START-UP BUSINESSES

Although it is a fact that start-up businesses fail at a higher rate than purchased established businesses, there are times when a start-up business is appropriate.   Business owners, however, can increase their chances of success by understanding why businesses fail and taking the steps necessary to avoid the common mistakes that cause many businesses to fail.  A list of the major reasons why businesses fail can be found at the bottom of this page.

Services For Start-Up Businesses

To assist new business owners establish their business, Capitol Business Consultants offers the following services for Start-Up Businesses:

Business Plans
Prepare Business Plans and assist with preparing applications for business loans.
 
Operating Manuals
Assist in preparing Operating Manuals and Sales, Inventory and Cost Management Systems.
 
Accounting Software Programs
Introduce business owner to a qualified CPA who will customize an accounting software program for the business owner.
 
Business Registration
Introduce business owner to a qualified attorney to file organizational papers such as the Corporate Charter, Assume Name Certificates, Federal Tax ID Number and Sales Tax Permits, if applicable.  The attorney will also prepare or review contracts such as equipment, supplier and employee agreements, as well as any business purchases and leases.
 
Banking Introduction
Introduction to a banker well versed in the business owner’s type of business who will establish a business account, credit line and arrange to accept credit cards if applicable.
 
Insurance Review
Introduction to a qualified commercial insurance agent to assist the new business owner secure business property and liability insurance.  Commercial insurance is an important business requirement that is often relegated to friends of the new business owner rather than to the most qualified. 
 
Commercial Realtors
Most new businesses will need to build or lease business premises.  An experienced commercial realtor working for the business owner’s interest can be a benefit to the new business owner.
           
Contractors for Construction and/or Commercial Space Finish-Out
If a new business operator requires the construction of a free standing structure or the finish-out of a leased space, the new business operator can easily save or grossly overspend.  Working with the right contractor can make a real difference.
 
Chambers of Commerce, Trade and Community Associations 
Identify the area Chamber of Commerce Associations and other organizations that could be beneficial for the business owner to join.  Many organizations can be a valuable business tool and there are others that are an absolute waste of time.
 
Logo Design - Letterheads and Business Cards
Introduction to a graphics artist and printer to design a logo and business forms for the business.

Yellow Pages and Advertising
Assist business owners to determine what type of advertising and promotional efforts could benefit the business and advise the business owners of the various free press announcements are available to new businesses.  The business owner can then determine if they wish to retain an advertising/public relations firm or manage their own promotional efforts.

Capitol Business Consultants conducts “Round Table Meetings” twice each month in order that new business owners and individuals planning a new business can informally discuss their business with several business professionals in a private meeting.  The “Round Table Team” generally consists of the following:

Business Attorney - will summarize the various business structures that could be considered and determine if there are any obvious legal issues that should be addressed.  The attorney will also advise the business owner if there is a need for a Trade Mark, Service Mark or Copyright. 
           
CPA - will discuss the accounting considerations for that particular type of business and explain the type of reports and filings that will be required to keep the business in good standing.
 
Commercial Banker - will value the business as to its bank loan value and determine how much of a credit line could be available.  Bankers traditionally consider hard assets only when valuing a new business.  The banker will also explain what bank services could assist the new business owner, including the ability to accept credit cards for transactions. 
 
SBA Specialist - will advise the new business owner as to the free SBA programs that may be available and value the business according to the SBA formulas.  Unlike the banks, when the SBA values a business they consider intangibles such as the cash flow of the business and the owner’s experience.
 
Chamber of Commerce Representative - will mention the benefits provided to members of the Chamber and the services available.
 
Web Site Design Specialist - will explain the type of web site and the components that could be incorporated in the site in order to best present the business on the Internet.
 
Business Broker - Capitol Business Consultants Representative - will explain how the business would be valued after the first three years of operation and what to do during that time to maximize the value.  If applicable and if the new business owner is interested, the broker will explain how the business might be expanded in the future, after being established, by acquiring a similar or complementary business.
 
There is no charge for this service, but the new business owner is asked to be prepared and to have a clear business plan, in outline form, for each member of the Round Table.  Capitol Business Consultants will assist the new business owner prepare for the meeting.

The Major Reasons Why Businesses Fail

1) The lack of capital.  That is sufficient capital not only to open the business, but also to establish the business.  Many start-up businesses anticipate and depend upon having a positive cash flow too early.  Although the business is growing and is showing real potential, the operator does not have enough capital to continue.

2) The absences of a clear business plan.  A proper business plan defines goals and has ways to monitor, evaluate and make adjustments.  Without a road map and a time schedule, it is difficult to ever reach a destination.
 
3) Not being properly positioned in the market.  That simply means to understand who are the customers and how can they be reached.   The prospective customers must know of the business and be aware of the products and services being offered.  As basic as that sounds, it is a major reason whey business fail to meet their sales goals.
 
4) Lack of professional support services.  Proper accounting, legal and management systems can help position the business in the market plus can avoid costly organizational mistakes.  Poorly written leases and/or agreements with suppliers have doomed a business from the beginning.
 
5) Unsound business concept, product or service.  The business premise must be sound and there must be a demand for what is being offered.  Equally important, it must be profitable to deliver the items offered.  Businesses have found items in demand, but the production cost was too high for what the market would pay.
 
6) Inadequate business abilities of the owner.  Business owners must have business, management and people skills necessary to operate their business.  A business is not a hobby and the owner must have the skills, abilities and discipline required to operate a business.
 
The above may seem obvious and simplistic information, but the majority of business failures are due to one or more of the above and if a business avoids the above mistakes, it will have a much greater chance of succeeding.