Starting a business can be tough, and with a two-thirds of startup businesses failure rate after the first three years according to Beth Reed, a business adviser from the Small Business Development Center, it can be daunting as well. On Wednesday, the Small Business Development Center held a Business Basics Workshop at Jamestown Community College that gave entrepreneurs essential information and guidance in how to be successful.
Essentially, the key to any successful venture lies in a well thought out and thorough plan.
"You go to a grocery store with a list or without one," Reed said, using an analogy to explain the importance of business plans. "And typically you do a whole lot better if you go with a list."
According to Reed, four components make up any good business plan: feasibility, potential of business, financial expectations and financial projections. By keeping these components in mind, businesses can keep on the golden brick road and a solid business plan gives investors and creditors reason to consider providing money to the business.
Small businesses attract customers with lower prices than larger retail stores or cater to niche markets. Reed said due to the struggle to keep prices lower than what is offered at large chain stores, small businesses tend to lean towards specialty stores.
Reed recommends small businesses should also keep a cash flow chart to know if they are making profit, losing profit or breaking even. This chart should include cash on hand, cash receipts, cash paid out, cash at the end of the month as well as essential operating data charted over a period of months or sales quarters.
Reed also made sure entrepreneurs understand the risks of starting a new business - not to scare them away, but because because it can be difficult when a business flounders. She said though with the right kind of planning and attention to detail, odds for success will be higher.
"There are certainly a number of risks getting involved in a new business," Reed said.
Besides the well-known financial and career risks, starting a new business can place a lot of stress on family and friends as the usual 9-to-5 job the majority of the workforce marches to evaporates into a round-the-clock obsession.
"If you get on the Internet at all, you will see the different entrepreneur quizzes - 'Is It Right for Me,'" Reed said. "Truthfully, it isn't right for everyone and there is a lot of stress involved."
Eighty percent of business failures are associated to marketing problems, according to Reed. This covers a large area of potential icebergs to hit, but the one which sinks the ship is the inability to make enough sales.
"You can have all of (the promotions) in place, but if consumers don't have the awareness then you still aren't going to get there," Reed said.
Small businesses though can get assistance through organizations such as the Small Business Development Center to help them succeed. Their rate for success also increases exponentially according to a study done by Dun and Bradstreet which states 94.9 percent of New York state Small Business Development Center start-ups are still in business after five years whereas only 50 percent of non-assisted start-up are in business after four years.
Another session will be offered on March 4 from 4-6 p.m. at the North County JCC campus in NCTC 116. Interested parties can reserve a spot by calling the Small Business Development Center at 338-1024.