Small Business Startup
Defining Your Requirements

(Date posted: March 10, 2009)

During this step in your small business startup, you define your requirements for a business idea. I recommend basing these requirements on your needs, desires, abilities, resources, time limits, and risk limits.

Before beginning, you should have a strong desire to start a business.

The desired result of this step is a set of written requirements for a business idea. The list should show your wants and your abilities.

You will use the following topics to complete this step:

Guidelines
Procedures
Example
Go or no-go decision

You will be using this list of requirements in the next steps to help find a suitable business idea.


IMPORTANT

Before using this information to start a business be sure to read the following notice: Disclaimer

Guidelines

The following guidelines may be useful when determining your requirements for a small business startup.

Satisfy your needs and desires

You may encounter difficulties in getting your business started and making it a success. A business idea that excites you, that satisfies your needs and desires, will help you overcome these obstacles.

Stay within your existing capabilities

When starting a business, you have many things to learn. This is why the business should use your existing knowledge and skills. If you have too many new things to learn, you will be overwhelmed.

Set reasonable time and risk limits

Don't overwork yourself in your new business. You need to keep in good health. If you are starting a part-time business, you need enough energy to keep doing your main occupation. You also need time for your family and friends.

Reminder

Expect to make mistakes and have setbacks in your new business. Don't risk more than you can afford to lose.

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Procedures

This checklist should help you decide:

  1. What you want from a business
  2. What you are willing and able to do to get going on a small business startup

You can add any other items you want to consider when choosing a business idea.

List of needs

  • Monthly net profit you want from the business by the end of the first year
  • Monthly net profit you want from the business by the end of five years
  • Non-financial needs you want the business to satisfy
  • Any other needs you have for this business venture

List of desires

  • Your interests in life
  • What you want to achieve in life
  • Any other desires this business venture can satisfy

List of abilities

  • Your education and training
  • Skills developed in your current and past jobs
  • Talents used in your hobbies or other personal activities
  • The types of business activities you are capable of doing
  • Any other abilities that can help make the business venture into a success

List of resources

  • Office facilities, shop facilities, and vehicles available for this business venture
  • Office equipment, furnishings, and supplies available for this business venture
  • Computer equipment, programs, and supplies available for this business venture
  • Any other resources available for this business venture
  • What you are willing to do to make this venture into a success

Time limits

  • How much time you are willing to commit to this business venture

Risk limits

  • How much cash and risk you are willing to commit to this business venture

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Example

I am using myself for this example. The list below shows my requirements for a small business startup.

This example should help you prepare your own list.

Needs

Monthly net profit at end of first year of sales: $2,500. (Make that $4,000 a month if Social Security goes bust.)

No other items are applicable for me.

Desires

My interests in life revolve around money and personal power. In particular, I want to assist other people in having more money and gaining personal power.

I want to be recognized as an authority on the topics of having more money and gaining personal power.

I derive a great deal of satisfaction from constructing a well-told story. So writing useful articles would pleasure me endlessly.

Abilities

I have a B.A. in Business Administration from the University of Washington. In addition, I have almost 40 years experience in the public accounting field.

I have writing skills developed from years of writing letters to clients and the Internal Revenue Service.

My talents derived from personal activities include using computer programs for various purposes.

I am capable of doing all types of business activities.

My other abilities are my revelations about life and my well-trained subconscious mind.

Resources

My available facilities consist of my home office.

My available office resources consist of a desk and chair, large bookcase, several storage cabinets, steel file cabinet, wastebasket, and assorted office supplies.

My available computer resources consist of a new HP computer with broadband web access, Brother multi-function laser printer, Microsoft® Office® programs, and various computer supplies.

My other available resources include a reference library and a collection of past writings on small business operations.

I am willing to devote much of my time and energy to producing useful products and selling them to people in need.

Time limits

Being retired and having no dependents, I can spend six hours a day toward the business, if needed.

Risk limits

I can devote $250 toward the startup costs and first few months operating expenses. I am willing to risk losing these funds to get going on my small business startup.

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Go or no-go decision

This decision concerns the written requirements for a business idea you developed in this step.

Go on to the Finding a Potential Idea step in your small business startup if you can answer "yes" to the following questions:

  • Are your requirements realistic?
  • Do they show what you want from a business?
  • Do they show what you are willing and able to do to get the business started?

If you have answered "no" to any of the above questions, go to this topic on another page to see what to do next.

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