Corporate America has changed, this is a fact. Job security and benefits are not nearly the same as they used to be. This helps to make starting your own business much less risky, and people are realizing it. For this reason, many potential entrepreneurs are choosing to start their own businesses, including home based businesses. The small business is again on the rise.
Starting your own business may seem daunting at first, or you’re afraid that it will not pan out so you stick with your regular job. The thought of failing businesses crosses an individual’s mind often, until one day they decide it’s time to jump in and give it a try. The steps listed here will help you in deciding whether to start your own business or stick with corporate America.
1. Are you Sure you Want to be an Entrepreneur?
Before you decide that you want to be an entrepreneur, if you’ve lost your job or had trouble with it, you should look for another job first. Finding another job is much easier than starting up your own business. So make sure you truly want to be an entrepreneur and business owner. Ask yourself these questions:
Do I have the means?
Am I self-motivated enough?
Am I willing to make sacrifices?
Can I stay in for the long run?
One of the top reasons businesses fail is because owners decide they do not have the willpower to finish what they’ve started or their original motivation runs out.
2. What Sort of Business Do you Want?
What sort of business do you want? A franchise or independent? Manufacturing or services? B2B, business-to-business or consumer rich? With every business there comes pros and cons, no matter the type of business you choose. Each business is different, what works for one small business owner may not work for another. Some businesses will require a lot of overhead, yet others will require much less effort. Keep in mind location, utilities, supplies, type of traffic, employees and the products or services you will offer. All of these factors must be considered when you make your decision on what type of business you want.
3. Do Your Research
One of the most important things to remember when starting a business is that it is not a race. Oftentimes, when you rush a good thing, you end up with penalties you were not expecting, especially penalties from the marketplace. Slow down, take your time, and let the chips lie where they will. The term ‘first-mover advantage’ has been heard by all entrepreneurs. What it means is that the person who discovers a product and comes out with it before anyone else. This is simply an idea that has been over-hyped about, especially if you own a small business. You may find that you will lose more valuable resources or revenue by trying to be first, and it is sometimes not worth the effort.
Do your research, be methodical, and plan accordingly. It is a far better idea to take your time with researching your idea before simply jumping in with your blinders on. Ask yourself these questions before proceeding. If you find that your answers are mostly positive, then move forward with your small business.
What is the competition like?
Is there a market for my idea?
Are others already doing it?
Will my product or service solve someone’s problem?
Will the demand for my product or service be good enough for a long-term future?
After you are convinced that what you have is worth the effort, then by all means proceed with starting your home business.
4. Write Up a Business Plan
With the tons of resources available to help you with your business plan, there is no longer an excuse not to write one up. Thinking up a business plan is one thing, but you still need to put in on paper for many reasons. In order to have a better shot at your business succeeding, writing up a business plan will help you understand your resources and how to obtain them.
A business plan does not need to be as long as a novel, one page will do it if you do not have the patience for a longer outline. However long you decide to make it, it must answer all of these questions before you launch your new business.
What is the purpose of the business?
Who is my target audience/customers?
What problem does my product or service help solve?
Who is the competition and why are my products or services better?
What prices will I charge for my product or service?
What are my marketing ideas?
What kind of support will I offer for my product or service?
Where do I see my finances for the business in the next 3-5 years?
Now sit down, review your business plan, and write down the answers to the questions before moving forward.
5. Choose Your Business Structure
A small business CPA named Michael Hanley says, “The foundation for tax planning begins even before your first day of business operations.” When deciding which entity you want your business to be, consider that of all the decisions you’ll have to make as a business owner, this choice will have the largest impact on your success.
The time has come to make a decision on whether you want to be the Sole Proprietor of your business or engage in a Partnership, have a traditional corporation, an LLC, Limited Liability Company, or an S-Corporation.
Sole Proprietor —you are the sole owner. You will take care of all aspects of your small business no matter how tedious.
Partnership —you have a partner in the business, similar to a co-owner. The business is both of your responsibilities, so be sure to delegate when needed. You an also have a silent partner, so you still take care of most everything to do with your business.
Traditional Corporation —is an incorporated business, a legal entity that is distinct from its owner.
LLC —owned by individuals, members.
S-Corporation—provides owners with a different way of being taxed than other corporations.
Do some research to learn about all of the differences, there are several options to help you understand each entity.
6. Put Your Team Together
This includes employees, if you plan to have any, an attorney for legal issues, insurance agents, an accountant, and trusted advisors. You could even go so far as to hire a virtual assistant trained in administrative duties or one that is familiar with the ins and outs of starting a business.
7. Organize the Paperwork
One factor or starting a business that is often overlooked is the paperwork. You will need applicable licenses, registrations, and tax forms. Your accountant can handle much of this, but be sure not to overlook the paperwork, no matter how daunting or tedious it may seem, it is an important part of your business.
Other paperwork might include:
Special Government programs if you are eligible