Business Success Measures

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.

Calculations

Plug your estimates into these calculations:

• A + B = Monthly expenses
• C - D = Gross profit per unit sales

Next, use monthly expenses (A + B) and gross profit per unit sales (C-D) estimates to figure out how many units of a product or service you need to sell each month.

• Monthly expenses ÷ gross profit per unit = how many units you need to sell

Lucy’s Traditional Sewing

Lucy wants to start a business making ribbon shirts. She made these estimates to see if her idea would work.

• Monthly living expenses
  • $600 rent + $400 food + $200 insurance + $200 utilities = $1400
  • A = $1400
• Estimate of monthly fixed costs to operate the business
  • Although Lucy is running a home-based business, she still estimates $50 advertising, $100 phone, and $50 for incidentals = $200
  • B = $200
• Cost to buy one unit of a similar product or service
  • C = $100 per shirt
• Cost of materials to make one unit of similar product or service
  • D = $25 per shirt

Len’s Lawn Care

Len wants to start a lawn care business. He made these estimates to see if his idea would work.

• Monthly living expenses
  • $800 rent + $500 food + $200 insurance + $200 utilities = $1700
  • A = $1700
• Estimate of monthly fixed costs to operate the business
  • Len already owns a lawn mower and some lawn care tools, but he estimates $50 advertising, $100 phone, and $50 for incidentals = $200
  • B = $200
• Cost to buy one unit of a similar product or service
  • C = $90 per account (estimated at 3 lawn mows per month)
• Cost of materials to make one unit of similar product or service
  • D = $10 per account

About You Worksheet Questions

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.

Business Name

What is the name of your business? (see Chapter 4: The Business Plan)

• Does this name describe your business?
• Is the name available and unique?
  • Is there another business with the same or a similar name nearby that might confuse customers?

Day-to-Day Operations

How will you run your business on a day-to-day basis? (See Chapter 6: The Operations Plan)

• How will you do things like manage money, provide receipts, order supplies, and make deliveries?
• Which tasks will you need to do every day? Which tasks will you need to do weekly?
• What accommodations or help will you need to do these things?

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?

Business Traits

Why will people choose your business instead of other similar businesses? (see Chapter 5: The Marketing Plan)

• Does your business have special strengths? 
• Are you providing something that your customers need? 
• Explain how you determined this information. 

Neighbors

What other kinds of businesses are near your location?

• How will these businesses affect your business?
  • Will these businesses attract customers that might also want to come to your business?
  • Do these businesses pose any health or personal risks to you or your customers?

If you are running a business out of your home, how will this affect your neighbors?

• Will business traffic to your home or noise from your business bother your neighbors?
  • What are your plans for addressing this?
• How will your neighbors affect your business?

Necessary Approvals

What kinds of approvals do you need before you start your business? (see Chapter 6: The Operations Plan)

• Do you need tribal council approval before you start your business in this location?
• Do you need a business license?
• Are there zoning laws or other restrictions for your business location?

If you answered 'yes' to any of these, how will you go about getting the approvals you need?

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.

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. They 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.

Fixtures, Furniture, Displays, and Shelving

List any fixtures, furniture, displays, or shelving you need to purchase for your business.

For example, you might need shelving to display your products, or an office chair and desk.

Rent or Mortgage Payments

If you are renting your business space, list out how much it costs per month. If there is a deposit, include that. If you don’t rent but have a monthly mortgage payment to purchase the space, put down that cost.

For instance, you may have to pay first and last month’s rent plus a security deposit in order to rent the space for the first month.

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 a powwow or high school sporting event.

Business Licenses, Registrations, Permits

List any business licenses, registrations, or permits needed to operate your business.

For example, a food truck might need a local business license, a health department permit, and a food handler’s permit.

Insurance

List 6-month premium costs for each type of insurance you need for your business. If you need any separate policies, list those.

For instance, if your business is based out of your home, your homeowner’s policy may require a rider for business activities. Other typical insurances include extra insurance for business vehicles, equipment, or supplies stored in an off-site location.

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 TVR counselor, small business development advisor, or business mentor about other possible sources of funding. There are also funding resources listed in the Resources section (which can be accessed from the navigation bar going across the very top of this website).

Self-Employment Shadow

As you explore self-employment, talk to your TVR counselor to see if they can help you find a business owner you could shadow for a day or two to get a better idea of what goes into running a business. 

This can help you learn what life would be like as a business owner. It will give you and your TVR counselor useful information about the training and supports you might need to become self-employed.

Business Trial

Some TVR programs may provide opportunities to try out your business idea on a small scale.  For instance, one TVR program assists with equipment rental to experiment with business production and initial sales.

Emma’s Exploration

As part of exploring business feasibility, the TVR program supported Emma with an 8-week self-employment trial demonstration period. The trial period would allow Emma and the TVR counselor time to see if her business idea and desire to be self-employed would be successful.

Together, Emma and her TVR counselor figured out how many pizzas she would need to sell to cover her expenses and make a profit. The TVR program helped with minimal supplies to set Emma up so she could explore her business idea.

Emma’s Decision

After going over her profits and other business performance measures with her TVR counselor, Emma realized and accepted that right now was not the time to start her pizza business. She saw that she needed to take care of herself so that her disability would not flare up, and keep her from doing what she wanted to do. She also saw that the time needed to be successful and the amount of work to make a profit was not possible with her disability.

Although she really wanted to pursue self-employment, the trial demonstration period showed Emma that the pizza business was not a feasible option for her right now.

Nadia’s Exploration

To help assess business feasibility, the TVR program supported Nadia with an 8-week self-employment trial demonstration period to see if her business idea and desire to be self-employed would be successful.

Nadia and her TVR counselor looked at financial projections and preliminary advertising, and started her 8-week demonstration period with minimal start up supplies.

Nadia’s Decision

At the end of 8 weeks, Nadia was doing a great job and her sales were steady. She was even looking at hiring another person to help her run the business because she was starting to see demand from customers, especially for breakfast foods.

It was evident from her profit and the way she was running the demonstration period that Nadia could be successful in self-employment. It was at this point TVR decided to fully support her self-employment plan and move forward with additional purchases to make her restaurant and catering business successful. 

Nadia closed her TVR case successfully, and a few months later she hired a student to assist her with running her business.

Prepare

In this chapter, you explored the feasibility of your business idea. You used the About You, About Your Business, and Start-up Costs 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 TVR counselor.
  • Refer to later chapters in the website to learn more.

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