This was originally published on Monday, August 31, 2015, in the Pacific Daily News. Click here to subscribe to the PDN.
In the current economy, many people are looking for ways to make extra or more money. One such way is to start a small business. Almost anyone can open a small business. But there are some things you should know:
• Know your target market: A target market is a group of particular customers to which you want to get your product or service. Who is your customer? Is there a real need for your product or service? How will you reach them? By answering these questions, you can develop a business strategy that will attract the customers you want. It really is the first step in your marketing strategy. How do you find these customers? One of the easiest ways is through a survey. It does not have to be a formal one, just get out there and ask the public or let them sample what you are selling and get some feedback.
• Create a business plan: A common mistake that many small business owners share is a lack of a business plan. A business plan is a very helpful tool that can help you foresee any shortcomings. You will identify your competition, list your strengths and weaknesses, and describe your product or service and your marketing strategy. The plan also describes how the organization will operate and provides a snapshot of your finances. Some banks require a business plan when applying for a loan. If you need assistance putting one together, contact the Small Business Administration, SBA.
• Local and federal requirements: There are requirements that you have to fulfill when starting a business. Depending on what service you start, it can be just a few forms to quite a few. Some requirements could be for tax purposes with the Internal Revenue Service or health-related at the Department of Public Health and Social Services. Talk to a representative at SBA to make certain which agencies you need to contact.
• Capital: Knowing what requirements you need will help you know how much capital, or money, you need to start. Many small businesses start under-capitalized, which makes getting started very difficult. If you don’t have a lot of money, you will have to be creative when it comes to marketing your product or learn how to save in other areas.
• Liability: What are you responsible for? If you are opening up a restaurant or a bungee jumping company, your liabilities are going to be different. Talk to a business attorney on what kind of coverage you will need. After identifying your liabilities, talk to your insurance company. What will they will cover and how much? One of the largest expenses in a small business is insurance.
• The structure of your business: Are you going in alone as a proprietor or as a partnership? Determining how the company is structured will affect how your business will be taxed, how you share the profits and how personally liable you will be.
• Choose a name: Be sure the name of your company or product is in line and appropriate for what your company sells. Ask around to see if it is clear to others. If you will be doing business online, check to see if that domain name is available. You may want to choose several different names, just in case your company name is already being used when you go to register your company.
• Location, location, location: This has to be one of the most important decisions you can make. It requires precise planning and research. Of course you want a location that is affordable, but you also want it in an area where there is a lot of foot traffic from your target market. Also consider your completion, plans for future growth, and safety.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him firstname.lastname@example.org and read past columns at the Money Matters blog atwww.moneymattersguam.wordpress.com.