Steps to Starting a Business: Knowing What is Needed

Pasta Maker

Part 1:

Physical Needs

By Joe Selzler

Steps to Starting a Business

  1. Acquiring Motivation
  2. Finding an Idea.
  3. Proving the Idea
  4. Knowing What is Needed
  5. Applying the Business Plan
  6. The Opening Day and Your First Product or Sale
  7. Transition to an Established Business

This article is part of a series on the steps to starting a new business. We have so far discussed having the necessary motivation for starting a new business, finding an idea for a business that seems viable, and then proving if that idea would work. In this article, and in the second one to follow, we will talk about Knowing what is needed to run a new business. We will cover this step in two parts: part one, this article, will cover knowing what the physical needs are for starting up; and the next article, part two, will cover what the financial needs are. So then, on to the first part, determining our physical needs, i.e. in equipment, premises, and staff. Let's discuss each of these one at a time.

Part I: Physical Needs: Equipment

While we were experimenting with our mini pasta business we were able to determine some of the equipment we would need to manufacture and distribute our product. For one thing, we could determine the size of pasta-making machine we would need in order to make a satisfactory pasta run. In other words, we might have learned that there were six chefs in our area that wanted to use fresh pasta, to one degree or another. We totalled up the amount they thought they would use per day, and let's say it came to 30 kilograms. We knew that we would need a machine that could produce at least 30 kilograms in a morning. Why 30 kilograms in the morning? Because most of the chefs want to serve pasta on their lunch menus, which means they have to have it before noon. However, remember that we don't want to keep serving just six chefs, we want to expand our business to serve a dozen or even two dozen chefs, or even retail shops. One part of this step then is to know what equipment we will need.

Of course we will need production tables, scales, and shelving to store our stocks of ingredients and washing up e equipment. Then we will need to be able to deliver the pasta and that means a vehicle of some kind. We will need something to hold the pasta while it's being delivered and so we will need packaging. It is good to write down a list of all the things we remembered would improve our production so that we didn't forget anything when we began to gather equipment at start-up. A list will also help with Part II, determining our financial needs.

How About Staff?

That's right, we must not overlook this important consideration. With our mini pasta factory, we were able to learn just how much time and effort it takes to produce a certain amount of pasta. If we now multiply this by the total amount of pasta we want to produce, we will know the total production time and effort. Would we be able to handle this on our own and still market the product and keep up on our office work? Though we will never be able to project exactly how much time every area of our businesses needs, we will have a fair idea. This should be enough to help us judge how much staff we will need to start our full factory.

Size and Location of Business Premises

Another thing our experiment could teach us would be the size and location of our business premises. When we know all the machinery we need and its size we can figure fairly accurately what size of premises we would need. We would also know how all the machines would have to be positioned for the most efficient production. This will affect the size of our premises as well. Additionally, we will need to consider how much space we will need for the ingredients of fresh pasta. Some contributing factors here are the amount of ingredients to make one day's worth, and how many day's worth of production we will want to hold stock for. Finally, there is consideration of staff needs when determining the size and location of a premises. These needs will include changing rooms, sanitary facilities and lunch and refreshments. Included in staff needs are our own needs. Do we need an office on the premises: do we need research areas; or do we need any other special managerial facilities? As for location, we would want to locate as near to the area of our sales as possible, thus reducing delivery time and expenses.

We have looked above at a few of the things we learned we needed from our mini factory. These are what we call our physical needs. Of course, all these things cost money and that is our financial needs. We will discuss some of these next time and learn how to put it all together in a "business plan".

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