Many of us with regular day jobs dream about running our own business. The idea of escaping the 9-to-5 grind and forging your own way in the world can seem a very attractive alternative to your office cubicle, but those who dare to dream of a such a life often wonder where to begin. When most people think about starting a business, they envision standing up and proudly walking out of their office with nothing but hard-nosed determination and detest of a mundane lifestyle, but it is important to realize that this is rarely how one makes the jump to successful entrepreneur. Given that most of us have bills to pay and households to support, simply “walking out” is never a realistic option. But fortunately, for the determined, there is a better way to begin your new career as a business owner. Following is a step by step plan for intelligently transforming yourself from employee to entrepreneur.
Get a Team Together
Though you might think you possess the necessary skills to create your product, and the know-how to market it effectively, you should not expect to run your entire business by yourself. Depending on the type of business you plan to start, you should begin recruiting like-minded partners who are exceptionally skilled in areas you are not. As an example, if you have a plan for a new website that you think could become the next FaceBook, you should aim to have at least one other programmer working with you on designing the engine. Think of all that goes into running a successful start-up: development of the product, marketing, accounting, website and document content authoring, and much more. Even if you are a skilled programmer, you seeking assistance from others who want to become entrepreneurs will expedite progress and get your product market-ready much faster than if you try to go it alone.
Offer Team Members a Piece of the Pie
If you are like most people, you don’t have the financial resources to offer friends or coworkers a salary to begin working on your project with you. Instead, try offering your partners a stake in the eventual profits of the business for teaming up with you. If you keep your team small and only recruit a select one or two skilled partners, you will still retain a large equity in the business. In addition, if a partner agrees to work with you for a stake in the company, you can be sure that they believe in the product and will give it their all to see it succeed.
Incorporate Your Business
Now that you have your team together and have worked out equity compensation, it is time to make the whole thing official by incorporating the company. There are several corporate structures that carry different tax considerations and offer varied legal protection. As an example, C corporations add an additional corporate income tax on top of your regular income tax, where as S corporations do not. Most first time founders of small start ups choose to go with a Limited Liability Corporation (LLC), as it offers low taxation and adequate legal coverage. Read up on the complete laws and benefits pertaining to each structure and choose the one that best suits your current intentions, keeping in mind that you can always restructure the business later if need be. Once you have done this, check with a local attorney or accountant on the best way to incorporate in your state. For a modest fee (or a bunch of paperwork if you wish to do it yourself and save money) your new business can be on the books in a matter of days.