Business Startup

Starting a business is both exciting and daunting. Be prepared to make a lot of important startup decisions. From incorporation to financing, this article aims to outline many of the key considerations.

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Business Startup - Info
An overview for starting your own business is essential as there are so many factors to consider. Starting your own business is an adventure, which takes courage, money, skill and thoughtful planning. Many new business owners start a business because they want to be their own boss and call the shots. Others have an idea for a business that they cannot get away from. Many new owners had no choice. Their previous job no longer exists. They were victims of a corporate down sizing and they were let go.

These are three common reasons why a person starts their own business. It does not matter why a person goes into business for themselves, but how to successfully make it happen. A new business owner needs all four of the elements stated above, to make the transition from employee to owner.

Many people have the courage, but lack the money, the skill or planning ability. Many have an unrealistic expectation of what it takes to start your own business.

Let’s look at the factors that should be in place before attempting to start your own business. Starting your own business can be difficult and frightening, but it is also exciting and potentially very lucrative.

Courage and Money

If you need the certainty of a monthly income, then starting your own business may be something you should consider very carefully. New businesses have a tendency to have lean periods of cash flow. If you cannot live with this fact of business life, then you should consider working for some one else. Money flow is the enemy of all new businesses during their start up period. In fact, it can be an ongoing condition for any business. The owner takes this risk and when successful gets the reward. But, they earn and deserve this reward. They had the courage to try and risk failure. They had the courage to be their own boss.

Not all people are made that way, so evaluate this part of your makeup honestly.

If you can see living with the risk, then you have a chance to make it work.

Under financing is the major reason that new businesses go under. The owner of a start up business needs to have money to live on that is not generated by the business during the first year or more. Cash flow is unpredictable for a new business, and the beginning months can be feast or famine. Short capital is hard to overcome for a new business owner. It also depends on the type of business that is being started. A business that can be started in the home has an edge in this area. Lower fixed expenses are a luxury for a new business.

Adequate capital or a spouse that can support the family during the beginning of the business venture will make the chances for success a better proposition. Starting a new business needs to be a family decision, as this initial business start up phase will impact everyone in the family. Money in the bank gives the new owner the ability to live through the lean cash flow periods. This one element needs to be appraised with the cold eye of a banker. It can make or break the starting of a new business.

Skill and Planning
Skill can mean many different things depending on the type of business being started. If the business is dependent on selling concepts rather than a retail product, the owner better be a good salesperson. If the business is heavy into people contact, the new owner needs to be people oriented. If the business is a service business, the new startup owner better be able to perform all aspects of the service being offered. This fact kills many new restaurants and saloons, as the owner cannot do all aspects of the business well. Know the business well before you start your own. Take the time to work for a successful business that does what you want to do if at all possible. The startup owner must be able to step in when an employee is late, sick or just doesn’t come to work,

Skill can also be managing people and getting them to perform at their best. This is an art form and not done well through intimidation. Leading by example and giving respect to those that work for the owner will give the best return. Good employees are hard to find and worth keeping. Businesses can grow quicker with good employees. Management experience will also help you as you start your own business.

Technical skills are critical in this computer age. A business of any kind will be better run if the skill of computer use can be incorporated. The owner should be conversant with computers and be able to use them for basic functions. Computer skills can assist with everything from bookkeeping to bill paying, advertising to inventory. Reading skills are important, as this is one of the best ways to acquire information that can be used to improve the business.

Almost every industry has magazines dedicated to showing better ways to do the industry’s business. This would be a fine start for the new owner. Innovative ideas can be taken from this source and from the Internet. Staying up to date on the happenings and trends in your industry is a critical part of business success.

Planning a business includes many important topics. Obviously, what kind of business does the owner want to start? Is there adequate capital for the business to get through the first year? Where will the business be located and why? What rules need to be learned by the owner? This includes Federal, State, and County rules. Are there rules that are specific to the type of business being opened? What about employees vs. contract workers? Are there health department considerations?

The list is long and each item must be understood, because these rules can bite you. When you least expect it, a rule can bring tons of trouble. Lack of knowing is no excuse as far as the law is concerned. Good advisors are critical to a new business. They can keep you from violating the law or rules that are specific to your business. This area of starting your own business is another reason that businesses fail during the first year. Making a business rule-compliant can cost money and money is the biggest problem most new businesses have.


Advisors are Important
Part of good planning is to bring a group of advisors in early. This should include an attorney, accountant, insurance person, web person and maybe a business consultant. Each will provide crucial information that keeps the new owner from getting into trouble and preventing mistakes due to lack of knowledge. This avoidance of mistakes will save money and give the business a better structure and footing. Going it alone if you are new to business ownership is difficult as there are so many rules that need to be complied with. Your advisors can make this part of the process easier and may increase your chance of success.

Starting your own business from scratch vs. buying an existing business
This is an area that needs to be looked at by the prospective business owner. A startup will usually cost less to open the doors than buying an existing business. On the other hand, the existing business already has customers and therefore cash flow. Statistically there is a greater chance of success by buying a business that already is open. The more successful the existing business, the more the up front cost to the new business owner. If the existing business has problems, maybe the new owner can fix them and save a floundering enterprise. In this case, the purchase price may be a steal. Some times owners of businesses that are in trouble just wanted to get out. This could work in the favor of the buyer.

The business comes with customers and cash flow, but also a known name, equipment and location. It has a phone number and a presence in the phone book. It may have a reputation in the business community that is good or bad. This should be carefully looked at and researched. Equipment, inventory, and client lists are typically included in the purchase of a business.

A good existing business will come with some trained employees. This knowledge base can be invaluable to the new owner. It can dramatically speed up the learning curve, provide a customer base and make the cash flow problems easier to deal with. Do avoid buying an extant business if you have no experience in that field.

A startup new business has none of these things going for it, either good or bad. Starting your own business is like an artist’s canvas, there is nothing there yet, just an idea. Both situations have merit, good or bad considerations and will enable the new owner to own a business.


Franchises
This method of starting your own business is popular and also has some restraints that should be considered. You buy into an established name and with the right location; the business should grow from the start. As a part of the franchise, you must adhere to the rules of the franchise as to buying product and advertising. You may also be substituting a 60-70 hour week for a 40-hour week. The business is service with a location requirement. Employee training is also an ongoing necessity of this type of business. Even a hamburger flipper needs to be properly trained. If you can grow and end up owning several of these operations, you can do quite well financially. The up front notice is to find out all of the details before you take the jump. Franchises often come with a reputation of their own, and with some thought can be a successful way to start your own business. Talk with other current successful owners for their opinion. Your research will lead you to the correct decision for yourself.


Location
Location is every thing to a retail business. Excellent foot traffic is what makes a retail establishment’s cash register ring. On the other hand, a service business is mobile and it is of little consequence where the office is located. Some businesses need a prestige address to garner the right type of clientele. A lawyer, financial planner, realtor or business insurance agent needs a good business address. A car dealership in a seedy part of town would not do as well as one that is on auto row. A currier service could be located anywhere as that business is conducted by phone.

The point of this is that the type of startup business will determine if location should be considered as critical or not. Poor location could guarantee failure of some businesses and not affect others at all.

Marketing and Advertising
Starting your own business is not about just opening a place of business and the customers will flock to your doors. It does not work that way. A new business has no residual base of customers to provide cash flow. They must be acquired by aggressively going after them. This means the business should advertise via radio, newspapers, TV, mail campaigns, phoning, Internet marketing and referrals. Lack of money and lack of advertising go hand in hand. You cannot do one without the other. This is an important part of the plan for a new business.

Buying an existing business solves one of these problems. You have a customer base to contact and tell about new ownership. Maybe a new owner special would be in order.

Do not overlook Internet marketing. This modern extension of the old newspaper ads is rapidly growing and gaining popularity with both owners and customers. A good web advisor will be able to provide information on what you can do.

Employees: Hiring, firing and fringe benefits
Ask your friends if they know someone that is looking for work they recommend. Help wanted and the Internet are two other sources you can use to let people know you are hiring. When you get a good employee, your next job is keeping them. These people are hard to find and should be treated well so you can grow your business. Bad employees should be let go as quickly as possible. They are bad for your business and they have a negative effect on those around them. One bad employee can be detrimental to all of the people you have working for you. Like a bad apple, they can ruin the barrel of employees so to speak.

Respect and reward (The Double Rs) are the two ways to keep employees you want to stay. A pat on the back for good work and maybe a little cash present are worth more than the cost. People like to feel appreciated and this is easy to do if you think about it and make it a practice.

Health care and retirement are important attractions to new employees. But, that is the problem. Health care and retirement are getting a lot of play these days as their cost go up. Health care costs are skyrocketing up. Employers would like to offer it, but many small businesses cannot afford the expense. Some businesses can get a better price for the company by going through an association that is connected by business type. Another alternative is to offer a deal to the employees for themselves and let them pay for their families. In any event this benefit is rapidly going the way of the horse and buggy for small businesses.

Retirement is usually a smaller cost item to the employer. Starting your own business is not to soon to think about this. As the business becomes profitable it would be wise to have a plan in mind and ready to go. Social Security is a base for retirement, but it needs to be supplemented. A small contribution by the company can influence the employee to participate in a retirement plan. This is good for the employee and good for the country. Well off retirees are good for the economy.

Summary
As can be seen by all of the factors this short piece features, there is much to think about when starting your own business. A very fist step that you could do is talk with friends that already have their own business. Ask them for advice and what to be careful about. Read about going into business for yourself. Spend some time on research and gaining knowledge of what you are thinking of doing.

Be prepared for the unanticipated. It is not about will it happen, but when.

Some ideas for starting your own business are amazingly creative and will be successful from the start. Others enter a competitive environment that takes excellent marketing to grow the business. A truly niche market idea is worth its weight in gold. This is especially true, if it fills a need that the public responds to.

If you are entertaining this idea of starting your own business so you can be boss, then remember you are taking on the public as your boss. You will now have more than one. The customer is always right, even when they are wrong.

Yes you can control your business, but the customers will have a direct say in how successful you become. Any one going into starting their own business needs to look at all facets of this idea. If you feel comfortable with the many elements that need to be done, then you have the will and the stomach to succeed. If you have a unique idea then you have a real chance of being very successful. If you are a terrific salesperson or manager, then you can do this with every expectation of winning. Owners of successful startup businesses have one common trait. They are very confident they will succeed and they are willing to give it their all. It is hard to deny a person like this when they start their own business.


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