Startup in Two Weeks: Day 3 - Calculating Startup Costs

You'll want a good estimate of the cash you need to launch. These tips can help. The third in a 10-part series.

It's critical to determine how much cash you'll need to open and operate your business before hanging your shingle. To keep your business running smoothly in its startup phase, you'll need enough capital to cover all expenses until you reach the break-even point. Many experts recommend new companies start out with enough money to cover projected expenses for at least six months. It's foolhardy to expect to generate revenue immediately -- it's best to plan for all contingencies.

Create a checklist of expenditures. These tips can help you get started:

• List the equipment, furniture, supplies and people needed to operate your business.
• Itemize startup costs for inventory, signage, sales and marketing literature or tools, research and product development, licenses, permits, operating capital, and legal or professional fees. 
• Calculate your monthly overhead for rent, supplies, utilities, business and health insurance, taxes, Internet access, shipping and other services. 
• Factor in your salary and employee or contractor wages.

Refer to industry-specific startup resources for additional costs that may apply to your respective business type. To determine accurate cost estimates, a good rule of thumb is to assume everything will cost more than you expect. Pad your number to create a safety net.

Then, tally and double-check the numbers before you begin writing your business plan and searching for startup funds.

Source:  Kimberly Stansell - www.entrepreneur.com 

Startup in Two Weeks: Day 2 - Research Your Business Idea

Many people have great ideas, but their businesses flounder in the marketplace because there really isn't an audience for their product or service. In this second installment of our 10-part series to help you launch a business, we'll help you evaluate your big idea.

Of course, thorough research will help support expectations about a business's success as well as uncover any potholes in your thinking.

Start now by asking yourself these questions:

• What problem does my product or service solve?
• Who will buy my product or service?
• Why will they buy it?
• Where will they buy it -- specialty shops, department stores, online, smartphones?
• What do I need to charge to make a healthy profit and will people actually pay that?
• What products or services will mine be competing with?

No business -- particularly a small one -- can be all things to all people. The more narrowly you can define your business and your target market, the better. So it's crucial that you create a niche for yourself in the marketplace. It's the key to success for even the biggest companies.

Wal-Mart and Tiffany's are both retailers, but they have very different niches: Wal-Mart caters to bargain-minded shoppers, while Tiffany's appeals to upscale jewelry customers.

To find out if your business idea has a chance of succeeding in the marketplace and to help you create an effective marketing plan, you'll need to do more than just answer the questions listed above. You'll also need to conduct more formal market research.

Generally, you'll need to collect information on three crucial aspects of your business:

• industry information
• target market
• your competition

Once you're able to substantiate the viability of your idea, then you can confidently move ahead.

Source:  Kimberly Stansell - http://www.entrepreneur.com