Preparation, preparation, preparation.
Anyone wanting to start a small business needs to follow that simple guideline, and a few more, in order to have a chance to succeed. Business consultant Randy Thomas with the Tarleton State University Small Business Development Center told a group Friday that 66 percent of all small businesses fail within the first three years because of a failure to plan as well as inexperience and poor location.
“Between 2008 and 2010, 200,000 small businesses failed in this country,” Thomas said.
Small business is the “backbone” of most economies, Thomas said. Getting a small business started requires some advance work, but is well worth it in the long run.
Getting things going will require a business plan, which most banks will want to see if you need a loan. It helps reduce the risk by analyzing all aspects of the business.
“It’s kind of your resume,” Thomas said.
Once someone has an idea, a SWOT (strengths, weaknesses, opportunities, threats) analysis should be done to help focus on potential problems and advantages of the business and to determine if such a business is feasible.
There is software available with templates to help you, but much of your plan should be written. Including a business description, management, a marketing plan and strategy, a table of contents and a business summary will all help a bank see what you are about and give a clearer picture of whether your plan is feasible, Thomas said.
If a bank denies your loan, the Small Business Administration offers loans of up to 75 to 80 percent of what is needed.
Business owners then have to become either a sole proprietor, forming a partnership, or become an LLC. Each has its advantages and disadvantages, Thomas said. He urged checking the tax implications with an attorney or accountant before deciding.