With so much information out there about launching and growing a company, it can be hard to get to the bottom of it. That’s why we went to Paul Smith, Fargo Center Director of the North Dakota Small Business Development Centers, and Steve Dusek, President and CEO of Dakota Business Lending, to get to the bottom of this.
What are the biggest struggles startups face when just getting off the ground?
- Lack of planning – Many startups fail due to a lack of proper planning.
- Money – If a business doesn’t have sufficient capital to support its daily operations, the business will fail.
- Neglected marketing and sales – It’s difficult to generate sales if nobody knows a business is out there, especially in a highly competitive global marketplace.
- Time management – There are simply not enough hours in the day to do everything; prioritization is key.
- Getting the right people on board – Certain skills are critical for a startup business to survive and grow.
Steve Dusek: There are two primary or significant struggles all startups face, which are:
- Not enough or lack of proper planning
- Lack of sufficient liquidity or not having enough working capital to operate with if their plan or projections do not materialize as they anticipated.
In North Dakota, it can be hard to find funding for your business. What resources out there would you recommend entrepreneurs look into?
Paul Smith: Finding funding can be challenging for any startup business. There are many funding programs available depending on the type of business, funding uses, business stage, borrower’s credit and available collateral and other factors. The SBDC can provide information and recommend possible funding options based on the particular needs of the business. The SBDC can help entrepreneurs prepare a professional business plan and financial projections, which are typically required by lenders.
Steve Dusek: Resources need to take in to account what the entrepreneur can raise or has from themselves, family or friends. After all of those resources are exhausted, they can turn to lenders or other organizations like Dakota Business Lending for any local, regional or state options that may work. The main point is that, with a solid plan, there are many options for funding.
I have an idea for a business but I’m just not sure about the feasibility of it. Where should I start?
Paul Smith: If you are in the very early stages and want to ‘test’ the feasibility of an idea, I would recommend developing a one-page business plan using either the Business Model Canvas (Canvanizer.com) or the Bplans one-page pitch, which can be downloaded at bplans.com. I would also suggest conducting 20 interviews/surveys with prospective customers (non-family or friends) to determine if there is a real need for your product or service and whether the market opportunity is large enough. I would also suggest working with an SBA resource partner that offers free client counseling services such as SCORE, the Women’s Business Center or SBDC.
Steve Dusek: I would recommend that they start with one of the state and federally funded resource partners who are specifically set up to help out in these areas. They are the Statewide Center for Technology and Business out of Fargo/Bismarck, the North Dakota Small Business Development Centers, and SCORE (service corps of retired executives).
I know I need to make a business plan but I’m confused about how to do that. Any suggestions?
Paul Smith: There are two basic types of business plans, a “lean plan” and a more detailed traditional business plan. The type of plan that’s right for you depends on your purpose and audience. For example, if you plan to apply for a loan through a bank or credit union, lenders typically want to see a more detailed business plan along with three-year financial projections. I would recommend starting by developing a one-page business plan – the Business Model Canvas (Canvanizer.com) or the Bplans one-page pitch (bplans.com) are great templates and can provide a framework for a more detailed plan.
Steve Dusek: There are several good resources online and just searching for business plans will bring up many of them. There are also state and federally funded organizations (ND CTB, ND SBDC, and ND SCORE) that can assist you with a direction or point you in the right direction.
When is the best time for me to actually dive in and launch the business?
Paul Smith: When you:
- Have the time and energy to launch your new business.
- Have support from the key people in your life.
- Are passionate and driven to provide a solution to a problem and determined to succeed.
- Have acquired some experience and expertise in this industry.
- Have a business and financial plan and know how much money you will need, where it will come from and how long it will take to become profitable.
Steve Dusek:This all depends on the industry and the business you are attempting to set up. There may be some ideal times throughout the year that make more sense for launching a small business and with careful planning and the assistance of one of the many resource partners (mentioned above), this will become clear as you develop your plan.