After deciding on a suitable business concept, the business owner should complete any advance preparations needed before starting normal business operations.
These advance preparations serve to validate many of the assumptions in the business concept. They also prepare the business venture for operations. If the assumptions prove to be faulty, or the business venture is not prepared for operations, then the venture may suffer or even fail.
A large, risky, or complex business venture may require a certain amount of market research to validate the assumptions in the business concept. (For example, there is no point in starting a business venture if not enough customers want the product at its offering price.)
The owner may require a certain amount of training or information to be able to run the business venture effectively and deliver a quality product. The time to get this training and information is before business operations begin. (Customers may become dissatisfied if the owner needs a lot of on-the-job training.)
For help on planning, see the following topic from another section.
Before beginning operations, the owner should satisfy all startup requirements for the business venture. This includes getting any required insurance, identifying and satisfying applicable government requirements, arranging for any required loans, contacting suppliers, and so on. (The government may penalize or even close down a business venture for failing to meet their requirements.)
There is a common expectation among new business owners that sales either will start out at a high amount or will start growing right away. But it's dangerous to rely on these "rosy" assumptions. The better way is to keep the initial costs and expenses low enough so that even moderate sales will be enough to show a profit.
The following pages can help you minimize startup costs:
There usually is no point in starting a small business that won't be able to show a profit for several years due to excessive startup costs or other large fixed expenses.
The surest way for a business venture to fail is to exhaust all of its cash resources. Cash is the lifeblood of every business venture.
Cash resources refer to both cash on hand, and the ability to raise additional cash when needed and prudent.
Following are the main reasons why a business venture runs out of cash:
As far as your customers are concerned, the essence of your business venture is the ability to deliver a quality product. For most customers a quality product is whatever satisfies their needs and desires at a price they can afford.
Therefore, business owners must first determine the needs and desires of their likely customers. Then they must design a low-cost product that can satisfy these needs and desires. This usually requires that the business owners must be familiar with both their likely customers and the various ways available to produce and deliver their proposed product.
I have noticed a deplorable tendency in some business owners who seem to think that whatever type of product they choose to supply to customers should be good enough. They tend toward a "take it or leave it" attitude. Unless there is no competition, this is not the way to run a sound business venture.