When evaluating your business idea, one of the elements to consider is its ability to satisfy your wants and needs. If it cannot, you will most likely be unhappy with the business, and an unhappy owner usually makes a poor manager. Poor management is a leading cause of business failure.
Stating the risks you are willing to take for the potential rewards will help you decide whether the business is right for you. Take a few minutes to identify the financial and personal needs objectives that are important to you. Be honest with yourself!
NOTE: Objectives are very personal; each person's will be different. The importance of these lists is to make you think about the real reasons you are considering starting your own business.
|Yes||No||Annual vacations are important to my family and me. We never miss them.|
|Yes||No||I like to leave my work at the office at the end of each day. I think about it only when I return the next morning.|
|Yes||No||I am willing, and able, to concentrate on the business to the exclusion of family and friends.|
|Yes||No||I am in good health and have no family members with health problems.|
|Yes||No||I am comfortable with uncertainty, even if it means not being guaranteed a regular paycheck.|
|Yes||No||I enjoy working with people, even disagreeable ones.|
|Yes||No||I want to be my own boss.|
|Yes||No||I want to become well-known in my community.|
|Yes||No||I want to be the sole owner of my business.|
|Yes||No||I am willing to take a partner/investor into my business.|
|Yes||No||I must have a regular paycheck.|
I want to work____hours per day,_____days per week.
I like to spend _____ hours per week engaged in my hobbies or other leisure-time activities.
I want to employ _______ people.
I want to employ ________ members of my family or friends.
I want to make $___________ per year.
I must earn at least $ ______________ annually.
I am willing to invest $________________ to start my business.
Write a description to complete the following sentences:
Your business idea may be a very viable one, but without good management skills to execute it, your chances for success are poor.
This does not mean that you must yourself possess all the necessary management skills. It does mean that you must know your weak points, so that you can either acquire skills in those areas or hire someone who has them. Be aware though that an overdependence on others may expose you and your business to significant risk.
Your chances for success are usually much better if you have direct work experience in the type of business you plan to start. Past experience provides key contacts in the industry or community that can help as you establish your own operation. Past experience provides first-hand knowledge that cannot be learned from a book. It gives you credibility.
The Management Skills Checklist identifies some of the skills that business owners need in order to insure that they can adequately control their businesses. Evaluate how well prepared you are to manage your business by checking the appropriate category under each skill.
Use the space below the checklist to list the name of the person who will provide any skill that you do not have and will not obtain through training. For those skills you intend to learn, identify where and when you plan to get training.
|SKILLS||I Know How||I Need Training||Someone Else Will Do|
|Establish & maintain financial records|
|Prepare operating budgets|
|Put together a loan proposal|
|Compile financial statements|
|Meet payroll & sales tax requirements|
|Analyze financial performance|
|Project & control cash flow|
|Purchase & manage inventory and/or supplies|
|Determine credit worthiness of customers|
|Collect past-due accounts|
|Price my product/service|
|Promote my product/service/business|
|Hire & train employees|
|Monitor employee performance|
|Motivate employees; build a team environment|
|Manage my time|
|Delegate work to others|
|Negotiate agreements/contracts with suppliers, customers, etc.|
|Schedule production work, including labor, machinery, & material needs|
|Install quality control methods & conduct follow-up measurement|
|Meet basic legal requirements, including those related to employment, zoning, safety/health, waste disposal, etc|
|Identify & make changes necessary to maintain the business's success|
Complete the following statements:
A critical element in the analysis of your business idea's feasibility is evaluating how much of the business's financial needs you can meet from your personal resources. It is unrealistic to assume that you will be able to borrow all of the money you need to start your venture. Virtually every lender - aside from family and friends - will require you to put in some money of your own, either in the form of cash or assets. As a general rule only, plan to provide around 20% of the total funding needed (either in cash, assets, or both) to start your business. In order to determine whether you have an adequate amount of money to put into the business, you need to summarize your personal financial resources. Use a Personal Financial Statement to identify your current financial condition. Most often, a bank will provide you with and insist that you use their own Financial Statement form.
Instructions for completing a Personal Financial Statement:
Name Business Phone ( )
Residence Address Residence Phone ( )
City, State Zip Code
Business Name of Applicant/Borrower
*Alimony or child support payments need not be disclosed in "Other Income" unless it is desired to have such payments counted toward total income.