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Most Common Questions About Starting a Small Business

  • Common questions small business owners may ask
  • For those looking to start a business
  • Read our suggestions on how InnovatorsLINK can address these concerns

Anyone looking to start a small business will have questions about the process – and may question whether they’re up to the task of getting a business off the ground. Here we address some of the most common inquiries entrepreneurs have when establishing a company, and provide further information on InnovatorsLINK resources that can assist you.

What is a business plan and why do I need one?

A business plan gives a clear definition of your business and identifies your goals.Think about what you want to do to develop a product or service, how you’ll market it, your financial projections, and other crucial information. The business plan should provide be a specific, organized way to describe your company and demonstrate how it can be profitable.

The business plan is useful when applying for financing, but is also a good way to tell your sales personnel, suppliers, and others about your company’s operations and goals. The plan doesn’t have to be too rigid; many startups end up deviating from it once they’re underway.

Do I have what it takes to own and manage a small business?

To determine if you have what it takes, you need to answer some questions about yourself:

  • Am I a self-starter?
  • Can I get along well with people who have different personalities?
  • Am I good at making decisions?
  • Am I physically and emotionally prepared to run a business?
  • Am I good at planning and organizing?
  • Will I be motivated to run a business?

InnovatorsLink’s Evaluation Tools can identify the areas of improvement and guide you to the best decisions.

Why do I need to define my business in detail?

It may seem silly to ask yourself, “What business am I really in?” But many businesses have failed precisely because they never answered that question in the first place. Clearly defining your purpose gives you a true sense of direction, as you’ll know how your business can work toward this purpose.

How much money do I need to get started?

Ideally, you should have enough money on hand to take care of your building and equipment needs as well as one year of fixed and variable operating expenses. These costs include the salary you pay yourself as the owner, utilities, and loan repayment.

Insufficient startup capital is a key cause of many business failures. Working with an accountant will help you determine just how much money you need to get the business going, and a sound business plan can help you unlock capital from financing sources.

Review the InnovatorsLINK summary of funding options here.

What financial statements will I need?

You should prepare and understand three basic financial statements:

  • The balance sheet, which is a record of assets, liabilities, and capital at a specific point in time
  • The income (profit and loss) statement, which is a summary of your earnings, expenses and net profit (or loss) over a given period of time
  • The cash flow projection, which shows the actual inflows and outflows of cash into and out of your business.

An InnovatorsLINK summary on financial statements gives an overview of their importance.

How can I come up with a great name for my business?

This can be a challenge, as many terrific names have already been claimed. Start by brainstorming several options, then search online to see which ones are no longer available. The business name should be easy to spell. While plenty of successful businesses have used nonsensical names, like Google and Uber, it’s best if your name gives some sense of what your company does.

Follow up this work by searching trademarks to see if the name is available. You should also check online to see if the domain name is available.

What are the biggest challenges to starting a business?

Some major challenges include:

  • Insufficient capital or poor cash flow
  • Coming up with a good business plan
  • Developing a great product or service
  • Staying motivated during difficult stretches
  • Long hours, time management, and work-life balance
  • Finding good employees and knowing when to fire bad ones

InnovatorsLINK offers a 12-part Bootcamp course to help early-stage companies get their footing and find success. Find out more about the program here.

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