You don’t have to read the news to realize that our country is in hard economic times. Unemployment on the national level stands at 9.7% with 16 states over the 10% mark. 14.9 million people are unemployed right now, yet only 4.78 million are collecting unemployment benefits. So, what are the other 10 million people doing to make money?
It is my belief that we are going to begin to see a large uptick in small business start ups in the coming months, and years. However, with most businesses failing within the first three years of opening their doors, you need to do a lot of research and leg work to make sure the odds are stacked in your favor.
You have a great idea for a product, or you simply have a talent you want to use. Where do you go from there?
The very first thing you need to do is figure out how to structure your company. For most purposes, at least in the beginning, starting out as a sole proprietorship will suit you just fine. This is the easiest, and cheapest way to form your company. Down the road you might want to look into other options such as an LLC (Limited Liability Company), or some type of Corporation (S Corp, C Corp, etc). For a great breakdown on the advantages and disadvantages of each form, check out this great article over at Entrepreneur magazine.
Second, do you have a map? Garmin won’t help you with this – you need to have a basic idea of what you are doing, and where you want to go with your business. It is helpful to plan out in small increments the first year so you have milestones to rejoice in. But, don’t get bogged down if everything doesn’t go according to plan. Building a business takes time. But, if you at least have an idea of where you want to go, you won’t be spending your precious time flailing your arms, not knowing “where to go from here”.
Next, you need to check with your local and state government to see what kind of regulations need to be considered when you start up. Some areas have zoning that could prevent you from operating out of your home. And, depending on where you live, you may need to apply for a business license or permit. Go to your state’s website and check out what you need to do.
Financing. Where is the money coming from to get the organization going? Chances are, you don’t have a lot of capital (cash) to get started. Please don’t let that stop you! In fact, if you are considering taking out a loan, please don’t. Start your business small, and using cash. Even if you don’t have a big chunk of change to get started, you can build things slowly, over time. With one sale at a time.
You don’t even need to get an “official” business checking account in the beginning – just operate using your personal account, but keep very good records so at the end of the year, you can separate business expenses from home expenses.
Part two of this series, we will talk more about Business Finances. Stay Tuned!