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The Entrepreneur's Guide to Building a Successful Business An excellent reference ownersfor andsmall operators business Everything you need to build your successful business: The Entrepreneur’s Guide to Building a Successful to Business a Successful Building Guide The Entrepreneur’s • Finding a profitable business idea • Choosing a location • Writing a business plan • Business model examples • Determining costs and revenues • Avoiding the 13 common reasons why businesses fail • Locating finance • Basic Bookkeeping • Pricing • Marketing and promotion (in-house and external) • Customer attraction and retention • How to sell (and how to close a sale) • Beating competitors that are bigger and have more money than your business • Finding and managing good employees • Taking your business to the next level ...and much, much more. with Great Advice from Seasoned Practitioners Seasoned Advice Practitioners from with Great The Entrepreneur’s Guide to Building a Successful Business Experience and advice from hundreds of small EFMD is an international, not-for-profit, membership organisation, based in Brussels, Belgium. With nearly 900 member organisations from academia, business, public service and consultancy in 86 countries, business owners /operators in fourteen countries EFMD provides a unique forum for information, research, networking and debate on innovation and best practice in management development. by Jonathan T. Scott For more information visit www.efmd.org www.efmd.org by the author of A PRACTITIONER’S GUIDE TO ACHIEVING LONG-TERM PROFITABILITY AND COMPETITIVENESS The Sustainable Business 2ND EDITION Taking the First Steps Toward Understanding, Implementing Design by www.jebensdesign.co.uk and Managing Sustainability from a Cost/Profit Perspective Jonathan T. Scott 1 The Entrepreneur’s Guide to Contents Building a Successful Business 10 Part I: Preparation 11 1. Do You Have What It Takes? By Jonathan T Scott 12 Stage I: The Right Attitude 12 Stage II: Implementation (Putting Plans into Action) Published by: 12 Stage III: Diligence (Going the Distance) EFMD 12 The Four Main Fears of Entrepreneurship aisbl 15 The Top Ten Myths of Entrepreneurship Rue Gachard 88 – Box 3 16 Overcoming Negativity 1050 Brussels, Belgium 16 Developing a Healthy Definition of Success T +32 (0)2 629 08 10 17 The Other End of the Scale: Overconfidence F +32 (0)2 629 08 11 17 Advice from the Pros E [email protected] 18 2. Starting Your New Business: Why, When, and Where www.efmd.org Should You Do It? EFMD is an international not-for-profit association (aisbl) 18 Starting a New Business 19 Good Reasons for Starting a New Business 19 Poor Reasons for Starting a Business 20 When is the Best Time to Start a New Business Venture? 20 Where is the Best Place to Start a Business? Copyright 2017 by Jonathan T. Scott and EFMD. All rights reserved. The moral rights of the author have been asserted. 20 Advice from the Pros No part of this work may be reproduced, offered for sale, sold, traded, or utilized in any form by any means, electronic or mechanical, including photocopying, microfilm, and recording, or by any information storage or retrieval system with the 22 3. Finding a Good Business Idea expressed written approval of the author and publisher. 26 How Stupid is a Stupid Idea? Cover design: Jebens Design 27 The Need for New Ideas Never Ends Library of Congress Cataloging-in-Publication Data 28 Advice from the Pros Scott, Jonathan (Jonathan T.) 29 4. Setting Up Your New Business: The Options The Entrepreneur’s Guide to Building a Successful Business (2nd Edition): with Collective Advice from Seasoned Practitioners 30 Part-Time Businesses / Jonathan T. Scott 30 Full-Time Businesses Includes bibliographical references and index 30 The Start-Up Business ISBN: 978-0-9818-260-1-1 30 Buying an Existing Business 1. Entrepreneurship – handbooks, manuals, study guides 31 Franchising 2. Entrepreneurship, small business ownership, starting a business – handbooks, manuals, study guides 32 Advice from the Pros 3. Business - handbooks, manuals, study guides etc. I. Title 33 5. An Introduction to the Importance of Business Research 33 Step Number 1: Building a Strong Foundation 34 Defining Market Research 35 The Objectives of Market Research 35 Tools for Conducting Market Research 36 Sources of Secondary Data Collection 37 Sources of Primary Data Collection 39 Don’t Walk Away from the Hard Work and Time Research Demands 39 Advice from the Pros 40 6. Suggestions for Conducting Business Research 40 Conducting External Research 42 Making Adjustments 42 Conducting Internal Research 42 Researching the Cost of Overheads 43 SWOT Analysis 44 Advice from the Pros Contents 1 10 Part I: Preparation 11 1. Do You Have What It Takes? 12 Stage I: The Right Attitude 12 Stage II: Implementation (Putting Plans into Action) 12 Stage III: Diligence (Going the Distance) 12 The Four Main Fears of Entrepreneurship 15 The Top Ten Myths of Entrepreneurship 16 Overcoming Negativity 16 Developing a Healthy Definition of Success 17 The Other End of the Scale: Overconfidence 17 Advice from the Pros 18 2. Starting Your New Business: Why, When, and Where Should You Do It? 18 Starting a New Business 19 Good Reasons for Starting a New Business 19 Poor Reasons for Starting a Business 20 When is the Best Time to Start a New Business Venture? 20 Where is the Best Place to Start a Business? 20 Advice from the Pros 22 3. Finding a Good Business Idea 26 How Stupid is a Stupid Idea? 27 The Need for New Ideas Never Ends 28 Advice from the Pros 29 4. Setting Up Your New Business: The Options 30 Part-Time Businesses 30 Full-Time Businesses 30 The Start-Up Business 30 Buying an Existing Business 31 Franchising 32 Advice from the Pros 33 5. An Introduction to the Importance of Business Research 33 Step Number 1: Building a Strong Foundation 34 Defining Market Research 35 The Objectives of Market Research 35 Tools for Conducting Market Research 36 Sources of Secondary Data Collection 37 Sources of Primary Data Collection 39 Don’t Walk Away from the Hard Work and Time Research Demands 39 Advice from the Pros 40 6. Suggestions for Conducting Business Research 40 Conducting External Research 42 Making Adjustments 42 Conducting Internal Research 42 Researching the Cost of Overheads 43 SWOT Analysis 44 Advice from the Pros 2 Contents — The Entrepreneur’s Guide to Building a Successful Business 45 7.Choosing a Location 45 Questions to Ask When Choosing a Business Location 47 Learning about Leases 48 Advice from the Pros 49 8.Finding a Manufacturer or Supplier… 49 Beginning the Search 51 Keeping Manufacturers and Suppliers 51 Selecting an Overseas Manufacturer or Supplier 52 Advice from the Pros 53 9.Business Models 53 What’s Good for the Goose is not always Good for the Gander 53 Sales Volume vs. Profit Margins 53 Trying to Get It Right: The Paradox of Business Models 54 Profit Margins vs. Sales Volume 54 High Prices vs. Low Prices 54 Market Share vs. Profitability 55 Less Choice vs. More Choice 55 Competition vs. Cooperation 55 Lean Thinking vs. Business as Usual 56 Selling vs. Sales and Service 56 Persistence vs. Stubbornness (or Knowing When to Stop and Change) 57 There are No Guarantees in Business 58 Advice from the Pros 59 10. The Thirteen Main Reasons Why New Businesses Fail (and How to Prevent Them) 59 Inadequate Planning 59 Underestimating the Commitment it Takes to Succeed 60 Cash Flow Problems 61 Poor Management 61 Not Understanding the Importance of Customers 61 Staffing Problems 62 Inflexibility 63 Poor Marketing and/or an Inability to Sell 63 Not Enough Capital 63 Pricing Problems 64 Lack of a Competitive Edge 64 Going It Alone 64 Growing too Fast 65 Advice from the Pros 66 Part II: Laying the Foundation 67 11. Writing a Business Plan 67 Why Write a Business Plan? 67 The Essentials of Good Planning 68 A Sample Business Plan Layout 69 The Most Common Mistakes Made When Writing a Business Plan 69 Additional Tips for Writing a Solid Business Plan 70 Advice from the Pros 70 Examples of Numerical Data 73 12. Finding Finance 73 Sources of Finance © Jonathan T. Scott and EFMD www.efmd.org 3 Contents — The Entrepreneur’s Guide to Building a Successful Business 73 Banks 74 Corporate Venturing 74 Equipment Loans 74 Crowdfunding 74 Family and Friends 74 Government Help 75 Grants 75 Issuing Shares 75 Small Business Administration Loans 75 Soft Loans 75 Trade Credit 75 Venture Capitalists 76 Mixing up the Options 76 Advice from the Pros 77 13. A Brief Look at Bookkeeping, Numbers, Taxes, and Formulas 77 The Importance of Numbers 78 Audits 78 Balance Sheets 78 Basic Bookkeeping 79 Break-Even Point 79 Cash Register Sales 79 Cost of Goods Sold 80 Inventory 80 Ledger Books 80 Monthly Net Profit 81 Profits 81 Taxes 81 Advice from the Pros 82 14. Naming Your Business (or Product) and Other Tasks Before Getting Started 82 Naming the Business (or Product) 83 Choosing a Logo 83 Obtaining a Business Mailing Address and Phone Number 83 Opening a Separate Bank Account 83 Setting Up a Website 84 Ordering Business Cards and Stationary 84 Establishing a Separate Work Space and Work Time 85 Insurance 85 Advice from the Pros 86 15. Making Your Business Legal 86 The Sole Proprietorship (or Sole Trader) 87 Partnerships 87 Limited Liability Companies 88 Incorporation 89 Subchapter S Corporations 89 Staying Legal (or, Keeping Abreast of the Law) 90 Advice from the Pros 91 16. Protecting Your Business with Copyrights, Trademarks, Patents, and UPC Codes 91 Copyright © Jonathan T. Scott and EFMD www.efmd.org 4 Contents — The Entrepreneur’s Guide to Building a Successful Business 92 Trademarks 92 Patents 92 Three Do’s and Don’ts Regarding Patents 93 Playing It Safe 93 Obtaining a UPC Number and Bar Code for a Product 94 Advice from the Pros 95 17.
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