Start a Business Checklist
Dear Fellow Entrepreneur,
In starting any new business, you are undertaking a journey that should be a rewarding and hugely satisfying experience. You will be devoting an extraordinary amount of time and energy plus risking your financial resources. You must be careful to minimize your risks of making mistakes.
Before an airliner takes off, you can be sure that the pilot will have walked around the plane and checked off every system to be certain that it's functioning properly. The purpose of this how to check-list is to provide you with important business education so that the necessary disciplines are in place and functioning.
While the following check-off lists will increase your new and unique chances of success, I suggest that you also create a strong mental image of a four legged stool. This stool will become your guiding reminder during your initial start-up. When all four legs are the same length and secure, the stool works fine. A short or missing leg can be a disaster. There are basically four legs that you will need to anchor securely in place during the critical start-up phase of the business:
- Be sure you have selected the right business. (The most common mistake is not selecting the right business initially.)
- Have your business plan in place and reviewed by experts in your field.
- Be sure you know how to keep score: basic knowledge in accounting and cash flow control.
- Work for someone else in your intended business before opening your own.
I hope you will keep in touch with us at My Own Business, Inc. by subscribing to our free quarterly My Own Business newsletter. Please furnish your success story to us at www.myownbusiness.org/alumni for inclusion in the newsletter.
With our hearty wishes for success in your own business,
Chairman and Founder
My Own Business, Inc.
Top Ten Do's Before Starting Your Business
- Have I focused on a specific product or service?
As a rule, specialists outperform non-specialists. Think about successful retailers, real estate firms, food chains, and where you bought the last take-out pizza or chicken. Would further specialization improve your prospects?
- Is my business plan complete and in written format?
The primary value will be to create a written outline that evaluates all aspects of the economic viability of your business. Does it include pre-opening, first year and long-range planning? Your business plan will also play a key role in securing financing and will help you uncover weaknesses in the planning process.
- Have I acknowledged my competition and limitations?
It will be hard to compete with "category-killer" discount chains with powerful buying power and efficiencies of scale. Does your marketing plan serve a special niche?
- Do I understand the basics of accounting?
Do I have a one-year cash flow projection prepared to ensure I can maintain ongoing liquidity? The free website for entrepreneurs at www.myownbusiness.org will show you how to prepare this as well as your business plan.
- Do I have the necessary e-commerce tools in place?
E-commerce is the fastest growing segment of the economy and allows even the smallest business to reach a global audience with minimal costs.
- Have I learned the basics of my business by first working for someone in the business?
This is probably the best way to discover if you have made a choice that will be not only be successful, but also satisfying.
- Have I successfully test marketed my product or service?
There can be a huge gap between the concept of a great product or service and the reality of what paying customers are seeking.
- Am I focused on selling a great product at a fair price rather than a fair product at a great price?
Great products suggest pricing power and fair products suggest a commodity-type product more susceptible to competition.
- Do I have all the communications, computer and other business tools in place? Do I have the skills to use them?
Unless potential customers are aware of your business, they will not have the information to contact you or to purchase your products.
- Is my marketing plan and budget in place?
Every business has a specific strategy that usually works best and has already been proven by your most successful competitors.
Checklist for Starting Your Business
To enhance your chance of success and minimize the risks of failure, please carefully make sure that all the following business requirements are covered to your satisfaction. Some items are questions, others are statements and some are blanks that require names to be filled in. Some checklist items will refer you to pages in this My Own Business textbook.
DECIDING ON A BUSINESS (Session 1)
The most common mistake made by entrepreneurs is not selecting the right business initially.
- ______ Have you considered starting part time without quitting your job?
- ______ Have you objectively compared your selection with a number of other business possibilities?
- ______ Have you prepared a "for" and "against" list to clarify your thinking?
- ______ Have you worked for someone else in your intended business?
- ______ Is your intended business something you will enjoy doing?
- ______ Have you test marketed your product or service?
- ______ Have you reviewed the advantages and disadvantages of starting with a partner?
- ______ Are you focused on a specialized product or service?
- ______ Have you considered operating as a family business?
- ______ Have you talked to the most successful people in your intended business?
THE BUSINESS PLAN (Session 2)
Your business plan will become your road map in starting your business.
- ______ Did you personally prepare your business plan?
- ______ Does your business focus on short-term (one year) goals? (See formats which are furnished at the end of each session).
- ______ Have you submitted your plan for review to appropriate experts?
- ______ Are you prepared to change your plan frequently per changing conditions?
- ______ Does your business plan include a one-year cash flow projection?
HOME BASED BUSINESSES (Session 3)
- ______ Have you avoided any conflict of interest?
- ______ Have you prepared a 1 year cash flow projection?
- ______ Have you adequate accounting knowledge?
- ______ Have you selected a business appropriate for moonlighting?
- ______ Will it conflict with your job?
- ______ Are you able to delegate business responsibilities?
- ______ Have you set a limit on how much you can risk?
- ______ Do you have a discipline and balanced lifestyle?
- ______ Do you know the rules regarding business deduction?
- ______ Do you have a personally written business plan?
- ______ Have you checked your zoning ordinance?
FINANCING THE BUSINESS (Session 4)
Money will be the fuel to drive your business. You will need assurance that you have enough gas in the tank (money) to drive your business for at least one year.
- ______ Are you saving money to start your business?
- ______ Are you willing to start small to minimize the capital required?
- ______ Are you prepared to invest sweat equity? (contribution of your own labor)
- ______ Do you plan to use unsecured credit card debt if needed?
- ______ Are you prepared to not rely on a banker to loan you start-up money?
- ______ Do you have financing in place to support your cash flow projection?
- ______ Have you investigated the S.B.A. loan guarantee program?
- ______ Have you looked to suppliers as sources of financing?
- ______ Have you considered bartering as a source of financing?
- ______ Have you asked your accountant and attorney for lending references?
- ______ Are you prepared to live frugally to keep your living costs at a minimum?
- ______ Does your one-year cash flow projection show liquidity? (money in the bank at the end of each month for the next 12 months.)
BUSINESS ORGANIZATION (Session 5)
- _______ Lawyer and accountant appointed?
- _______ Have you had the assistance of your lawyer and accountant in deciding what type of organization is best for you?
- _______ Partnership buy/sell agreement in place?
- _______ Organization format elected and papers drawn?
- _______ Pension plan in place?
- _______ Health insurance plan in place?
- _______ If you have a partner, do you have a written buy-sell agreement in place?
- _______ Have you joined a local service organization such as the Chamber of Commerce?
LICENSES AND PERMITS (Session 6)
All businesses need licenses and/or permits from the City, County, State and or Federal Government. Go to the City Hall or the Courthouse and ask to see the "City Clerk".
- _____ Write down the name or secure card of the person contacted at City Hall.
- _____ Contacted the same person each time?
- _____ Is your location zoned for your business?
- _____ Is your home approved for a home-based business?
- _____ Does your business require a state license?
- _____ Does your business require a federal permit or licenses for selling such items as alcohol, firearms, gasoline etc?
- _____ Are you clear with the Planning Department? Contact ______________
- _____ Are you clear with the Health Department? Contact ______________
- _____ Are you clear with the Zoning Department? Contact_______________
- _____ Are you clear with the Building Department ? Contact_______________
- _____ Do you have your business license?
- _____ Do you have the Certificate of Occupancy?
- _____ Do you need a Seller's Permit (also called a Certificate of Resale) to allow you to collect sales tax on your merchandise.
- _____ Are you registered with the Board of Equalization?
- _____ Do you have an Employer Identification Number (EIN)?
YOUR BUSINESS NAME
- ______ Is the name you selected appropriate for the business, easy to remember, easy to spell, and does it create a visual image?
- ______ Have you secured a DBA certificate?
- ______ Have you trademarked your business name?
- ______ Do you have a logo?
- ______ Have you secured stationery, business cards and business forms?
BUSINESS INSURANCE (Session 7)
Check with an insurance agent for the coverage you will need for your type of business.
_____ Insurance agent in place
_____ Insurance agent in place
_____ Business property insurance
_____ Worker's Compensation
______ Are all policies in force?
CCOMMUNICATION TOOLS (Session 8)
Communications equipment needs to be installed and tested before you open. Are the following components in place?
- _______ Telephones including Voice Mail service
- _______ Fax machine with dedicated phone number
- _______ Computers including back-up equipment (external hard drive and DVD)
- _______ Mobile communications equipment including laptop, cell phone and PDA
- _______ Software programs including accounting installed
- _______ Letterhead and business cards printed
BUYING A BUSINESS OR FRANCHISE (Session 9)
Buying a business can become the single most important decision you will ever make.
- ______ Will your business provide a full- or part-time?
- ______ Can you reasonably predict the future earnings of the business?
- ______ Is the business a good fit for your skills and likes?
- ______ Have you investigated the industry?
- ______ Has your lawyer and accountant advised you on all aspects including approval of purchase agreement and leases?
- ______ Will fixtures and improvements need replacement?
- ______ Have you evaluated the quality and size of the inventory? Obsolete?
- ______ Are the payables verified and current?
- ______ Are the receivables current and collectable?
- ______ Is there an order backlog?
- ______ Will the seller help finance the purchase of the business?
- ______ How strong are customer relationships?
- ______ Is the primary marketplace stable or changing?
- ______ Does the business have all necessary government approvals and licenses?
- ______ Is the seller motivated?
- ______ Review "factors to consider".
If you are considering a franchise, here are additional checklist items:
- ______ Have you talked to operating franchisees of your choice?
- ______ Have franchisees of your choice furnished their profit and loss records?
- ______ Do you have the financial statement of the franchisor?
- ______ Are there outstanding lawsuits against the franchisor?
- ______ Is it a business you will enjoy operating?
- ______ Is the proposed location adequate and meet site criteria for the business?
- ______ Is the franchisor well established?
- ______ Does the franchisor have a significant number of successful franchisees?
LOCATION AND LEASING (Session 10)
A wonderful business can fail because of a poor location or a faulty lease.
- ______ Have you established a site model criteria for your business?
- ______ Have you secured a location for your business meeting your site model?
- ______ Does the location meet your site criteria?
- ______ Have you reviewed the leasing checklist and points to consider before signing a lease?
- ______ Have you asked for a short-term lease with options to renew?
- ______ Has your lawyer reviewed your lease?
ACCOUNTING AND CASH FLOW (Session 11)
To succeed in business, you must know how to keep score. If you do not understand all aspects of accounting, enroll in an accounting course.
- ______ Is your accounting software in place?
- ______ Are you prepared to reconcile your bank account every month?
- ______ Do you completely understand
- ______ Balance sheets
- ______ Profit and loss statements (also called an income statement)
- ______ Cash flow control
- ______ Have you projected your cash flow for three months and one year?
- ______ Will you be updating cash flow control every month?
- ______ Are you planning to keep your own records when you start out?
- ______ Have you set up an account with a payroll service provider to handle payroll, state and federal payroll returns?
- ______ Will you personally be signing all checks?
- ______ Have you set up a business account at your bank?
- ______ Do you know the tax liability issues?
- ______ Income tax _____ Quarterly returns
- ______ Payroll tax _____ Bank account reconciliation
- ______ Internal controls _____ Employee benefits
- ______ Have you established a good relationship with your banker?
- ______ Is your credit policy in place?
- ______ Will you be matching up invoices with purchase orders?
- ______ Do you have safeguards against employee dishonesty in place?
E-COMMERCE (Session 12)
Sixty-nine percent of the online population has made at least one purchase in the lat 90 days and over two-thirds of U.S. households are online shoppers.
- ______ Is your Web site set up to handle money transactions?
- ______ Is your business listed in the "local" function of search engines?
- ______ Is your domain name registered and the Web site online?
- ______ Do you have all necessary e-commerce tools in place?
- ______ Is your website adequately tested to sell on line?
OPENING AND MARKETING (Session 13)
Opening for business requires attention to a great many details to be accomplished and coordinated:
- ______ Are the tenant improvements complete?
- ______ Are all your signs installed?
- ______ Are all licenses, permits and certificate of occupancy secured?
- ______ Is your merchandised displayed attractively?
- ______ Is the advertising and promotional material scheduled?
- ______ Have you started developing a mailing list database?
- ______ Do you know how and where your successful competitors advertise and market their products or services?
- ______ Have you joined the trade association of your industry?
- ______ Are you focused on selling a great product or service at a fair price?
DETAILED OPENING AND MARKETING TO-DO LISTS:
- ______ Review each task in the "Before You Start" checklist.
- ______ Check off each bullet point under "How to Buy Checklist".
- ______ Does your name pass inspection for "A good name is"?
- ______ Review each bullet point under "Most common mistakes made when opening a business."
MANAGING EMPLOYEES (Session 14)
- ______ Does your hiring policy include
Job descriptions ______
Hourly rates ______
- ______ Do you employees like what they do?
- ______ Are employees quick learners eager to expand their knowledge?
- ______ Do employees project a pleasant and positive image?
- ______ Do employees like people and relate well to them?
- ______ Are employees helpful to customers as well as to associates?
- ______ Are your employees completely trained?
- ______ Do employees know the product, merchandise or the service provided?
- ______ Have you established a work schedule?
EXPANDING AND HANDLING PROBLEMS (Session 15)
- ______ Are you prepared to prove out your business concept before expanding?
- ______ Have you structured profit sharing plans to provide for delegation of authority and responsibility to managers?
- ______ Are your profit sharing plans in writing and simply stated?
- ______ Is your incentive plan for managers tied to individual financial success?
- ______ Have you created separate profit centers for each expansion unit?
- ______ Have your checked out the incentive plans of your best competitors?
- ______ Have you identified the activities for which you will not delegate responsibility? For example, signing of check and major expenditures.)
Most all communities have resources which can be of help to your business. Also, networking with other business people can be extremely helpful. Here are start-up resources that can be of assistance:
- The U.S. Small Business Administration (SBA.)
Visit this large resource of training and information helping small businesses at www.sba.gov.
- Small Business Development Centers
The SBDC is a branch of the SBA. Centers are located at universities, community colleges and vocational schools and provide management assistance to small business owners. (see http://www.sba.gov/aboutsba/sbaprograms/sbdc/index.html)
- Service Corps of Retired Executives (SCORE)
SCORE is also a resource partner with the SBA and is a source of free and confidential business advice and training for entrepreneurs. (see www.score.org)
- Other Community Resources which may be available are
Recommended Books on Entreneurship
Successful entrepreneurs are great readers of business topics. Here is a collection of recommended titles furnished by the U.S. Department of State. Many of the books are on sale and are inexpensive. Amazon writes an editorial review for each title which gives a detailed description of the book.
- Alpha Dogs: how your small business can become a leader of the pack, by Donna Fenn
- The Art of the Start: the time-tested, battle-hardened guide for starting any business, by Guy Kawasaki
- The Book of Entrepreneurs' Wisdom: classic writings by legendary entrepreneurs edited by Peter Krass
- Common Sense Business: starting, operating, and growing your small business by Steve Gottry
- The Complete Idiot's Guide to Starting a Business: by Edward Paulson
- The E-myth Revisited: why most small businesses don't work and what to do about it, by Michael Gerber
- Entrepreneurship for Dummies: by Kathleen Allen
- Go It Alone: the secret to building a successful business on your own, by Bruce Judson
- Guerrilla Marketing: secrets for making big profits from your small business, by Jay Conrad Levinson
- Hidden Champions: lessons from 500 of the world's best unknown companies by Hermann Simmon
- Retail in Detail: how to start and manage a small retail business by Ronald Bond
- Small Business for Dummies: by Eric Tyson and Jim Schell
- Start, Run, and Grow a Successful Small Business: edited by Susan Jacksack
- The Way of the Guerilla: achieving success and balance as an entrepreneur in the 21st century, by Jay Conrad Levinson
- What No One Ever Tells You About Starting Your Own Business: real life start-up advice from 101 successful entrepreneurs, by Jan Norman