To be successful over the long haul, every one-person business needs to do some planning. The more organized the planning - the better the choices you will make. It is not necessary for you to have a full-blown business plan, like the ones used to raise hundreds of thousands of dollars for the start-up and growth of businesses with a lot of employees. For the one-person business a simple business plan will suffice.
Do you really need a business plan? It really depends on the nature of your business. A business plan is a product, and if you see it that way, whether you're in a service business or a product business, you will begin to see the value to the product. Like a product, a business plan is only valuable if it's used. A business plan is really an objective written estimation of what you think is going to happen in the future based on your understanding of the current situation and what has happened in the past.
As you accumulate a history in business, whether you know it or not you begin to accumulate knowledge and data on who your market is. You also accumulate financial information even if you do not have financial statements.
The importance of doing a business plan is the process in and of itself. It's not because experts say you have to do it or a bank says you have to do it, though that may be one way to use it. The reason to do a business plan is that the very process of going through a series of questions about your business will force you to audit the current situation and think about the future - to think strategically.
Whether it's used for starting a new business or growing an existing one, the first step in any business plan is to become familiar with your personal financial condition. What is your net worth? What does your personal budget look like? How much do you need to feel financially secure? The second step is to begin looking at how much cash you will need to start or expand. Is it a realistic amount? Where can you raise the cash you need? With the answers to these questions in hand, your final step is to incorporate them into the business plan itself, which will become the blueprint for the future of your business.
Tip: Calculate Your Net Worth
One of the most powerful steps you can take to understand your financial condition is to calculate your net worth. If our economic life is about the accumulation of wealth (as economists say it is), then to understand our economic life we need to understand our wealth: where it comes from, what forms it takes, and how much of it is available for us to use in starting and running a one-person business.
Accountants have come up with a quick and simple way to help us understand our personal wealth. It's called the balance sheet statement, or statement of net worth, or, What you own and what you owe. Basically, the statement of net worth is created by writing down the value of everything you own and everything you owe and then subtracting what you owe from what you own to see what the difference is. This difference is called your net worth.
The most important thing is to be absolutely sure that you are doing something that you truly want to do. To know this for sure you have to ask yourself a simple question, why do you want to do it? Is it because you would like working with other manufacturers and dealers? Or is it because you think it is an easy way to mint money? Wholesale business like any other business is very demanding. It requires that you put in a lot of effort and also a great amount of up front capital. It requires that you have great customer skills and adequate knowledge about warehousing and logistic planning. You will be playing a role of a mediator between the suppliers and the retailers. You will have to ship tons of goods across the country at a moment notices, it is important that you do not lose your nerve in such situations. It is also important to know that the payment that you will receive from the retailers will be on a Net10 or a Net 30 basis, often the retailers will pay you after the goods have been delivered, but what if after the goods are delivered the retailer refuse to pay? Or he goes bankrupt? You can face these situations once you plunge in to the business. So it is very important that you take all the precautions and you are prepared to meet the consequence. It is important for you to assess the degree of competition before plunging in this field. If there are reliable wholesalers in the locality the retailers would not want to shift from their regular supply for a new wholesaler. It is prudent to do certain research through the internet and also through the retailer themselves and find out if there is scope for your business to flourish.
You should assess your financial status before taking any step further. Wholesale business requires that you buy goods in large quantity from the wholesalers. It also means that you have to sell to the retailers on credit as they will be paying you after 30 days of receipt of goods. You have to invest a lot of money in insuring the goods and also in the shipping and transport of goods. You need a secure business plan to ensure that your business is a success. You should have a clear plan of what you want to do and how you want to go about doing it. This will not only be beneficial for you but it is also a requirement for the banks in order to sanction the loan that is proposed by you. It is also advisable that you take the help of a business lawyer from whom you can take professional advice. Lastly it is important that you apply for license, taxing certificates and complete other paper works. Paying taxes is a certainty and it is no time deferring it. You should start planning for your tax payment to the state and the federal government and for this there is a lot of paper work that you must do.
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