What would a regular day look like at your company? As you visualize it, it might be helpful to consider the type of industry your business falls into: service, manufacturing, or merchandising.
The service industry simply means that you’re providing a service—either to other businesses or to the general public. Manufacturing is defined as producing and selling products, whereas merchandising is buying and reselling them. Your company might fit neatly into one of these groups, or it might fall under more than one category.
Thinking about the industry you’re in can help you come up with a basic outline for your business. This outline should cover three key areas: production needs, expenses and transactions, and division of labor. We’ve talked a bit about these things in past lessons—now let’s dig a little deeper!
As we go over the three areas, feel free to jot down the bolded terms and some notes for each one. (Keep in mind that this outline is a little different from a formal "business plan"—something you might need to show investors or loan officers. You can find business plan templates here).
Start off by thinking about space. Do you need to rent or purchase some real estate? You can always move into a larger space in the future if need be.
You should also make a list of equipment. It could be specialized equipment, like what’s used in manufacturing, or it could be items like chairs, desks, and computers for an office setting. Stick to the essentials so you don’t get bogged down by the smaller details.
Inventory refers to your products or the materials used to produce them. Do you need some inventory to start off with, and if so, how much? If you need help making or distributing your products, you may need to enlist key partners.
Key partners include vendors, suppliers, manufacturers, and distributors. Start contacting potential key partners early on in order to get estimates on their services. Then you can compare prices and decide who to build relationships with.
Space, equipment, inventory, and key partners all tie into the “scope and scale” of your business. To be more specific, scope refers to the variety of products/services that you provide, while scale refers to the size of your business.
Maybe you want to keep it simple and provide only one product or service—or you want to steadily expand your inventory. In terms of growth, maybe you want a family-run business—or you would be comfortable handling a larger team in the future. The main thing is that the scope and scale of your company should align with your long-term goals.
Expenses and Transactions
Estimating your daily expenses can help to determine pricing for products and services. Expenses can include rent, utilities, payroll, equipment, business insurance, and marketing. Don’t forget about manufacturing and distribution costs. And remember—smaller daily expenses can pop up unexpectedly!
In addition to tallying your expenses, try to visualize your daily transactions. You need to determine when and how the “point of sale” will occur. Will you accept cash, checks, or credit cards? What about payments through platforms like Square and PayPal?
Customers will want receipts, which you can print (from a cash register or credit card machine) or email to them if you’re using a digital platform.
If you provide goods or services to another business, also think about invoicing, or billing. Number your invoices so that they’re easy to keep track of, and include information like the quantity and unit price. Microsoft Office provides invoice templates, or you can use an online generator like the one on Shopify.
By having consistent protocols, or ways of doing things, your business will build a reputation for being trustworthy and professional.
Division of Labor
The type of industry you’re in should give you a sense of the “division of labor,” or which employees are responsible for what tasks. They will be your human resources, helping the business to run smoothly. Who will be in charge of finance and marketing? What about the day-to-day operations?
You'll want to assemble a team with different strengths. The more responsibility a team member has, the higher up they will be in your company’s leadership structure. More responsibility should also come with higher pay. In the next lesson, we’ll discuss how to hire the right staff for the job.