In light of the recession scare and the housing crisis and the high unemployment rates, many entrepreneurial types are choosing to venture out on their own to provide security for their family by setting up their own business. There are more new businesses being established than ever before but honestly the task is not one everybody is able to handle successfully. There are some serious considerations to make before delving into the world of business.
Here are 8 considerations to make before starting your own business:
1. Do You Have the Time?
A self-employed individual likely spends much longer, more intense hours at their own business than they ever did working for someone else. If you think your new found schedule will be completely flexible, think again. It takes a lot of time, a lot of planning, and a lot of consistency to get the business off the ground and earning a profit. For the first few years, you’ll likely live, eat, and sleep the business. Be sure you can handle it and also check in with your family who also needs to be on board to make it a successful venture.
2. Can You Afford It?
Depending on the kind of business you wish to start, it may take several thousand dollars just to open up the shop. You may want to start out as a consultant or a freelancer in your field just to get by with as little overhead as possible. But that is not the only thing to consider. It can take some business five years or more just to see their first profit. Ask yourself if your family can survive on a roller coaster income for any length of time.
3. Have You Thought It All Through?
The best way to really gauge your interest and success potential in a new business is by creating a business plan. A business plan will force you to look at the facts and figures of your potential business. It will make you project profit forecasts, define your marketing plan, and help you see the light when it comes to your idea working out and making a profit. Without a completed business plan, an entrepreneur will not clearly see what is entailed in starting a business. There will also be nothing to refer back to moving forward so it will be more difficult to track progress.
4. What Are You Selling?
The product or service you provide needs to be something people want or need. You will have to do the appropriate research to ensure that an auto body shop will survive in your neighborhood or that you can be competitive in the retail market internationally. Whatever your business idea is, you have to first make sure it is going to work. Ask friends, family, and colleagues for their opinion of your idea before moving forward.
5. Can You Promote Yourself?
It can be easy to talk up people you know but when it comes to talking about yourself, your skills, and your ideas it may be much more difficult than you realize. Promoting and marketing your business to the right audience is an important element of success. If you can’t do it successfully, you’ll need to make sure you hire (and can afford) someone to do it for you. Marketing is an ongoing process and as a busy business owner, you can’t let it fall to the wayside and still expect great results and big profits.
6. How Legal Will You Be?
Depending on the business idea you have, you may need to file a lot of paperwork with the Local, State, and Federal Governments. There are tax considerations to make and you’ll have to decide how to set up your company. You may choose to be a sole proprietor, be involved in a partnership, or establish a Limited Liability Company or a Corporation. You may also need to register and pay for your company name.
7. What Shall You Call Thyself?
Speaking of a name for your business, you may choose something catchier than John Smith Consulting. You’ll need to make sure your business name is not already taken by someone else or you could find yourself at the wrong end of a lawsuit. Trademarking your business name may also be something you’ll need to do. There are many considerations to naming a business using either your own moniker or that of a fictitious name. Plus, the creative side of things can be very difficult. Coming up with an appropriate name that people can identify easily may not be as easy as you think.
8. To Hire or Not to Hire Is the Question
Many new business owners think they can do it all on their own without the aid (or expense) of staff. However, when it gets down to it, there is only so much one can handle at any given time. You need to consider when and how many staff will be necessary to open the doors for business. Under or overestimating can cause a lot of problems and cost business owners a lot of cash and frustrations.
These are just some of the basic considerations to make when planning a new business venture. There are many more issues that come along with various industries and business structures. It may be worth an investment of time to meet with and work alongside other self-made business owners before going solo. You also may not want to quit your day job until your new business is firmly established. At the end of the day, the bottom line of your business is what matters the most, and consultants like Hitachi Capital are able to help you get it right with this guide to business cashflow. For a chance to win a invoice factoring facility to up to $1M free of charge, enter the Inspired Cashflow competition for Small and Medium Businesses.