Starting a Business
Starting a business and being your own boss is a dream of many young people. It can be an opportunity to put innovative ideas to work, to fill a needed niche in a market and potentially to build your wealth. It can also be an overwhelming task. However, millions have been successful and millions have failed. There are no guarantees, but here are some of the issues you should consider.
Do you have the
psychological make-up to handle a start-up?
You should also consider the effect that starting a business may have on your lifestyle and your family. Long hours, constant distractions and sacrifices can put strains on your mind, body and finances, as well as on those around you.
What type of business
Find a line of business that matches your skills, experience and interests. If you are considering starting a personal service business, it can be nice to start off with at least one existing customer. Whatever type of business, be sure you like it. If you are successful, you may spend many years or several decades in that business. There are few things worse than not liking your job.
If you are considering buying into an existing business or franchise, investigate them thoroughly. Have a professional look at the financial statements and any contracts you may be signing.
Are you going alone
or should you have a partner?
If you choose to have a partner, you may also want to discuss how your partnership can be ended. While everyone has good intentions at the beginning, things can and often do change. Having a buy/sell agreement or a contractual agreement may avoid difficulties and hard feelings later.
Where will you
get the financing you need?
Arranging needed capital should be undertaken early in the startup process. Once the business is operational, you will probably want to focus on running it and not have to constantly be looking for funds. Be sure to speak with your financial institution about what they may be looking for before they would be willing to lend to a new business. You may also want to explore a loan through the Small Business Administration. The SBA programs offer a number of types of loans but can be time consuming and frustrating.
The final observation on needed capital is to consider setting a limit on how much you are willing to risk or lose before shutting the business down and accepting failure. While this may be difficult to consider when starting out, having a contingency plan for failure is prudent.
What are some of
the other legal, financial and tax issues to be considered?
Your personal financial and tax situations may also change when you become a business owner. You may lose the predictability of a monthly paycheck and the other benefits found with a larger company. You may have to pay for your medical insurance and fund your retirement account.