June 21, 2016

Starting a Small Business

Hooray! You’ve decided to start your own business! How exciting! Think of all of the freedom you’ll have! You’ll probably be able to retire early! You get to work out of your house, how cool!

You may have heard many of these phrases when talking about starting your own business or “being your own boss.” Experts and close confidants will encourage you in a different way. Their words may sound more like: Do your homework; Seek advice; Meet with an attorney; Be sure to consult your accountant; and Are you sure?

The long list of things to consider includes everything from “who’s going to do the work?” to “what sort of corporation are you going to form?”

There are many resources available to help you through the phases of planning. The U.S. Small Business Administration is a good place to start. They list “9 Steps to Starting a Business” on their website. Fortifi Bank has an SBA expert on staff to help guide you through the SBA process. Here are the 9 steps:

Step 1: Write a Business Plan

Step 2: Get Business Assistance and Training

Step 3: Choose a Business Location

Step 4: Finance Your Business

Step 5: Determine the Legal Structure of Your Business

Step 6: Register a Business Name (Doing Business As)

Step 7: Register for State and Local Taxes

Step 8: Obtain Business Licenses and Permits

Step 9: Understand Employer Responsibilities

ADAPTABILITY, PERSISTENCE, AND WORK ETHIC

These three attributes have been noted as the most important for any entrepreneur. In addition to these, there are three more very practical issues. Entrepreneur Magazine offers the following advice.

1. Possess the requisite skills to do the primary work of the business.
Or if you possess only some of the required skills, you can partner with someone who has a complementary skill set. It may sound like remedial counsel to say that before starting a business, the owner should ensure that he or she can do the primary work of the business. Yet, we’ve known many people who have charged headlong into an entrepreneurial venture without having thought this issue through clearly.

One most often overlooked and necessary skill is the ability to sell. For most startups to survive, the owner will have to sell. It is unusual for a startup business to succeed if the owner(s) lacks the ability to do the primary work of the business.

2. Have a plan for performing the ancillary functions
If you love baking cakes, don’t open a bakery. Get a job as a baker.

If you are going to start a company, you better want to run a business. That means you’ll have more to do than just the primary work of the enterprise. If you are running a bakery, you’ll do a lot more than just bake. You’ll have to wait on customers, order supplies, set up a bookkeeping system and administer it. You will perform administrative functions such as accounts receivable, accounts payable and payroll. You’ll probably need some sort of IT infrastructure. The list goes on.

These functions are ancillary to the core business. However, they are not unimportant — quite the opposite. Getting these ancillary functions right is critical to the survival of the business. Yes, some of the ancillary functions can be outsourced, but you’ll need a plan to do each of them.

3. Realize that growth means you will have to let go.
Perhaps you are contemplating going into business because you are passionate about doing the primary work of the business. Good, you’ll need that passion. Still, you must remember, if your business is successful, it will grow.

The time will come when you’ll face a choice. You’ll have to delegate doing the primary work of the business to others, stop growing or hire someone to run the company while you continue doing the primary work of the business. Before you launch your new venture, know which path you’ll take. Be prepared to deal with success.

Starting a new business is an exciting journey. As with any journey, prior planning can help you avoid disaster. Make sure you have thought through the three critical issues above.

References:
“Follow These 9 Steps to Starting a Business | The U.S. Small Business Administration | SBA.gov.” <i>Follow These 9 Steps to Starting a Business | The U.S. Small Business Administration | SBA.gov</i>. US SBA, n.d. Web. 01 Mar. 2016.

White, Doug and Polly. “3 Vital Things to Consider Before Starting a Business.” <i>Entrepreneur</i>. Entrepreneur Media, Inc., 21 Apr. 2015. Web. 01 Mar. 2016.

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