Strong Opinions and Attitudes

People who start their own business may be members of different political parties, feel differently about religion, economics and other issues. They are like everyone else. The difference is they usually feel and express themselves more strongly. This is consistent. If you are going to risk your money and time in your own business you must have a strong feeling that you will be successful. As you will see later, these strong feelings may also cause problems.

If you want to start your own business you probably have mixed feelings about authority. You know the manager must have authority to get things done, but you're not comfortable working under someone. This may also have been your attitude in a scholastic, family or other authority structure.

If you want to open you own business you are likely to have a strong "Need for Achievement". This "Need for Achievement" is a psychologist's term for motivation and is usually measured by tests. It can be an important factor in success.

The person who wouldn't think of starting a business, might call you a plunger, a gambler, a high risk taker. Yet you probably don't feel that about yourself. Studies have shown that very often the small business owner doesn't differ from anyone else in risk avoidance or aversion when measured on tests. At first thought this seems unreasonable since logic tells us that it is risky to open your own business. An Ohio State professor once explained this apparent contradiction very simply. "When a person starts and manages his own business he doesn't see risks; he sees only factors that he can control to his advantage."

If you possess these traits to some degree or other it doesn't mean you will be successful, only that you will very likely start your own business. Some of these characteristics in excess may actually hamper you if you are not careful.

The characteristics that appear most frequently among "successful" small business managers include drive, thinking ability, competence in human relations, communications skills and technical knowledge.

Drive, as defined in the study, is composed of responsibility, vigor, initiative, persistence and health. Thinking ability consists of original, creative, critical, and analytical thinking. Competency in human relations means emotional stability, sociability, good personal relations, consideration, cheerfulness, cooperation. and tactfulness. Important communications skills include verbal comprehension, and oral and written communications. Technical knowledge is the manager's comprehension of the physical process of producing goods or services, and the ability to use the information purposefully.

Motivation or drive has long been considered as having an important effect on performance. Psychologists now claim you can increase the motivation and the personal capacities that will improve your effectiveness and increase your chances for success. Much of the development of such achievement motivation depends on setting the right kind of goals for yourself.

What Business Should You Choose?

Many of you have already decided what business to choose. Others may still be seeking answers from counselors. Whether you have decided or not, you will find it helpful to continue your self-evaluation.

Begin by summarizing your background and experience. Include jobs. schooling, and hobbies. Then write down what you think you would like to do. Does what you would like to do match up with what you have done? It is helpful if your experience and training can be put to direct use in your new enterprise.

What are your prospective needs? What are your prospective customers' needs? You may make money doing something you don't like if people will pay for it. On the other hand, you will never make money if people don t need your product or service no matter how happy you are doing it. Experts have said more companies fail because they are in the wrong business than because they are "doing business wrong".

Read, listen to the experts, talk to business people, try to determine where growth will occur. Most new businesses can only get customers by taking them away from someone else, or by attracting new people entering the area. In other words, don't start a contracting business in a community where the population is decreasing even if you are a good contractor.

At this point, try to match your background and interests with what you see the needs to be. If they match, wonderful. Now all you have to do is discover how to offer the customers more for their money than do your competitors.

If the needs and your background don't match, don't despair. Get training by working in a company that provides a product or service that is needed. Find a job in a well managed, successful company of the kind you are contemplating. Then absorb as much management know-how as you can while learning the technical skills.

Education can help too. While there may be no educational requirements for starting your own business, the more schooling you have along the right lines the better equipped you should be.

(Some fields require licenses, certificates, even degrees in specific educational areas.) Certainly it is helpful if you have had courses in record keeping, sales and communication. These needn't be college or even high school courses. They can come from adult education programs and the like.

Is there a need for what you want to sell or do? Are you prepared to fill that need? Are you interested in the area? Can you learn what you need to? Will there be a continuing and growing need for your product or service?

Say that you are the sort who's beginning new small business. You Have given focus to the general chances for success, and have
chosen the new company you want to establish.

What practical problems will you face in starting your business? How Much money will you require for starting new small business?
Where can you obtain it? What kind of business organization will you have? Where should you locate the business? (start business
tips to follow along )

The very first question you want to reply is: Just how much money will I need? However, this question can not be answered until
other questions are answered and several decisions are made.

To Determine how much money is needed to start a company, enter all Of your prospective income and all of your planned expenses
onto a job sheet or kind.

Though you might feel that This Type of preparation is more than You have to initiate a simple small business it is beneficial to
begin with this approach to management which puts down figures in black and white. You'll find exactly the same approach valuable
within an established business.

First, estimate your sales quantity. This will depend on the total Quantity of business in the region, the number and skill of
competitors now sharing that company, and your own capability to compete for the customer's dollar. Obtain assistance in producing
your sales quote from wholesalers, trade associations, your banker, and other business-people. Several company and statistical
books may be useful in making sales volume quotes.

In reaching your final quote of sales do not be over-enthusiastic. A new business generally develops slowly at the beginning. If
you overestimate sales you are likely to spend too much in gear and first stock, and devote to thicker operating expenses compared
to your real sales volume will warrant. As you are just starting up you might have no earnings for the first couple of months. At
any rate you can expect your first few months to be very low.

You must also determine what proportion of your sales will be cash And what proportion will be sold on credit. If you guess that a
certain portion of the sales are going to be on credit then you must figure whenever you're going to get the money for these
earnings. One month? Two months? More? Never?

Next, in our guide to beginning new small business, estimate how Much money will be paid out. Bear in mind that in starting a
business you may be purchasing equipment, paying licenses and fees, which makes deposits on rent, utilities and so on, several
months until you open the doorway. Some of those expenses are simple to estimate. If you've opted to lease a building (more about
that later) then you understand what your deposits will be and how much you will have to pay out each month. You are probably able
to get the expense of fees, permits and utility deposits with a couple of telephone calls.

Other expense figures might take a little more work to get. One way Is to acquire typical operating ratios for the kind of company
in which you are interested. One of the resources for such ratios are Dun & Bradstreet, Inc., trade associations, publishers of
trade magazines, specialized accounting companies, industrial companies, and schools and universities. The normal ratios for your
type of company multiplied by your estimated sales volume will serve as bench marks for estimating the various items of
expenditure. But do not rely solely on this way of estimating each expense item. Verify and modify these estimates through
evaluation and quotations in the specific market area where you intend to operate.

Don't forget to pay yourself also. You may need money to live on if You need to quit your job. If your partner is working and may
encourage the family for a while you might not have to withdraw cash from the company. The longer you can go without taking money
from, the faster you will build up a strong cash position. Now that you have estimated your cash receipts and expenses, write down
the quantity of cash you will put in the business to begin. This goes online 1 at the example below. Next, add lines 2 and 1 for
the first month to get line 3. Then add up all the expenses to get line 5. Subtract line 5 from line 3 to find line 6. This money
in the end of month 1 then goes to line 1 to the beginning of the next month, and so on.

If you continue this for the entire year, very shortly you'll find You have negative amounts or a negative cash flow. About this
time you'll also understand that you should be operating on this kind with a pencil that has a fantastic eraser.

In this overly-simplified case, you notice that by the end of June you're minus $200 in cash. Two options can be tried - reduce
your buys in June by $200 or start with $200 more. You may not be able to reduce expenses (they will likely go up as your business
starts). That means you will need to put in $200 more to start with. If all you have is 4000 then the extra $200 you need is
capital you must get from somewhere else.

Don't be fooled by this very simple illustration. Many small businesses Start with the $200, and try to acquire the $4000 from
somewhere else. Since a Major cause of failure in the early stages of a business is Under-capitalization, be very careful in your
planning at this stage. You can Almost always aim on some unexpected expenses and some delays in expected income.

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