Starting your own business
may be one of the biggest risks you will take in your life – and the statistics
confirm it. According to the Small Business Administration (SBA), two-thirds of
new businesses survive for a minimum of two years, with only 44 percent
surviving at least four years.
in good and bad times, the dream of being your own boss and pursuing a
for-profit or non-profit business venture can be an enticing one. In fact, when
the economy struggles, the number of non-employer small businesses tends to
increase at a higher rate than the number of employer businesses (Source: SBA
Small Business Advocate, July 2009).
how do you make that dream a reality and take the plunge into the risky waters
of small business ownership?
doubt there is a lot to wade through – tight credit, fickle consumers, and
oftentimes stiff competition. Then there are the personal risks – the loss of a
steady pay check, finding health care insurance, and so on.
and other reasons are enough to make many potential entrepreneurs fearful of
taking the plunge. But given the right preparedness, planning, and financing,
many entrepreneurs do take the plunge and succeed.
are some tips for making these three factors work for you as you consider
starting your own business:
1. Is Business
Ownership Right for You?
you get the calling to start your own business venture, it can be a compelling
one. For some it’s layoffs, for others it’s the dream of taking a unique
product or invention to market.
there is a difference between a calling and preparedness. Being a successful
business owner requires at least four fundamental qualities:
– Aside from being one of the seven holy virtues, diligence in business drives
methodical work methods and an active rather than a passive approach.
Determination – A
determination to succeed, no matter what conflicting advice you receive or
doubts that you may have, must be there.
– This is the DNA of the successful
business owner. You get from your business what you put into it.
– As a business owner you must be able to shift with the market, learn from
your mistakes, and change your business plans accordingly.
this quick Small Business Start-Up Assessment from the SBA to help better understand your readiness
for starting a small business.
2. Do you have a Plan?
start-ups put writing a business plan on hold until they find they need to get
a business loan. But, without a plan, taking the plunge into business ownership
will surely end in disaster.
strategic business plan should include a review of your strengths and
weaknesses; an understanding of the market opportunity and threats; proposed
sales and marketing strategies; as well as a clear plan for business ownership,
management, and funding.
government offers a great deal of advice to prospective and existing business
owners on the subject of planning. This “Write
a Business Plan” guide for small
businesses from www.business.gov
includes tips and free training on how to write a business plan, offers
hundreds of sample business plans, and more.
also can’t emphasize enough how important it is to talk to a representative or
attend business start-up events at your local SCORE, SBA, or Small Business Development
Center (SBDC). These organizations provide invaluable help and advice when it
comes to business planning. Find one near you here.
3. Financing your
Start-up: Low Risk Options
Financing can be a major
road block to starting your business – not only do you need capital to get
started, you also need a cushion to cover the ebb and flows of cash flow.
you are reticent about taking on a large financial risk as your start your
business, here are four options to consider:
Start from Home
– Home-based businesses (approximately 50% of small businesses are home-based)
require a lot less investment than operating out of a leased or owned business
property. Read more about “Starting
a Home-Based Business“.
– Another option is to start your business venture online. Granted, not all
businesses can operate online, but for retailers and some service providers starting
an online business is a low-cost entry into business ownership. Read “Starting and Growing an Online Business – An
Entrepreneur’s Checklist” for tips.
Start Part-Time – If
you are currently employed, can you alleviate some of the risks of starting
your business by venturing into it on a part-time basis? This is oftentimes a
great option for freelancers who can build a client base while still
maintaining a full-time job.
Government-Guaranteed Loans – Much has been written about how credit has dried up
for small business owners, but, in the past few months, the SBA has introduced
some finance lifelines for small business start-ups, including temporarily
waiving loan fees and raising loan guarantees to stimulate banks to lend. Read
more about these here: “The Recovery Act – SBA Loans and Your Small Business“. When it comes to government-backed
loans, the SBA’s Microloan Program provides very small loans (up to $35,000) to
start-ups. Read more about the Microloan Program and other SBA loans here.