How to Start Your Own Business?

Everyone knows the potential advantages of starting ones own business. Self-employed people decide what they’re going to do every day rather than having someone else assign your duties. Once you are self-employed, you will have (hopefully) chosen a business that you love instead of being stuck in some job you can’t stand. You will hire your employees, thus deciding with whom you work. If you want to play golf next Wednesday, no one will tell you different. The amount of time you can vacation each year will be totally your decision. You will also have pride in yourself for building a successful business.

So that’s the way that many people think of their future when they decide to start their own business for the first time. In the real world, it’s rarely that rosy a picture! While you and only you decide what you’ll do each day, if you decide wrong it could destroy your business. You may have chosen a business that you love but it could be unrealistic and therefore you go broke. Plus, people often think they’ll love doing something for life but the attraction eventually wears off and it becomes just like any other job. You can hire people you’ll love to work with but if they’re so personable that they don’t get any work done … well, you get the picture and you may have to fire people that you really like! You can take Wednesday off to play golf but will your business fall apart while your on the thirteenth hole? You may not be able to take any vaction for years until you have employees that can run things while you’re gone.

So how do professionals ensure that these problems (and many others) don’t happen? You can bet that billionaires don’t start a new business venture simply because it sounds like fun. They have a series of steps they take to reduce the number of future problems. Make no mistake about it though. Every business encounters problems on a regular basis that could potentially kill the business. If you’re not the type of person who can handle pressure, you may not want to start your own business.

The first and most important step in starting a business is determining the type of business. People are rarely successful in building their own businesses unless they really love what they’re doing. You shouldn’t guess here. If you’ve actually worked in the field, you should first work for someone else for a while. This will allow you to see whether you truly love that type of work and you’ll get valuable experience while earning a paycheck. Starting a business where you have no previous experience is a recipe for disaster! Your chances of failure go way up!

You also need to consider whether you have sufficient money to start your own business or whether you have the necessary assets and business acumen to convince a bank to lend you the money. The typical new business does not generate a profit or a paycheck for the owner for a year or two. Your banker won’t be as excited as you are about your new business so don’t think your idea is so great that they will throw money at you. They will be more concerned about whether you will be able to repay the loan and they will want proof or other assets (such as your home) to secure the loan.

Step #2 in starting your own business is to write a business plan. If you want a business loan, you will have to do this. A bank won’t talk to you without one. The business plan shows step-by-step how you will take your business from startup to profitability. Even if you don’t need a loan, a business plan is probably the most important step in making your business successful and it’s probably also the most often skipped step. Make no mistake about it. If you don’t know where you’re going in business, you’ll probably get lost and lost business people go broke.

Step #3 is to pick a name for your business. This is one of the fun steps but it’s still a serious one. You are not allowed to use a name for a business that is already being used by another business (with a very few exceptions). When choosing a name, avoid including your name. Think about it. Would you rather do business with “Jim’s Muffler Repair” or “Quality Muffler Repair”? Another thing to consider is how your business name will hurt or help your advertising efforts. Businesses are typically listed alphabetically in phone books and in online directories. People looking for businesses often call or click on the first listing or the first one with an interesting name. So “ZZZ Muffler Repair” would obviously be undesirable. On the other hand, “AAA Muffler Repair” is probably already taken. Phone companies and directory webmasters often won’t list businesses with that type of prefix because all of their other customers threaten to pull their advertising. So use a thesaurus to find a word that is nearer the beginning of the alphabet and sounds good. For example, change “Quality Muffler Repair” to “Excellent Muffler Repair”. If you have a webmaster that’s building you a website, you might also want to consult them on what name might be best for use on the web. It can make a huge difference!

Step #4 is to officially form your business. In most cases, you should incorporate your business as this protects your personal assets if the business fails. In some cases it may make sense to form an individual proprietorship which is otherwise known as a DBA (“doing business as”). This just involves notifying everyone in your immediate area that you are doing business as: “Your Business Name”. It’s not terribly expensive to form a corporation so if you have a home with equity or any other substantial assets, you should probably incorporate. Keep in mind though that if you take a loan for your business and allow the bank to take a lien on your home, that home can be foreclosed on if you don’t make the business loan payments even if you’ve formed a corporation. The corporation simply keeps creditors from taking your home if you haven’t given them a separate lien.

Step #5 is only necessary if you need money in order to start your own business. You and your business plan (don’t forget it!) have to convince a banker to loan you the money for your new business. If you’re unsuccessful at banks, you may want to check out the US Small Business Administration. Loans through them are not as easy to get as most people believe. You will still have to convince them that your business has a reasonable chance of success based upon your education, experience, and business plan. If you get turned down, ask the loan officer why your application was rejected. Be polite and respectful! Make sure they know you’re not mad at them, you simply want to know what you need to improve before trying again! Then forget how amazing you think you are and listen! If everyone says you lack the necessary experience, don’t get mad! Get more experience! Of course, you could always ask friends or family for the money but don’t be surprised if they also think you’re not ready to tackle your own business.

Once you have a business plan and money, there are dozens of things to do. You may need to lease a location for your office, store, restaurant, or whatever. You will need to register your business with whichever government organizations (city, county, state) require that in your area and secure licenses where necessary. If you will be hiring employees you’ll need an employer identification number (commonly referred to as “EIN”). Business insurance is nearly always a must and if you will be selling most anything or providing parts along with services you’ll need a “sales tax permit” to collect sales tax and to buy your merchandise wholesale and tax-free (for business use only, of course). Will you need to by office furniture, computers, ovens for your restaurant, or shelving for your consignment shop? You will have to set-up your books or hire a bookkeeper or accountant to do so. What about inventory control software? Turn on utilities. Get phones installed. Buy pens, pencils, pencil sharpeners, paper clips, etc., etc., etc.

So hopefully this article has pointed out the pleasures and pitfalls of How To Start Your Own Business. As you can see, there’s much to do just to get to your first dollar of income. Starting your own business is not likely to deliver you into the lifestyle of the rich and famous anywhere in the near future so be sure that you aren’t expecting things to be easy. The rewards can ultimately be great though! There’s nothing like making your own decisions, leading the team, and building a successful business!

Thank you for visiting our How to Start Your Own Business post!