Maybe you can’t take your boss anymore. Maybe you have a great new idea and you don’t want someone else to profit off of it. Maybe you just want to be able to make your own way in the world. Whatever the reason, you’ve decided to start your own business… and your life will never be the same.
Starting up a new business can be both a blessing and a curse, a trial of both love and terror. If you don’t know where to start, it can make it that much worse… the task can seem so overwhelming that even the most steadfast of people can give up on their dreams and ambitions. Do you want to see your ideas come into being, or are you content to simply wonder about what might have been? Presented here is a guide to be used as a starting point, so that you’ll be better able to determine whether or not to continue with your pursuit.
Consider the various benefits of being the owner of your own business. You’ll have the freedom to run your business as you want to see it run. You’ll be the one in charge of how much or how little you make, and what you do in your business life. Most importantly, though, you’ll be able to use your creativity effectively, not having to worry about what your boss thinks about your decisions, and doing item A instead of focusing on item B. You should be careful, though… while it’s nice to have freedom, too much of it can be more of a curse than a blessing. Many people need a more structured life, and as a business owner you’ll have to deal with all of the things that never affected you as a mere employee. You’ll have your freedom, but you’ll also have the all of the consequences of that freedom.
After it’s clear to you that going into business is the right thing to do, you’re going to need to figure out exactly what it is that you’re going to do with your business. Are you planning on going into manufacturing, or perhaps into the service industry? Do you have any skills or special experience that can be useful? Will you be creating something new to the market, or does a product or service along the same lines already exist? There are a lot of things that you’ll have to think about before taking the plunge… be sure to work out the exact details before you get in over your head.
Something else to think about before you really get going with plans for your new business is exactly how much money you have to invest into it. You’ll find that it’s usually quite difficult to get any sort of loan or investment on a new, unproven business, so there’s a good chance that you’ll have to front the expenses yourself. If you do apply for a loan, you’ll likely have to apply for a personal loan… that means you’ll be putting your credit (and possibly your car or house) on the line if your new business doesn’t make it.
Next, let’s look at your goals. You should be able to clearly define 2 sets of goals for your business: short term goals, and long term goals. Your short term goals are anything that you want to be accomplished within a year, and your long term goals are anything that you want to be accomplished within 2-5 years. Each year they should be revised, with more of the long term goals becoming short term, and with more long term goals added. Always reach for something more, to keep your business moving ahead.
You also need to consider the structure of your business… how you want it to be run. Do you want to be the sole owner (or proprietor), or do you want partners? If you do take partners, how active will they be in the running of the company? Will they be a silent or limited partner, merely contributing financial backing, or will they be an active partner who helps to run the business? Or will you take things a bit further and incorporate the business, allowing shareholders to be the owners and having the business viewed as a separate legal entity? Each of these options has its own advantages and disadvantages… think carefully on how you want the business run before deciding on anything.
Once you get the ball rolling with your business, you’re going to want to think about what it should be called. If you’re going to use anything other than your real name, you’ll have to file a Fictitious Name Statement (also known as a Doing Business As statement, or a d/b/a) with your city or county government. The d/b/a allows you to register the name of your business, so that it is legally recognized as your business, and no one else can use that name within the same area. You’ll also want to apply for an Employer Identification Number with the IRS for tax reporting purposes (and while you’re doing that you should also get a copy of IRS publication 937: “Employer’s Tax Guide” so that you’ll know how, when, and how much to pay out to the IRS).
As your dream of a business begins to become a reality, you’re going to have to start thinking about sales and marketing. Marketing is the process by which you select your products or services, price them, advertise and promote them, and even how you distribute them. Sales is the steps that you take once your product is on the market to get your customers to buy it. Of course, those are overly-simple explanations of sales and marketing, and you’ll want to do additional market research before rushing in to anything.
Finally, you’re going to want to make sure that when money starts coming in, that everybody is getting theirs. You’ll have to pay taxes to the federal government, and possibly to state and local governments, most likely filing your tax returns quarterly. Payments will have to be made for each employee from each paycheck, so you might want to get a payroll accountant unless you really have a head with numbers and know how much and when to pay everyone. And while you’re figuring up income taxes, don’t forget that you’ve also got to pay unemployment, and then there are all of the non-payroll expenses… you can see how this can be an overwhelming process.
Try to remember that while running your own business can be extermely satisfying on a number of levels, it is also quite definitely work. There are problems and situations that you’ll face as a small business owner that you might never have known existed as a common employee. Many new business owners aren’t prepared for this part of being a business owner, and end up going under in the process. Caution and careful planning are your greatest tools to help you stay out of the red and in business. Be careful, and good luck.