can’t prove it now, you may not be able to achieve it later.
  3. To develop and communicate a course of action.

    No entrepreneur can do everything on his or her own. Even if you’re a solopreneur, your team might include advisors, service providers, or contractors. Whether you have a team of two people or twenty, your business plan will help ensure that everyone is on the same page. It will help you:

    • Align and focus your team. Give everyone on the team the same target and the same path and trajectory to hit the target. Everyone united for a cause means better chances to achieve the goal.
    • Establish milestones for your work. Measurable step by step milestones help you determine if you are track toward your goals. Don’t wait for a year to go by to determine if you are on track. Set achievable milestones in your plan that help you identify your own progress. Investors also want to see progress, and setting milestones allows you to brag about the achievements along the way.
    • Develop collaboration. Sharing a plan in development gives everyone on the team the chance to be engaged in the process and fosters greater participation. The collaboration makes everyone better and a stronger team player. Everyone understands the mission and the business program better if they have engagement in its development. They get the “why” without you having to explain it all the time.
  4. To help manage cash flow.

    Regardless of how you measure profitability, you should define your business’ financial goals. Your business plan will help you:

    • Identify break-even and manage by it. Figure out your basic costs and determine if you can actually make a profit at a price that will sell your product or service. Does it seem plausible, or do you need some more research? The planning process makes you double check your ideas, facts, and figures.
    • Know the numbers. How many sales will you have to make to reach profit? Can you do that in the time period allotted in your plan? What else must happen in terms of costs and expenses, such as salaries, marketing, travel, or delivery? Completing the plan requires you to know your numbers up and down and making sure it passes muster!
    • Set a course for profit and solvency. Fully reviewing the sales process right down to the payment schedule will put you in a position to manage your cash flow and be certain that you won’t become insolvent due to poor planning.
  5. To support a strategic exit.

    It’s important to start your business with the end in mind. Whether you intend to sell your business once it’s profitable or hand it down to your children or grandchildren, your business plan will help you:

    • Focus on creating value. If you go into your business knowing how you plan to get out, you’ll plan and operate in a different manner. Focus on value right from the first business plan.
    • Know what determines a true valuation of your business. Don’t allow yourself to be sucked into overstating the value and then believing it! You won’t get your dream price if you have to sell out.

A business plan is not intended to be a static document. By periodically updating your plan, you'll make sure that you have a clear direction in mind for your company and that you're not getting distracted from your goals by the day-to-day tasks of running your company.

For more information about this and other topics, consider registering for the NaperLaunch Academy workshop series or scheduling a one-on-one appointment with a business librarian or NaperLaunch coach.

Posted: 
Tuesday, August 24, 2021 - 18:00