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The basics of small business

April 08, 2013

Since I have been an adviser at the Angelo State University Small Business Development Center, it never ceases to amaze me how many people are interested in starting their own small business.Even though the economy may be struggling or the odds are against them, entrepreneurs just find a way to make it happen. Their spirit and drive are insatiable…

SAN ANGELO, Texas — Since I have been an adviser at the Angelo State University Small Business Development Center, it never ceases to amaze me how many people are interested in starting their own small business.

Even though the economy may be struggling or the odds are against them, entrepreneurs just find a way to make it happen. Their spirit and drive are insatiable. Many times an idea comes to them out of the blue.

The idea for a product or a service might be unique or innovative. It may even be the first of its kind; such as a shower mat made from recycled grocery bags. For most who are opening that new small business, their product or service is not something new.

Regardless of the idea, lots of work will need to be done before you can hang out that new shingle or flashing neon OPEN sign. Before you do anything else, find out if there is a need or a market for your business. Are there customers who are willing to spend their hard earned money at your establishment? Will there be adequate customers to open, sustain and build your small business?

Every new small business needs a name, should determine its legal structure and needs to be registered with the appropriate agencies. Your business could simply be your own name. Many also describe the type of business in the name.

There are a few types of business structures: Sole proprietorship, partnership, limited liability company and corporation. It may require you as a potential small business owner to seek advice from an attorney or CPA to help determine what is best for your business. If you will be seeking loans, investment or almost any type of financing you will need to have your business structure legally established. It could be as easy as registering the entity in the county in which you will be doing business.

Before opening the doors of your new small business, you will need to determine what your startup costs will be. Then estimate what your monthly expenses will be, and then look at your cash flow. Startup costs will show you how much money you will need to get your business up and running. Expense estimates should include those costs you will need to cover every month, whether you are open or not.

Sales forecasts need to be realistic, show the effects of seasonality or calendar trends, and other ups and downs of any small business. If revenues are not covering expenses, you need to know why and what you can do about it. Cash flow shows what your cash balance is every month. You could make a profit and still be broke. Managing your cash is extremely important.

If you are thinking about opening a small business, I urge you to come to the SBDC. The professionals here would be happy to assist you in any way.

“Business Tips” was written by Paul Howard, Business Development Specialist and Certified Business Adviser IV of Angelo State University’s Small Business Development Center. Contact him at Paul.Howard@angelo.edu.

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    Paul Howard, Business Development Specialist and CBA IV

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