Consultations. I. The reasons to start your own business

Before starting your own small business, just make up a list of the reasons why you want to embark upon a business activity. Whatever these reasons may be, use a systematic approach towards making a plan that can be later used as a basis for your assessment of the results achieved.

Some typical reasons to start your own business :

1. You want to be your own boss.
2. You seek financial independence.
3. You are not a good team worker.
4. You do not like the regulations of your current job..
5. You want creative freedom.
6. You want to make full use of your talents and knowledge..
If anything listed above relates to you, then you can embark upon a business of your own.

To determine the kind of business that suits you most, answer the following questions

:
1. How do you like to spend time?
2. What kind of specialist abilities do you possess?
3. What do others think you can do the best?
4. Will your family encourage you?
5. How much time can you spend on business activity?
6. Do you have any hobbies that may be of a marketable interest?
All persons have hobbies. Yet, only some people can turn their hobbies into money. Some even do not want to try to. Think about your hobby, just think how to put it to practical use. Ask your questions at our Website forum. The best thing is turn your hobby into a business. You are your own boss.

The next step is to determine a market niche for your business.
The following questions will help you find the right answer :

1. Is your idea of practical interest? Will it be in demand?
2. Will you have to face a competition?
3. What advantages do you have, compared with your competitors?
4. Can you offer higher quality?
5. Can you create demand for your products/services?

Finally, respond to the following questions before you start drawing a plan of your business activity.
1. Describe the business you are going to embark upon..
2. What products/services are you going to sell?
3. Where will your business be located?
4. What talents and skills can you use in your business activity?
5. How will you business be organizationally structured?
6. How will you name your firm?
7. What equipment and materials will you need?
8. How will you record your business data?
9. What kind of insurance will you need?
10. What funds will be required?
11. What are your resources?
12. How will you cover your expenses?
Basing on your answers to the questions from the above checklist, start drawing your business plan.

II. What do you need to start your own business?

The following chapters contain information about the practical steps you will have to make when starting your own business and the guidelines you will have to follow. We advise you to have a good think whether you are capable of accomplishing your plans. There are a good many reasons urging a person to start his/her own business: maybe, you have retired on an early pension; you have been fired; perhaps, you have had a business of your own but you would like to do something different. Whatever your reasons may be, the requirements will remain the same.
You must be:
persistent;
self-confident;
enthusiastic;
prepared for hard work.
The reward is evident: you will dispose of your time as you like ; you will be able to regulate the size of your income; and the main thing is that you will be independent, you will be your own boss. The following chapters are supposed to help you successfully overcome all difficulties you will meet.

Please, notice!
If you are planning a short-term business
-- till you find another job;
-- till you retire on a pension;
-- till you marry someone rich,
or if you start your own business to receive a government subsidy, we can only advise you one thing — DO NOT START!
You must have technical knowledge and skills. For example, you may know how to make fiber-glass plastic windsurfing boards but as you start your own business, you will have not only to make the boards, but take care of:
--sales;
--marketing;
--management;
--accounting;
--financing;
-- personnel.

You will have to work as hard as never before.
You will need:
-- great enthusiasm and self-sacrifice;
-- discretion and broad-mindedness;
-- flexibility to work in ever changing conditions and critical situation;
-- encouragement and understanding from your family as, at least, at first, you will have less time for your family;
-- some money reserve to see you and your family through the initial period of your business activity as your income may be insufficient then;
-- the ability to work taking risks.
You will have to say goodbye to the habits you have made while working for someone. When you start working for yourself, you may lose the feeling of stability, a guaranteed and regular income. You will have to change your daily routines, with no days-off or holidays guaranteed. You will have to spend less time with your friends. You will be under constant stress.
Try, if possible, to start your own business without leaving your present job until your business begins to yield you a sufficient income.
Do not take too much money from turnover, at first, as the size of turnover is one of the main conditions for the development of your business.
.
You may have the following sources of additional information and advice:
1.your accountant or auditor.
2.successful businesspersons who made mistakes in their time themselves, especially if they work in your business sector.

III. What to begin with?
There are, at least three answers to this question: 
- realize your own idea;
- buy a ready business;
- organize a business using the trademark and technologies already in successful use by other firms, i.e. buy a franchise. 
The business persons taking the first option must keep in mind that it will take a lot of time to develop a new business in the Russian conditions as a good many agreements with bureaucratic structures are to be made in this case. Besides, the promotion of new products or ideas entail considerable expenses in the beginning. If you do not have your own money to start your business, you will be hard put to find investors. As a rule, they do not like to invest in risky projects.
Taking the second option, you buy a ready business (for example, a pizzeria). The purchase will include a number of procedures, including: 
- searching for a business you would like to be;
- proprietary re-registration;
- legal assessment of the documents involved;
- assessment of the business to be purchased;
- assessment of the financial and economic aspects of the business;
- settlements with creditors, if any. 

As a rule, the businessperson alone can hardly negotiate all these problems. The services related to the purchase of ready businesses have been available in Russia since not long ago.
Franchising is the quickest way to start up your own business in Russia. The franchisee sells services according to the technology and under the trademark of the franchiser. In Russia this type of business relations is called commercial concession.. 
The businessperson opting for franchising faces the following main tasks: 
- determine a desirable business sector;
- choose a franchiser;
- find a financing source;
- regulate relations with the franchiser. 
The franchisee does not have to start from scratch. The business will be practically a copy of all the other businesses of the given franchising chain. For a fixed fee the franchisee receives assistance from the franchiser, including: 
- personnel training;
- purchases of equipment;
- recommendations on the location of the business;
- interior decoration of the business premises;
- unified policy and procedures;
- management consulting;
- financial assistance. 
The franchisee runs smaller expenses on materials and equipment as the corresponding purchases are made in a centralized way. Yet, franchising is only beginning to develop in Russia. The franchisee support infrastructure is not developed enough.. 
Russian banks already have some experience of extending loans to franchising projects. For example, KMB-bank (the Small Business Crediting Bank) already has six projects in its portfolio. Most of the projects relate to the fast food sector. KMB-bank extends loans of $15,000-$200,000 for the term of up to two years at a 12% annual interest rate. It is the franchiser who provides recommendation for the borrower. Yet, the own funds of the borrower must account for not less than 30% of the cost of the franchising project. Loans are, as a rule, extended for purchases of equipment. This equipment can be used as collateral. Besides, the bank can demand guarantees from the franchiser and the franchisee.
IV. How to start your own business.
It is a great decision to start your own business and get rich! Each year thousands of new companies are founded, yet many of them end up in a failure mostly because their owners do not have a good knowledge of private-sector business management. Below are some guidelines for you to follow if you want to make your way to success easier..

First of all, you should decide how much time you can spend on your planned business activity. Many people start their businesses in their spare time and, at the same time, care for their children or work elsewhere. Others dedicate all their time to their businesses if their family or financial conditions permit. Whatever your starting conditions may be, just decide how many hours a week you can spend on your business..

Then start drawing your weekly plans. Just write down everything you do to find out what part of the day can be allocated to business. Some people first think they could spend several hours a day on their business and then they find out that their family or other responsibilities do not leave them any spare time at all..

Determine what kind of business you would like to take on. If you cannot at first make a definitive decision as to what kind of business is preferable, then consider your skills and talents. Choose those that could be of use in business. Then make up a list of the business methods you know. Strike off the list the methods that could not be applied geographically or do not meet demand in your region. 
Choose a form of business organization. The main forms include private enterprise, partnership and small business. Private enterprise is the most suitable type since this kind of business is easier to start and run.. 
The advantages of a private enterprise are as follows:
? All the profit is yours.
? A private business is simple and does not require considerable organizational expenses. A license is all you need at the beginning.
? You are the boss.
? You have considerable tax benefits. With your license paid, you can then earn as much as you can.
? Private ownership stimulates diligence and responsibility. It is your money that are at stake! So you will put all your energy, talent and skills into your business.

If your business requires investment, then determine a financing source.
There are three ways of financing a new business :
own savings,
a loan,
services of investors.
Better use your own savings, at first. Remember that as you organize a private small business, you do not have much chance of receiving a loan or drawing investment until the successfulness of your business idea becomes obvious. You should read technical literature to learn more about all this. 
Now you have to draw up a business plan (business plans are useful in many cases, for example, in searching for an investor. A well-written business plan will help put in good order your intentions and activities.
The business plan should contain information about:
- what you are going to sell; - Вашу подготовку и квалификацию
- your qualification
- potential clients
- your projected means of attracting clients;
- the materials required to start up your business;
- your advertising plans;
- estimated costs. 
Then obtain a license and/or a permit, if necessary. Just call the local tax agency to find out whether you must obtain a license. For example, if you are going to trade in foods, you will possibly face certain restrictions and limitations. 
Open a bank account. It is very important to choose a suitable bank. The easiest way is to open a commercial account at the Savings Bank of Russia. If you are an individual businessperson, you can use a savings account, But it is not always the best decision. Commercial banks can provide more advantageous and suitable services. So find the bank which will suit your needs best. Determine what kind of transactions you will make. Call the managers of local banks. Make your choice very carefully. Don’t base your decision on the geographic factor! This factor is far from the most important one.. 
Choose the bank which, in your opinion, offers the best attitude towards clients. The friendlier your relations with the bank managers, the bigger your chances of obtaining loans or benefits. Meet the bank personnel, Remember the bank and its employees work for you. 
Try to find a bank familiar with your activity..
Find all necessary equipment for your business. Make up a list of all things you need to start work. Before making purchases, just think what you already have. You will need a fax machine, a quality telephone, a voice mail, a computer, a printer, a modem. Obtain an e-mail box. Try to save on everything. Look through newspaper advertisements. Maybe, you will find something secondhand. You can reduce your expenses by 70% buying secondhand office equipment.. 
Avoid making spontaneous buying decisions. We all have bought goods or services we do not need just because we were in a specific mood or because of the insistency of the shop assistant. “Awakening”, we find out that we have spent a lot of money on needless goods while the necessary things are not bought yet. Make up a list of things that are really necessary to equip your business and avoid making other purchases until your income permits excesses. Buy the most practical and reliable goods. 
In any business your main task is selling your goods and/or services.
No business can last long without selling. Any sale begins with advertisement. It is necessary that possible buyers see or hear your advertisement.. 
The way your advertisement is made determines success or a failure.
Generally, the advertiser expect the potential buyer to do the following:
1. visit a shop to see the goods advertised, or order the goods by phone or some other way.
2. arrange a meeting with the seller or the seller’s agent, obtain more detailed information. 
In any case, the goal of advertisement is just to motivate consumers to buy. If an advertisement makes a consumer praise a product and nothing more, it is not a good advertisement. 
In order to motivate consumers to act as desired, the advertisement should:
1. attract the attention of potential buyers,
2. arouse the potential buyer’s interest in the goods advertised,
3. motivate the potential buyer to purchase the goods,
4. urge the potential buyer act in a desirable way..
ATTENTION + INTEREST + DESIRE + ACTION – such is the main formula of advertisement.
Never forget the following rule. If an advertisement has not been read, it will not result in a sale. If it has not been seen, it has not been read. If an advertisement does not attract a buyer, it will not be seen!
V. How to set up your own business. The phases
Creating your own business is a hard work to be done by yourself. We can only offer you some advice, teach you to ask necessary questions, show you how to find the correct answers. It is you who will have to find these answers. We cannot provide you with the correct answers to all possible questions. A lot depends on your personality..

1. The profession of a businessperson and its problems 
As a businessperson, you will have to do a lot of things : organizing and managing; finding means and making use of them; taking risks and bearing responsibility, i.e. you will have to make decisions in uncertain conditions and be personally responsible. 
The problems and difficulties related to the profession of a businessperson . 
Money: Your income may be smaller than you expected. In the beginning of your business activity it would be helpful if your wife/husband has a stable income. A lack of money at the moment when money is needed most is the major cause of bankruptcy.. 
Working hours: You will have to work all day long without days-off and holidays. 
Psychological stress: You will find yourself under constant stress connected not only with your business but also your family life.. 
The type of work: Until you have enough money to hire qualified personnel, you will have to do everything yourself: you will be a shop assistant, an account, an administrator and so on all at 
Independence: Instead of one boss, you will have many – your clients, your suppliers, your creditors, etc. 
The possibility of a failure: A failure is always possible: be it your own fault or a fault of your business partners, including government. How will you react then? A successful businessperson must always keep in mind the possibility of a failure and have enough moral strength to bear up under it, learn the lesson and be more successful next time. 
Authority: If you have employees, the manner you govern them may have a positive or a destructive impact on your business. 
Personal relations: You will need good personal relations with your clients, suppliers, creditors and personnel. 

2.How to reduce initial risks

It is very important that you should do your best to reduce initial risks. Below are several recommendations suggested by the western business practice and the common sense.
? Obtain some experience and knowledge of management and your planned business sector.
? Write your business plan and assess the planned cash flow.
? Take a good think before making decisions. Collect and use reliable information.
? Make use of your strong points. Do not do what you cannot do
? Draw up your marketing and advertising plans.

3. Your idea

How much to invest? Who will be your clients? Are they many enough? What will you sell (what do your clients need?) What will your niche be? How do you differ from others? Where will you locate your business? Who are your competitors? Who are your suppliers? At what price will you sell? Your advertisement? Your trademark? The interior decoration of your office and/or shop? What else?

How much will your daily sales be? Turnover? Expenses? Receipts? Do you need an accountant? What will the accountant do? How to register your firm?
Do you need personnel? If so, then who? How will you find and select your employees? How much will you pay them?

4. Start writing your business plan

The business plan of a beginning businessperson serves two major purposes:

- to help the businessperson have a clear understanding of his/her business, define the goals and control their achievement;
- to help receive loans persuading the creditors of the seriousness and preparedness of the business started.

5. The phases of creating a business

Suppose that you want to be a businessperson and you have your business idea and you want to start your business in three months (12 months). Below is an exemplary plan to follow.

Phase 1: you and your idea (12 weeks before the startup):
Make a schedule of the activities listed below
Choose a suitable type of business
Assess the possible impact on your private life and your family
Consider your idea in detail
Start writing your business plan
Start collecting information
Enroll for a business beginner course

Phase 2: examine your idea and study the market and determine your commercial policy (10 weeks before the startup):
Make a schedule of the activities listed below:
Consider the profile of your future clients. Determine your pricing policy. Make sales projections. Determine the image of your firm, advertising, a PR-strategy.
Choose a suitable name for your firm. Determine the location of your business.

Phase 3: assess your finances, your future balance and budget; make financial decisions (8 weeks before the startup):
Make a schedule of the activities listed below:
Determine how much cash you need;
Consider your planned cash flow;
Draw up a balance and assess it;
Consider how you will conduct your accounting and make financial decisions;
Collect information about the organizations that provide aid for businesspersons, make contacts with them;
Collect information about the possible financing sources.

Phase 4: arrange your relationships with government agencies (6 weeks before the startup):
Make a schedule of the activities listed below;
Find suitable consultants to help you start your business.
Choose a law firm to serve your business.
Register your firm.
Determine what personnel you need..
Continue collecting information about possible financing sources.

Phase 5: make your business plan and obtain finances (4 weeks before the startup):
Make a schedule of the activities listed below::
Draw up your business plan.
Find necessary finances, using your balance report, sales projection, your cash flow plan and your business plan.
Obtain required insurance.
Order the necessary goods and materials
Repair your office.
Begin hiring the necessary personnel.

Phase 6: is all prepared? (2 weeks before the startup):
Make a schedule of the activities listed below:
Put in good order and decorate your office, the entryway, etc.
Check up if everything has been prepared
Complete the hire of the personnel.

Phase 7: the start of business activity
Plan your time.
Keep on improving your business.
Welcome the opinions of others about you and your business.
Compare your cash flow projections with reality.
Keep up good relations with your creditors and suppliers.