"Small Town, Big Dreams: Crafting the Blueprint for Business Success with a Targeted Feasibility Study"

Starting a small business in a small town differs significantly from a big city.

Photo by Debby Hudson on Unsplash

Because of the sheer numbers in big cities, you can make many more mistakes in your business than in a small town.

For example, let's suppose you have a passion for oriental rugs.

You're a legitimate expert on these rugs and want to open a shop to sell them.

In a large city, there may be enough customers in your selling area to make the store profitable.

However, there may not be enough in a small town to make it profitable.

So, how do you know if your business idea will work?

The Starting Point: Look At Yourself

To make your dream happen, you must do a feasibility study to see if your business will work.

In this article, I'll talk about how to do just that.

If you haven't done a business plan yet, that's where to start.

You’ll find ten videos I’ve created on my YouTube channel about creating a successful business plan.

You can get free assistance developing a business and marketing plan from your local SCORE volunteer chapter or your nearest Small Business Development Center. 

You will answer the following questions as part of the executive summary in your business plan and again in the marketing sections.

Are you qualified to do this kind of business?

Do you or someone else in the business have the expertise to make it successful?

 Do you know what it will take to own and run your business?

Are you an entrepreneur?

(See: Age is no Barrier to Being a Successful Entrepreneur)

Are you a people person?

Some of us love what we do but have difficulty talking to others about it.

In a small-town business, you will have to be able to sell.

Before you stop reading because of your fears, let me define the selling you must do.

Have you ever recommended a movie to a friend? That's a basic form of selling.

You might ask your friend what kinds of movies they enjoy.

You would tell them why you liked the movie.

The stars, the storyline, and how much you enjoyed it. If you can do that, then -- guess what? — you can sell.

See: "Small Town Relationship Selling: How it Works and Why No One Uses It."

How Do You Compare?

For any business to succeed, three things must happen.

You must make enough sales to produce enough profit to pay all expenses, make a profit, and pay your monthly salary.

One of the first things to look for here is who else is doing what you're doing.

This is sometimes called a Comparative Competitive Analysis.

See: (How to Evaluate and Beat Your Small Business Competition)

Is there a perception that your competitors are good at it?

Notice I didn't ask, "ARE they good at it?"

I asked if there was a perception that they were good at it.

The two statements are vastly different.

If you compare a competitor to your business, the competitor may come up short in your eyes.

The reason is that you are only looking at the features of each business.

I deliver, they deliver, so both businesses are equal. Customers don't buy features. They buy benefits.

Customers buy based on emotion. (See: "Why Customers Buy.")

As a result, an evaluation of the competition based on the features of both businesses, like the one described above, may not be accurate.

Here's why: If both businesses are equal -- what benefit is there for the customer to change and do business with you?

An older business will always have a slight advantage over a new business.

An older business has a track record, but a new company does not.

A new business must create its perception of how it will fill existing customer needs to the customer's perceived benefit rather than the customer's current business.

Is There A Market For Your Business?

There are only two ways to get customers.

The first way is to create them from groups of people who have never been customers.

An example might be kids turning 16 and getting a driver's license, who are now gasoline, insurance, and tire customers who never were before.

The second way is taking them away from the competition.

Every day, someone has an unhappy experience with a business and changes to the competition.

Here are some ways to determine which category your business might fit into.

Target Market Analysis - You won't have a business without customers.

You must know the people most likely want your products or services and how to reach them.

Their age? Occupation? Marital status? Household income? What TV shows do they watch? What newspapers do they read?

Where can you put your message where they will most likely see and react to it?

See: "How to Find The Real Target Market in a Small Town"

Sales and Market Share Analysis - How much of the market do they have, and how much do you need to be profitable?

Either create new customers or steal them from your competitors.

Product Awareness and Attitudes - Do people need to be educated on using your product?

Do new buyers have to be educated when they buy a computer? Are they concerned that your product might be dangerous or harmful?

Purchase Rates and Buying Habits - Is your product or service seasonal?

In Bozeman, MT, ski businesses make money in the winter, while bicycle shops thrive in the summer. When do people want your product?

Can You Do It Financially?

As mentioned above, the business must produce income to survive.

I keep hearing how great Amazon.com is doing, but it took them over ten years to produce a profit. A good plan will work, but it may take time.

The best advice I could give you in starting a business is to sit down with an "experienced" accountant and have them help you design a financial plan.

Where and how you handle money can make the difference between success and failure for many new businesses.

You may say, "Well, I'm just a home-based business and won't make much money for a while."

That may be true, but at least have the accountant set up the "tax categories" for you.

You will have to pay taxes on any income produced in your business.

How well you keep records will determine the amount of taxes or allowed deductions you can take on your business taxes.

See: "Self-Analysis For Going Into Business"

Your accountant can also assist in preparing the financials for your business plan.

You may feel you don't need a business plan because you aren't going to run right down to the bank and get a loan.

The sole purpose of the business plan is to keep your business goals on track.

What Must You Do To Break Even?

How much business will you do to make your business successful?

That would be a break-even analysis. Rather than rehash something that's already done.

See: "How To Do A Break-Even Analysis" and "How To Grow Your Business To The Break-Even Level."

The two articles above should answer most business questions about computing break-even levels.

If not, check with your accountant.

The Last Word On Small-Town Feasibility Studies

Some common mistakes often made by new business startups are:

1.    Underestimating the startup costs needed for inventory or unexpected expenses. There is always something that was overlooked in the planning.

2.    Not having a business and marketing plan to refer to when making tough decisions. Sometimes, a business must be altered even before the doors open. Your choices made now could affect your business as far as five years down the road.

3.    Expanding too fast. You have not developed lines of credit or sufficient reserves to handle substantial business increases. It's usually always better to grow slow and steady than too fast.

Finally, look for similar businesses in towns of your size and demographics. Contact those business owners and pick their brains for helpful ideas and advice.

What are they doing that's working? Most people are happy to help similar businesses that are not direct competitors.

If you're convinced it will work, look again and then go for it.

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Look for my book, “How to Market, Advertise, and Promote Your Business or Service in Your Own Backyard.”