A part of the American Dream has always been opening and operating a private business, and for many years, it was the one way that was almost certain to get you ahead in life. Today, however, opening a business for yourself is fraught with financial peril. There are numerous difficulties in getting a business off the ground, not to mention ensuring that it is legal.
Once upon a time, all you had to do to open your own business was learn a trade, and then hang a sign outside your front door. This is where the phrase “hanging out your shingle” comes from, which is used today primarily with lawyers. It just isn't that easy today, even if you plan to do business from your home. The proper permits must be obtained, and the right taxes have to be paid.
The first consideration you have to look at when thinking about opening your own business is the largest and most fundamental. Do you have enough financial security to get started? You have to cover not just startup costs, but also your personal expenses during the period between starting the business and it's “catching on.” This is unfortunately the one aspect that many would-be entrepreneurs miss. Most professionals suggest that you either: A: have enough savings to cover at least 6 months of personal expenses as well as the startup costs of the business or B: Keep your day job until the business catches on. Obviously, this can be a bit tough, particularly if your dream business is positioned as a 9-5 retail store. If this is the case for you, then perhaps option “A” would be a better choice.
Once the finances are set to go, the easy part sets in. First, you'll need a business plan. These are really easier than they sound. In fact, there are templates available online that you simply fill out. Basically, a business plan lets creditors and your zoning department know what business you plan to engage in, who your intended customer base is, and your earnings forecast, or how much you believe you'll make in your first year. If you try to get a loan through the SBA, a business plan is a necessity.
Speaking of the Small Business Administration, the SBA website offers loads of information. What the SBA doesn't do is make loans. An SBA loan for small business is opened through a traditional bank after you apply to the SBA. You take the paperwork from the SBA to the bank of your choice, and then obtain a loan from the bank. The SBA simply guarantees part of the loan. Obviously, they don't guarantee the whole loan. If your broccoli cupcake business just doesn't pan out, you're going to be out some capital yourself.
So, you can shoulder the financial burden, but can you invest the time? Most small businesses are 80-hour per week affairs, at least until they get underway. Then, they tend to take up less of your time and energy. Plan to spend between 78 and 79 hours per week worrying about, taking care of, and seeing to the needs of your business, on average. Many entrepreneurs indicate that their fledgling businesses tend to take up practically every waking hour, and then the business even invades their dreams. Scary, huh?
Still, owning and operating your own business is an extremely gratifying experience, particularly if you find success. The only way you can go about it, though, is to give it a try.
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