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Business Resources |
Starting a Business |
Owning a business is the dream of
many Americans. Starting that business converts your dream into
reality. But, there is a gap between your dream and reality
that can only be filled with careful planning. As a business
owner, you will need to avoid pitfalls to achieve your goals
and to build a profitable business.
What business is right for me?
Your best bet is to get into a business where you have the most
skill and interest as well as the best growth potential in your
local market. Talk to your family, friends and potential customers
about your business idea. You may want to consult with family
members, local experts and also other business professionals
in your area to discuss local market trends to better ensure
your success rate.
The pros and cons of owning a business
Owning a small business is not just another job. It's
a totally different lifestyle. You have to ask yourself whether
you're ready for a complete long-term commitment to the
success of your business. Just as importantly, you have to ask
your partner, if you're in a relationship, whether he
or she is completely committed. Loving what you do is rewarding
and it motivates you to keep going even when the road becomes
rocky. Your enthusiasm and passion for the business will drive
you to be knowledgeable, imaginative and determined.
As a small business owner, you're going to have less time
for your personal life and you'll probably be using much
of what you own as collateral to raise money for the business.
If you are willing to make those sacrifices, then let's
move on to some of the advantages and disadvantages of owning
your own business.
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| Top Ten Reasons to Start Up
a Business |
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1. You are your own boss
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2. You get to do what you're interested
in.
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3. Your firm = your deadlines
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4. Get creative
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5. It's not that hard to do
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6. It can be very profitable
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7. It's varied
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8. You can have a second career
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9. Cut the commute
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10. The big dream
really can become reality
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Pros
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Cons |
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Freedom - Money - Creativity and Independence - Risk Taking |
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You have the chance to make a lot
more money than you can make working for someone
else. |
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You'll be your own boss and make the decisions
that are crucial to your business' success or failure.
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You may be the boss of other people. |
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You'll have job security — no one can fire
you. |
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You'll have the chance to put your ideas into
practice. |
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You may participate in every aspect of running
a business. |
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You'll learn more about every aspect of a business
and gain experience in a variety of disciplines.
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You'll have the chance to work directly with
your customers. |
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You'll be able to benefit the local economy, such
as by hiring other people to work for you. |
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You'll have the personal satisfaction of creating
and running a successful business. |
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You'll be able to work in a field or area that
you really enjoy. |
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You'll have the chance to build real retirement
value (for example, by selling the business when
you retire). |
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You'll have the chance to put down roots in a
community and to provide a sense of belonging and
stability for your family. |
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Uncertainty
– Money
Distractions – Unpleasant Tasks |
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You may have to take
a large financial risk. |
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You will probably have to work long
hours and may have fewer opportunities to take vacations.
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You may end up spending a lot of
your time attending to the details of running a
business and less time on those things you really
enjoy. |
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You may find that your income is
not steady and that there are times when you don't
have much income coming in at all. |
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You may have to undertake tasks
you find unpleasant, such as firing someone or refusing
to hire a friend or relative. |
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You may have to learn many new disciplines,
such as filing and bookkeeping, inventory control,
production planning, advertising and promotion,
market research, and general management. |
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The bottom line is this: It is easy to romanticize the idea
of becoming an entrepreneur. The smarter move is to consider
the pros and the cons very carefully and act accordingly.
Operating a small business from your home
Before you start your home-based business, do a thorough investigation
of the zoning laws in your community. Zoning regulations spell
out activities permitted and prohibited in specific portions
of a city or county. Call your town hall, zoning office, or
local library to get a copy of zoning laws. Find out the structure
of your local zoning groups. Most areas have Planning, Zoning,
and Appeals Boards.
If the home business you are planning conforms to zoning
regulations, then all you need to do is keep abreast of new
proposals that may affect your situation. It's a good idea
to stay in touch with others operating from their homes by
joining business organizations or neighborhood groups in case
you ever need to band together to propose or oppose new regulations.
Maintaining a low profile and friendly relations with your
neighbors will result in more support from them should adverse
regulations affecting your business ever be proposed. If in
doubt, check with your local business license or zoning officials.
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Here are some special pros and cons of the home-based business |
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Your startup costs will be lower. |
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Your operating costs will be lower than they would
if you were renting space and paying utilities. |
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Your commute will be shorter. |
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If your location is unimportant to your business, you
can theoretically live anywhere and still operate your
business. |
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You may be more flexible in your schedule if your business
can be conducted at your convenience or outside "normal"
weekday business hours. |
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On the other hand, you're much more vulnerable to interruptions
from family members, neighbors, and door-to-door salespeople.
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You may have trouble attracting qualified employees.
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You may be less accessible to suppliers. |
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You may have an image problem, although with the growing
popularity of home businesses, that's less common. |
Don't forget about your professional image
Developing a professional image may be hard if you work out
of your home. Projecting a businesslike image is an important
part of building credibility with your customers and contributes
to your own professional self-image. Design a logo or have
one designed; order business cards and stationery. Set regular
business hours. Use an answering machine or answering service.
If other members of the family also answer the phone, make
sure they know what to say. Have a businesslike office or
"showroom" if you meet customers face to face. Consider
referring to your apartment number as your "suite number"
or rent a post office box rather than using your street address.
Such practices might improve your chances of doing business
with potential customers.
What skills do I need to succeed in starting my own business?
There are a numerous number of skills that you can list here,
but the basics are Industry experience, management practices,
planning aptitude and technical support. Not everyone will
have all of these skills or the experience, but this is where
you can recruit employees or partner with others where their
talent and experience will compensate for you own deficiencies.
Just remember, you will have to motivate yourself to get your
business started and continue running—there’s
no one else there to tell you what to do or even how to do
it.
The roles you will be expected to play?
If you're currently employed, you have first-hand knowledge
of what it's like to be an employee. If you think going into
business for yourself will mostly mean doing the same thing,
but for yourself, you're in for a surprise. Small business
owners are responsible for the entire business, which involves
a lot more than just providing goods or services. It's likely
that all the administrative and managerial duties currently
performed by your employer will fall on you.
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We've all heard of the beleaguered executive who moans that
he's overworked because he has to wear two or three hats at
his company. Well, most small business owners would give anything
if they had to wear only two or three hats.
Sales taxes and payroll or self-employment taxes will have to
be collected and paid. Accounts receivable and accounts payable
will arise in almost any business setting. Providing customer
service, keeping the appropriate equipment and supplies in stock,
as well as tracking and maintaining inventory and work in progress
are activities vital to most businesses. As a new small business
owner, it's more than likely there'll be no one except you to
do them. And you'll be doing these things in addition to the
activities that directly relate to providing goods or services
to your customers.
Here's a look at some of the roles you can expect to play if
own your own business:
Tax collector
— if you sell goods at the retail level, you're responsible
for collecting a sales tax for various government entities;
also, if you have employees, you're responsible for collecting
payroll taxes from them.
Manager/boss
— if you have employees, you'll be responsible for all
of the human resources-related functions, including recruiting,
hiring, firing, and keeping track of all the benefits information;
you'll be the one filling out all the insurance forms, answering
employee questions and complaints, and making the decisions
about whether you should change the benefits package you offer
your employees.
Sales/marketing/advertising executive — in addition to having to plan your marketing
or advertising campaign, you'll have to carry it out; you may
write an advertising copy, do some preliminary market research,
visit potential customers, and make sure existing customers
stay happy; depending upon the type of business you own, you
may have to join business groups, attend various breakfasts,
lunches, and dinners, and just generally network with anyone
who could help your business prosper.
Accountant
— even if you have an accountant, you'll have to know
a lot about accounting; you'll have to know which records to
keep and how to keep them; if you don't have an accountant,
you'll also have to prepare all of your tax forms, and you'll
have to know how to prepare and interpret all of your own financial
statements.
Lawyer
— even if you have a lawyer, you'll have to know a lot
about the law; if you don't have a lawyer, you'll have to prepare
all of your own contracts and other documents and understand
all of the employment laws if you have employees or want to
hire someone.
Business
planner — as you own your business, you'll inevitably
want to make changes, perhaps to expand the business or add
a new product line; if you want to make a change, it'll be your
responsibility to do it; you'll have to plan it and execute
it, and you'll have to consider all of the ramifications of
your decision.
Bill collector
— when customers don't pay, it'll be up to you to collect
from them; you'll have to know what you can and can't do when
collecting; you'll have to decide how best to collect from them
and when to give up.
Market
researcher — before you start your business, you'll
have to find out who your customers are and where they're located;
you may also have to conduct market research at various times
during the life of your business, such as when you are considering
introducing a new product.
Technology
expert — as a small business owner, you will probably
come to depend upon your computer; you'll have to fix it when
it breaks, install upgrades, and load software; you'll also
have to keep up with the newest products and the latest changes
in technology.
Clerk/receptionist/typist/secretary
— even if you have clerical help, you'll inevitably do
some of your filing, some of your typing, some of your mailing,
and some of your telephone answering; even if you have someone
else, for example, keep track of overdue accounts, you'll have
to know how to do it so that you can teach them what to do.
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We included this list of the important responsibilities of running
a business so you can realistically appraise your chances for
success. Obviously, much of your time will be spent on the mechanics
of complying with the requirements imposed on you as a business
owner. If you're going to succeed, you'll have to do so in the
time that remains. Don't make the mistake of underestimating
the cost, in hours, of being in business for yourself. A person
who spends 40 hours a week focused on his or her work will have
to work a lot more hours as a business owner to get in 40 hours
of activity directly relating to providing customers goods or
services. And during the startup period, you'll probably be
the busiest you'll ever be.
How long will it take to start a small business?
Speed is not always best when starting a small business. While
many businesses are started within a matter of weeks, some of
the best businesses take several months to a year or more to
start. The time frame is driven by your commitment and energy,
as well as by how much time and effort you put in to research
and planning. Whatever your time frame, we recommend that you
make time to research and plan your business ahead of time.
Even after a business is "started," it may be some
time before the businesses generates a profit. Many startup
companies are not profitable in the first couple of years.
It is critical that you not allow your enthusiasm or your desire
to get started to push you into business before you are ready.
Premature starts are a common reason for small business failure.
Buying an existing business versus starting from scratch
The advantage of buying an existing business is that it is already
established in the market. It has customers and is carrying
on business. You avoid the hassle and expense of starting from
scratch. The trick is making it fit your desires and capabilities.
Is it the kind of business you want? Can you afford it? Can
you operate it?
Businesses that are offered for sale are offered for all kinds
of reasons. Often the business is in less than good condition.
That's okay if you know it and the price reflects it –
and you can fix it. Sometimes the owner is just tired of it
and wants to retire. Knowing the real reasons for the sale helps
in your evaluation.
Sound financial and business analysis is a key to buying an
existing business. The business analysis is to determine if
you want to buy it. The financial analysis is to determine how
much you should pay for it. It may be a good business, but it
costs too much. It may be cheap in price, but a failing business.
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Buying an existing business can give you room to change and
grow without the hassles of starting from scratch. Another option
to look into is buying a franchise. Popular franchises such
as McDonald's are probably not within your price range but many
less known franchises can be bought relatively cheap and provide
you with the support you will need to keep your business growing
and productive. Franchises provide administrative services,
payroll services, assistance with taxes and red tape as well
as advertising materials and campaigns. Purchasing a franchise
usually means that you don't get to make up the rules though.
Most franchisees are expected to follow strict guidelines and
policies. Franchise owners tell you exactly how to manage and
operate your business.
Must-Have
Books on Starting Your Own Business
Below are the top ten books on starting a small business that
our readers consider to be highly informative and useful. Read
these books to guide you in starting the business of your dreams:
(link to Amazon.com)
Magazines on Starting a Business
Subscribe to the following magazines to keep you conscientious
of the developments in the small business market, give you
tips on starting and running your business, and read inspirational
stories of small entrepreneurs who made it big:
Entrepreneur
Magazine
Inc.com
Working
Mother
Black Enterprise
Home Business
Magazine
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