Starting a business can be complicated. You have to decide what form of legal organization works for your situation, secure funding, perform market research, and depending on your industry, familiarize yourself with all the relevant laws and regulations.

At AdviCoach of Southeast Michigan, we generally work with small business owners in Michigan who are two or more years into their business life cycle, but commonly hear from business owners who regret not laying a more solid foundation for their business.

Over the years, we’ve noticed some trouble spots in the first critical months. While it can be easy to get bogged down in the details of opening your small business in Michigan, you can’t lose sight of the important questions: why are you starting a business or this business? What value will your business bring to the market? How do you expect your business to change and grow through the years?

Here’s what most business owners wish they spent more time on when starting their Michigan business:

Personal Assessment: Think of this as your “Step Zero.” Before you begin getting into the details of your future business, take stock of yourself. Make sure you know what your motivations are and what you want to get out of being a business owner. Entrepreneurship isn’t for everybody and you should be honest with yourself. Here are some useful questions to get you thinking:

  • What are my personal strengths and weaknesses? Will any of these help or hinder my business once it is up and running?
  • Do I have all the technical skills and knowledge necessary to succeed?
  • Why do I believe my business will be successful? Do I have a plan if it isn’t?
  • What risks and sacrifices am I willing to make?
  • How do I define financial success?
  • What are my personal and family goals, and how will my business support/affect these?
  • What is my short- and longer-term strategic plan to launch the business, begin selling and creating a unique customer experience?
  • What is my exit strategy?

Market Research

You may be eager after you’ve selected your business idea to get on to other tasks like securing funding and legally organizing. However, market research is an essential step in starting your Michigan small business.

There is a wealth of online resources to begin your market research, but believe it or not, your local library may still be your best bet. Most local libraries keep trade journals and publications, directories of trade and industry associations, census data, industry-specific encyclopedias and other reference works, and various other source of statistics published by federal, state, and local agencies. We suggest organizing your market research into four categories: industry, market, customers and competition.

  • Industry: How big is your industry, and what potential for growth will you have in it? What are the historical and seasonal trends of this industry, and is it currently growing or contracting? Does this industry have any particular threats on the horizon?
  • Market: Will your business be B2B or B2C, or some combination of the two? What are the current market trends, and what market segments can you identify?
  • Customers: Get as much information about your potential customers as possible. You should approach this in a data-driven manner, but remember that through marketing and branding, you are also building the persona of who you’d like your customer to be. What ethnicity, gender, and age are they? What kind of occupation do they have, and what level of education? Where do they get most of their information, and where will you be able to most effectively reach them?
  • Competition: Identify both your direct and indirect competitors, in addition to potential future competition. Visit their physical locations and websites and get a sense for the customer experience they offer. What are they doing well, and what could they improve? What opportunities do you see?

Business Plan

One of the major reasons Michigan small businesses fail is simply due to a lack of planning.

Practically speaking, when you begin to secure financing in the form of loans and investors, this will require a written plan.

However, the main benefactor of a well written business plan is you! Writing out a detailed business plan lets you essentially run your business without ever spending a dime! By projecting your realistic revenue and expenditures, you can begin testing different financial scenarios without any risk.

At a minimum, your business plan should contain your basic information, a market analysis, plans for management and operations, and details regarding your finances.

Of course, these suggestions are only scratching the surface.

For more resources, you may want to read the IRS checklist for starting a business, as well as the Michigan SBDC guide to starting a small business.

David Waymann has been helping small businesses in Michigan for years. If you think you could benefit from the attentive, thoughtful business coaching that AdviCoach of Southeast Michigan has to offer, contact David today!