Small Business Startup
Designing Business Operations

(Date posted: February 20, 2009)

During this step in your small business startup, you will decide on the organization and operations of your proposed business venture.

This is part of the ongoing process of changing assumptions and estimates into hard facts and detailed calculations.

Before beginning this step, you should have:

  • Refined your product's features
  • Developed the sales program to solicit customers

The two previous steps show you how to do this.

The desired result of this step is a detailed list of the organization and expected operations of your proposed business venture.

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 business organization and operations in future steps to prepare for the initial business operations.


IMPORTANT

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

Guidelines

This small business startup program is intended for a one-person or small joint venture type of business firm. Ideally, you will not have any employees. The owner or the members of the joint venture will perform the moneymaking activities. Some of the routine administrative tasks may be performed by family members or outside firms.

This business structure should allow you to operate the business venture using your existing resources, along with any loans or outside help you are willing and able to obtain.

Keep in mind that you want to have very low fixed costs and expenses at first. This will allow you to make a profit even when sales are low. So be frugal when planning your initial facilities and operations. After you have established a successful and profitable business, your increase sales will support a more elaborate operating style. However, you always want to be operating with sales above your break-even point.

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Procedures

The following list shows typical facilities and functions of a business organization. You can use this list to make those decisions needed for your proposed business venture.

  • Select the type of business entity (proprietorship, partnership, joint venture, limited liability company, corporation, or other).
  • Decide what is needed for a home office (workspace, furniture, computer equipment, office equipment, and storage fixtures).
  • Decide what is needed for production facilities (workspace and storage areas, equipment, and tools).
  • Decide who will solicit orders from customers (business owner, family members, or commission agents).
  • Decide who will produce and deliver the products (business owner, family members, subcontractors, or outside firms).
  • Decide who will perform various routine administrative tasks (business owner, family members, or outside firms).
  • Decide who will perform various accounting and tax reporting tasks (business owner, family members, or outside firms).
  • Select the suppliers that will provide computer equipment, programs and supplies; office equipment and supplies; and production equipment, materials, protective gear, and supplies.

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Example

I am using my own small business startup for this example. This example concerns my proposed information product (e-book) on "How to Have More Money."

I hope this example will help you make your own decisions.

Following are my decisions and selections:

  • Type of business entity -- Proprietorship.
  • Home office -- This will be a spare bedroom in my house. I will use the existing furniture, computer equipment, office equipment, and storage units. These consist of a desk and chair, wastebasket, Hewlett Packard computer, Brother multi-function printer, listing calculator, electric typewriter, steel four-drawer file cabinet, several storage cabinets, and large bookcase.
  • Production facilities -- this will be my home office, computer equipment, broadband access to Internet, and my website powered by Site Build It!
  • Soliciting orders -- after I have created the e-book and developed sufficient traffic to my free website, I will use an automated sales page on the website to solicit sales.
  • Production and delivery of products -- I will produce the e-book and upload it to my website. The automated sales page on my website will be used to deliver copies of the e-book to customers.
  • Routine administrative tasks -- I will perform all the routine administrative tasks for my business.
  • Accounting and tax reporting tasks -- I will perform all the accounting and tax reporting tasks. I will be purchasing a Quick Books Pro program to maintain the accounting and tax records.
  • Suppliers -- I will use the local Office Depot store for all my computer programs and supplies, office supplies, and production supplies.

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Go or no-go decision

This decision concerns the plan for organization and operations you prepared in this step.

Go on to the Listing the Startup Requirements step in your small business startup if you can answer "yes" to the following questions:

  • Have you decided on a low-cost business entity (such as a sole proprietor or joint venture)?

  • Is your operating style frugal enough not to require any large costs and expenses when first starting out?
  • Are you satisfied with the decisions you have made about who will perform the various tasks required for business operations?

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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