Important considerations for most start-up businesses fall into these categories: philosophical, physical, and practical. The “3 Ps,” if you will. Taking time to analyze each “P” during the panning phase, prior to launching a business, will result in increased confidence, sharper direction, and solid goals for the entrepreneur.
Many people experience a seductive excitement about starting a new business, assuming an existing business, or purchasing additional locations. However, not all would-be entrepreneurs see their dreams through to fruition. Why? Let’s look at dentists.
Dentists are professionals with doctorate degrees who have invested significant time and money into their education. They are smart as a whip and know dentistry inside and out. Unfortunately, like a great number of entrepreneurs across various industries, dentists don’t know business, and business is an essential element in entrepreneurial success. While the idea of starting, or expanding, a dental practice is exciting, taking time to create a comprehensive business plan, not just to submit for a loan or seed money, but to set a course and define a purpose, will eliminate many potential storms along your journey toward success.
In this article, we’ll touch on the philosophical, physical, and practical considerations for a start-up business. First, however, think about whether you have what it takes to find success as an entrepreneur.
Dreamers vs. Doers
Many would-be entrepreneurs become overwhelmed thinking about the philosophical, physical, and/or practical aspects of starting a business. As a result, they either skip important considerations, saving them for a later date that never comes; become lodged in the mire and never move forward; or they give up their dream of owning a business and go to work for someone else. Wise entrepreneurs think their ideas all the way through before they begin the adventure of starting a new business. Wise entrepreneurs conduct the research and gather the data they need for a complete business plan, then press onward to achieve their dreams based on the information they’ve assembled and goals they’ve defined. They cement the foundation of their future in facts and logic, then allow their dreams to grow on reliable footing.
Philosophical Considerations for Start-Ups
Each of these bullet points requires significant consideration. A book could be written on every point below. To move toward business ownership, consider each of these points, make notes, explore what others have done in your field and your area, and determine what will make your business uniquely yours.
- Family buy in: Is your significant other going to support you in this adventure? Are you at a point in your life when you can invest your personal time and money into a new venture? Supportive family will be important to your long-term mental and emotional health as you begin, then grow, your business. The next few years will be a stressful time for everyone who depends upon you, and you will need their support.
- Company name: Google your county’s DBA (doing business as) registration protocol. Oftentimes, the originator of a start-up must check his proposed company name against a database of existing entities to make certain his will be the only business of that name in the county. Also, Google your proposed business name and your industry to expand your investigation. If you have any concern about your company name being uniquely yours, consult an attorney. The last thing you need is a lawsuit from a company with the same name!
- Tagline: A tagline is made up of a few words that either expand upon the company’s name (Name: Diamond Dentistry, Tagline: Cosmetic & Family Care) or make the company’s brand memorable (Name: GE, Tagline: We bring good things to life.). You can have more than one tagline and use them in various ways throughout your marketing efforts.
- Mission statement (for customers): A mission statement reveals your passion to your customer in a few sentences. Ask yourself: Why are you in business? What will you provide your customers? What do you do that your competitors don’t?
- Vision statement (for company): The vision is more for you than your customers. In a few sentences, define what your vision is, from a philosophical standpoint. What is your goal for your company? Are you in it to help people, make people feel good, change the way people think, or to save lives? What is your vision?
- Employee promise (for staff): Many companies don’t invest time in an employee promise, but defining how you will treat your staff and what you want to provide them along their journey with your company is an investment in employee loyalty. This could save an enormous amount of your time, energy, and money down the road.
- How your product/service is better: In addition to what you determine when creating your mission and vision statement, make a list of how your product or service will be better than what’s on the market right now. Why will consumers choose to do business with you instead of an established company or one with a cheaper service or product?
- What makes your product/service different than others: Sometimes, different is better, but not always. Perhaps your product is orange instead of black, and an orange version has never been available before now. Being orange does not make the product better, but it will make it stand out against other products. So, while you’ve already explored why your product or service will be better, also decide what makes it different.
Physical Considerations for Start-Ups
- Your physical wellbeing: Are you healthy, mentally and physically, enough to endure the financial and emotional stress of starting a new business? You will certainly experience highs and lows physically, financially, and emotionally during this time. A lingering illness or unhealthy lifestyle could seriously impact your potential for success.
- Name availability & DBA: Call the county for name registration and purchase your DBA. You’ll need this to set up a bank account. You may also need a tax ID number if you’re selling a taxable product.
- Banking: Take your DBA and any other legal paperwork (LLC, etc.) to your banker. Consider who will be signers on your account and how you’ll handle accounts payable/receivable. If you have to repay a loan you took out to start your business or you’ve financed equipment, think about whether you would like the payments to be auto-drafted. Determine how employees will be paid.
- Location: Will your business need a physical location, or can you work from home? If you will need an office, warehouse, or storefront, consider the best location. You’ll need to think about whether you need signage and visibility or an off-the-beaten path location would work well for your business. You can consult a realtor and even go further by hiring a service that will conduct research to determine the best location for your business. Make certain you understand your financial and length of lease obligations prior to signing a lease. Also determine whether you’ll need to undergo construction prior to moving into your new space. Consult an attorney if you have any concerns or questions about your lease or rental agreement. Consider parking for employees and customers, and don’t neglect to contact the city about permits. Insurance will be required, as well.
- – Required initial investment: Whether you bring seed money to your business or start without a penny in your pocket, know what your initial investment will entail. Make room in your budget for unforeseen expenses, and if possible, consult your mentor to determine whether your list of expenses is comprehensive.
- – Monthly investment: Once your business is running, from day one, you’ll incur monthly expenses. Rent, insurance, loan payments, payroll, phones, Internet access, supplies and/or products, cleaning service, taxes, and marketing are but a few expenses to include in your monthly budget. Determine how much money you need to begin your business, then how much you’ll need to spend each month for the first two years. Unforeseen expenses will pop up, so make allowances in your budget for incidentals and emergencies.
- Profitability: Based on the numbers you’ve run thus far, when do you anticipate breaking even? When will you turn a profit?
- Employees: Who will run your business the day it opens? How many employees will you need to keep the doors open often enough for you to turn a profit? What is the average pay for each position you need to fill? Consult www.bls.gov/oes/ for salary averages by job and region. Will your employees need time off? Who will do their work during this time? Do you need to interview placement and temporary staffing agencies? What will you need to offer in regards to benefits? Write job descriptions before conducting any interview. Don’t forget to consider how much you will earn!
- – Timeframe: How long is your sales cycle? How long will it take to complete a project or case? If you sell widgets, each sale is a closed deal. If you sell dental care, you may have a longer sales cycle that involves an initial consultation, clinical treatment planning, case acceptance, financing options, and then one or many appointments to complete the full case.
- – Quality control: How will you check your work, as well as the work of your employees? How will you acquire feedback from your customers, then apply that information to quality improvements for both service and products?
- – Customer service: If you could have 10 clones of yourself to run your business, how would each one handle customer service in his day to day work? How would you answer the phone? What would you say or do in various situations? When a customer is justly angry, unjustly angry? When a product fails and the customer asks for a refund? When you see a nasty review of your business on Google – true or not? You must set expectations for customer service before you open the doors of your business.
- Supplies/Products: What will you need to open your doors? How much inventory (supplies and/or product) will be sufficient for your projected traffic? How often will you need to order? This needs to be worked into your budget. Also consider who will do inventory and place orders. Be sure to find the best vendors for your situation and set up payment terms with them. Where will your inventory be kept prior to use? If your inventory has an expiration date, do not order too much at one time!
Physical Considerations for Start-Ups
Visit sba.gov and create your business plan there, following the simple instructions. Do not expect to complete the plan in one sitting. Review it, make notes, do your homework on each section, and complete one section at a time. Don’t leave any out! Set a due date for your completed business plan, and stick to it. If you lose interest or don’t have enough time to meet the deadline, rethink whether entrepreneurship is the right path for your future.
- Time required to get started: How long will it take to get your business up and running, open for sales? Create a timeline based on weeks and months, then fill in actual dates later.
- Define product/service: What, exactly, are you selling?
- Identify target market: What character is the best potential client/customer/patient for your service or product? Where do these characters shop, eat, and play? Learn everything you can about your target market. If your market is local, go to city-data.com to find demographic and population information.
- Consider market needs: In your market (global, national, regional, local), which companies are your competitors?
- Pinpoint major competitors: Research them, know them, and understand their product or service. How are they like your company; how are they different? You must identify their strengths and weaknesses so that you can develop a competitive business strategy. Look at these areas…
- – Their market share
- – Their brand popularity
- – Their product
- – Their price point
- – Their service
- – Their weaknesses
- Determine best price point for your product: How much will you charge? What will your profit be, per sale, after overhead and hard costs?
- – Define hard costs (physical items like supplies, rent, employees)
- – Define soft costs (intangible items like marketing, legal fees, and financing fees)
- – Look at competitors’ prices
- – Look at your projected expenses
- – Determine profitability per item/account
- – Measure how many must be sold each month to profit after expenses
- – Determine your break-even point
- – Decide if this project is worth your time
- Calculate advantages/disadvantages: Considering your personal life, professional goals, monetary and time investment required, and potential profits, think seriously about what you will gain by embarking on this adventure. Think also about what you might lose. Is it worth it?
- Identify goals for sales and growth: Most experts tell us to measure goals in short term (1 year and 3 year) and long term (5+ years). Now that you’ve defined your company, products, target market, and profitability, name your goals. Put them in writing and set 6 month dates calendar to review them. Goals should be achievable, and making personal and professional goals will help you establish goal setting as a lifelong discipline that can prove extremely rewarding.
- Job descriptions: Write a job description for each role you will need to fill in your new business. For a sample job description, visit http://www.businessballs.com/jobdescription.htm.
- If capital is required, owner financial information: Be prepared – your business plan should have personal financial information included if you plan to acquire a loan or investors.
- Marketing plan: The marketing plan is key to success. If you open a brand new business, how will you attract clients/customers/patients? Do you need a logo? Signage? Business cards and forms? Remember that Internet marketing is the most cost effective and efficient marketing tool you have today. Don’t waste time and money on print marketing until you have your Internet marketing strategy, complete with a solid SEO plan, well underway. The Small Business Administration includes a marketing plan template in their online business plan tool. Use it. If you need advice, consider consulting a marketing company like www.mdpmconsulting.com for free e-books and advice.