A lot of experts say the first step in starting a business is planning. Most begin with a suggestion to write a business plan. Others who are perhaps more conscientious, begin with a feasibility studies. While both are excellent first steps, both are premised on the assumption that you already know which business, at least, which particular industry, you’re getting in. That is rarely the case. Which is why, the first step in starting a business is knowing which particular business to engage in. This question is not just a matter of whimsical moods or preferences. You are venturing into business because you want to turn a profit. Knowing which businesses are profitable ventures can spell the difference between profit and loss, and ultimately, by how much – in actual dollar figures. Place your investment in a venture that is most promising.
Deciding Which Business to Engage In
In the US, bankers and other lenders have one important tool they use in deciding whether to grant a loan application or not. They get the Annual Financial Statement Studies from the Risk Management Association (RMA ), a complication and analysis of all tax returns filed by US businesses in the previous year. This little book provides entrepreneurs with a clear picture of what to expect in the real world. Even before beginning your feasibility studies, it is important to know how businesses in a particular industry you are interested in:
Firstly, it gives you a ballpark of the performance you can expect from any business you decide to pursue. If you’re considering a restaurant business, you can clearly see how much the average, the lowest or the highest-performing restaurants in America
Secondly, knowing how businesses performed in a particular industry gives your planning a clear direction. When you begin to take stock of your strengths and weaknesses as a business owner, it helps you identify the particular industry you have the most useful skills for.
Lastly, it helps you to identify the kind of people you need to help you grow your business. Rarely does anyone possess everything needed to run a business; often, it’s a collaborative effort. You can grow your business best by recruiting the help of people who best do the tasks you don’t have the expertise for. Although it helps to give entrepreneurs the confidence boost they need, it’s not necessary that you know a lot about the particular field your business is in. You don’t need to be a chef to run a restaurant business successfully or be a hairdresser to be successful with a beauty salon.
Starting a business is obviously more than what you like to do or how much money you have to initially invest. The decision as to what business to pour your efforts to, are a clinching first step you need to take seriously. You don’t want to have spent thousands of dollars on a beauty salon only to realize later that it’s not profitable. You could save yourself the thousands if you take this decision seriously. As a first step in starting a business, check the numbers before you pick your playing field.