Building Success

Customers

Businesses need customers to survive. You need to think about:

• Why people would be interested in buying your product or service
• How to reach potential customers with advertising and marketing

Financing

Every business needs money to get up and running. You need to figure out what things you need to start and run your business, and how much everything costs.

Start-up financing can be broken into three parts:

• Personal living expenses - money to cover your living costs until the business can pay you wages and earn a profit.
• Start-up costs - money for things you need before your business opens. Examples are equipment, supplies, and business licenses.
• Fixed operating costs - things you have to pay for every month, even if you are not making any money or selling any product. These are things like rent, utility bills, insurance, and advertising.

Estimates

First, write down your estimates for these four categories:

• A = Your monthly living expenses (such as rent, utilities, food, insurance)
• B = Monthly fixed costs for your business (such as rent, utilities, insurance, and advertising)
• C = Cost to buy one unit of a similar product or service
• D = Cost of materials to make one unit of a similar product or service

Thumbs Up or Thumbs Down?

Now that you have figured out how many units you’ll need to sell each month to cover your total monthly expenses, think about these questions:

• How long will it take you to make and sell this many units each month?
• Does this seem possible?
• Do you want to work this hard?
• Can you work this much with your disability?

If you answered “no” to any of these questions, talk your business idea over with your VR counselor.

• Do you want to change your business idea to make it more feasible?
• Are there accommodations that could help?
• Would getting a job working for an established business be a better plan?

Lucy’s Calculations

Lucy did the following calculations:

• A + B = $1,250 living expenses + $200 monthly fixed costs = $1,450 monthly expenses
• C – D = $40 sales price per skirt - $4 costs of materials per skirt = $36 gross profit per skirt
• Monthly expense ÷ gross profit = $1450 ÷ $36 = approximately 40 skirts

Thumbs up! Lucy decided that making and selling 41 skirts each month seemed possible. By working from her home, she can rest when she needs to, which she is not able to do at her current job. She knows that this is just a rough estimate to decide if she wants to continue exploring business feasibility.

Len’s Calculations

Len did the following calculations

• A + B = $1,600 living expenses + $200 monthly fixed costs = $1,800 monthly expenses
• C – D = $90 sales price per account - $12 cost of materials per account = $78 gross profit per account
• Monthly expense ÷ gross profit = $1800 ÷ $78 = approximately 23 accounts

Thumbs down. Len decided that caring for 23 accounts (and mowing close to 70 lawns) each month was not possible. He realized that caring for so many lawns would mean he would not have time to fulfill his family duties of helping to take care of his mom. He also thought it would be hard to line up that many accounts in his small community. He decided to look for a landscaping job working for someone else in a nearby town.

About You Worksheet

Why Self-Employment?

Why do you want to be self-employed? (see Chapter 2: Readiness).

There are many reasons why people want to be self-employed. Here are some examples:

• Needing flexible work hours
• Limited job opportunities in the area
• Demand or need for your product or skills
• Workplace attitudes that prevent you from working at your full potential

Your Experience

What previous experience or training has prepared you to run this business?

• In what ways does this experience apply to making your product or delivering your service?
• How might this experience contribute to other aspects of business success?
  • For example, do you have experience with things like:
    • Bookkeeping
    • Ordering supplies
    • Customer service
    • Advertising or marketing
    • Other skills needed to run your business

Disability Accommodations

Some people need accommodations to run their business. Examples are things like:

• Flexible work hours or part-time work
• Breaks throughout the day
• Limited pressure or stress
• Limited walking, standing, reaching, or lifting
• Need for specially-designed equipment or assistive technology
• Personal assistance with some parts of business operations

Are there any accommodations you need? How will you set up your business to accommodate your disability? Think about things like business location, office equipment, office set-up, and ways of communicating with customers.

Training

Do you need any training to run your business?

• If yes, what kind of training will you need?
  • What are your plans for getting the training?
  • Is there a training program? If there is:
    • Where and when is the training program?
    • How much does it cost?
  • Can the training be on-the-job?
  • Are there other ways you can get needed training?

Business Activities

Keeping in mind that a typical full-time job is 40 hours per week, how many hours per week do you think you will have to spend on the following self-employment activities?

• Reaching out to potential customers through advertising and marketing activities
• Serving current customers
• Making products
• Maintaining financial records
• Purchasing supplies
• Planning and managing the business
• Traveling
• Other business activities

Check with another small business owner to see if your estimates are realistic and similar to theirs.

The Basics

To get started putting together a business plan, you need to be able to describe your business and how it will be run day-to-day.

Product or Service Description

What will your business do? (see Chapter 4: The Business Plan)

• Did you describe the main products or services you will provide?
• Are there other services or products you could sell to increase your earnings?
  • Think about other things your customers might want. For example, a hairdresser might sell haircare products, or a lawn mowing business might offer services like leaf raking or snow removal during different seasons.

Business Structure

Every business has a business structure that determines how the business pays taxes and fulfills other legal responsibilities. The most common business structures are sole proprietorship, limited liability company, corporation, general partnership, and non-profit. Most VR consumers choose sole proprietorship or limited liability company business structures because they are the easiest to set up.

It is important to get professional advice when picking a business structure, especially if you receive SSI or SSDI benefits.

What business structure will your business have? (see Chapter 4: The Business Plan)

• Why did you select this business structure?
• If you receive SSI or SSDI, how will this structure affect your public assistance benefits?

Know Your Customers

Who are your potential customers? (see Chapter 5: The Marketing Plan)

• Where do they live?
• What is their range of income?
• Education level?
• Gender?
• Age range?
• What are some important interests they have?

If you plan to sell your product or service to other businesses, describe these businesses.

How did you figure out this information about your potential customers? Is this information reliable, or do you think you should get additional viewpoints?

Marketing

How will you advertise or market your product or service to customers? (see Chapter 5: The Marketing Plan)

• What methods of marketing will you use (such as website, brochures, posters, newspaper advertisements, or social media)?
• How much will each marketing method cost?
• Will you use different strategies to reach different customers?

Similar Businesses

What businesses are similar to yours? (see Chapter 5: The Marketing Plan)

• Name a few businesses that offer the same or similar products or services.
• Describe what they do well.
• Describe what sets your business apart.

Location

Description

What is your proposed business location and address? (see Chapter 6: The Operations Plan)

• Is the location in a safe area?
• Does the location make sense for the type of business you plan to operate?
• If the business is in your home, what are the benefits and drawbacks of this as a business location?

Customers

How will customers find and get to your business?

• How will you advertise your location?
• Is there parking nearby?
• Can people walk to your business?
• Will customers be able to access your location year-round? Are there seasonal transportation issues in your area?

Some of these questions may not apply for a home-based or online business.

Feasibility

Challenges to Business Start-up

Even if you have a good business idea, there may be challenges to starting your business, such as:

• Restrictions, patents, or copyrights
• Challenges in getting materials or supplies
• Negative environmental impacts of the business
• Concerns about how to advertise or market the business
• Concerns about paying off existing debt
• Poor credit scores that could make it difficult to get financing
• Restrictions on land use
• Other challenges

Action

Do any challenges apply to you? If yes, discuss them with your counselor or a business development expert to get ideas for addressing them.

Take time to record any additional thoughts about your business that may be important for future planning.

Talk to your VR counselor about any VR restrictions about the types of businesses and costs they will support.

Start-Up Cost Estimates

There are some common expenses to think about when you estimate start-up costs. Depending on what type of business you are starting, you might not have costs in every section.

1. Production and Service (pgs. 2-5 in the Start-Up Costs worksheet)
   • Materials and supplies
   • Inventory
   • Equipment
   • General supplies
2. Physical Space (pgs. 6-9 in the Start-Up Costs worksheet)
   • Furniture, displays, shelving
   • Remodeling
   • Rent or mortgage payments
   • Utilities
3. Advertising (pg. 9 in the Start-Up Costs worksheet)
   • Advertising and marketing
   • Signs
4. Business Management (pgs. 10-11 in the Start-Up Costs worksheet)
   • Business licenses, registrations, and permits
   • Legal and accounting fees
   • Insurance
5. Other Expenses (pg. 12 in the Start-Up Costs worksheet)
   • Any other expenses not included in the other categories

Materials and Supplies

If you are making a product, or providing a service, list all materials and supplies you need to make or deliver your first two months of goods or services. You estimate two months of materials and supplies, because you often need to produce your first month’s inventory before the first month of business operation.

Materials and supplies are often things you use up when you make your product or provide your service. Refer back to the Cost Evaluation Exercise you did in Chapter 2 to see how many units of your product you need to make each month so you have a better idea of how much of each material or supply you need.

For instance, if you are planning to sell jewelry, what beads, silver, wire, and clasps do you need?

Equipment

List each piece of equipment you need to purchase for your business. Equipment includes things you need to run your business that have a useful life of one year or longer. This can be bigger items, like a rototiller, or more expensive items, like camera equipment or a computer. Depending on what it is, you can lease or purchase the equipment you need.

For instance, a t-shirt business might need to purchase a t-shirt printer or heavy-duty heat-press.

Physical Space

Physical space costs focus on your business space. These costs include one-time only costs to get the business location ready for the public (such as set-up and remodeling costs) and monthly costs to maintain the space (such as rent and utilities).

Remodeling

List any costs for remodeling activities, such as replacing windows, repainting, or installing railings or ramps.

Utilities

List start-up fees and utility costs for the first month. These might include phone, electricity, water, internet, or garbage. If you are running the business out of your home, some of these costs may not apply or should be split between personal and business expenses.

Advertising and Marketing

List costs for any advertising or marketing you will do for your business opening. (Other ongoing advertising and marketing will be included in your full Marketing Plan, which is covered in Chapter 5).

For example, you might develop a website, buy ads in the local newspaper about your grand opening, or print flyers to hand out at the farmer’s market or high school sporting event.

Business Management

Business management costs focus on legal requirements for running a business. These include costs for required licenses and permits, fees related to setting up your business structure and accounting systems, and insurance, to make sure your business and assets are covered.

Legal and Accounting Fees

List any legal or accounting fees for your business start-up activities. These might include costs for an accountant to help you set up a bookkeeping system, or payment to a lawyer to get advice about your business structure.

Other Expenses

Do you have any other expenses that don’t fit into one of the previous categories? List them in the other category.

Cash on Hand

Cash on hand, also called cash reserve, is the money you have right now that you can use to pay bills until your business starts making money. Cash reserve can come from your personal savings, loans, or from other sources like your family, friends, or grants. (This information will be covered more in Chapter 7: The Financial Plan).

Do you have enough cash reserve to pay your bills during start-up? To help you think about this, you may want to fill out a cash flow statement. A cash flow statement is a useful tool to help you figure out how much money you’ll need each month, and if you might run out of money in the short-term (see Chapter 7: The Financial Plan).

Other Sources of Cash

Costs that aren’t covered by your cash reserve or donated items will need to be covered by other funds. Talk to your VR counselor, a small business development advisor, or business mentor about other possible sources of funding. There are also funding resources listed in the Resources section.

Self-Employment Exploration

Before you spend money and resources to start your business, take time to learn about what it really means to be self-employed. Talk to other business owners. Ask how they got started. Learn about the challenges and downsides of self-employment as well as the benefits.

Get information from as many different people as you can.

• Talk to business owners with and without disabilities
• Talk to people who have had unsuccessful businesses, as well as people who have successful businesses

Business Mentor

Once you start developing your business plan, it can be helpful to find a business mentor or someone who has experience running a similar business who can help you learn the ropes.

Talk to family, friends, your VR counselor, or to a small business development center to help you find a mentor. Seek out previous VR consumers who have successfully started businesses in your community for guidance and ask about other local resources that might be available in your area.

Prepare

In this chapter, you explored the feasibility of your business idea. You used the About You, About Your Business, and Start-up Cost Estimates worksheets to help you think seriously about your business idea and your resources to do it.

• Do your best to fill out as much as you can in each worksheet.
• If you are unsure how to answer a question or need more information, leave it blank.
  • Make a list of questions and discuss these with your VR counselor.
  • Refer to later chapters in the website to learn more.

As you go through the rest of the chapters in this guide, add more detailed answers to the worksheets. Answers to these questions will help you complete a full business plan.