Tips for Starting Your Own Business
Starting your own business is the great American Dream. In fact, small businesses are the bedrock of our nation's economy, accounting for more than 99 percent of the more than 25 million businesses in this country and bringing in more than 50 percent of the nonfarm private gross domestic product (GDP). Women own approximately 6.5 million businesses and 53 percent of all small businesses are home-based. So if you've always dreamed of owning your own business and being your own boss, here are some tips to help you achieve your dream.
Know Thyself. Take a good look at yourself and why you want to undertake this kind of challenge. Are you tired of the 9-to-5 drudgery? Want to be your own boss? Looking for a more direct connection between your efforts and your reward? But are you willing to sacrifice more for this dream? More time, more money, more energy? Are you willing to risk your financial solvency?
Starting your own business takes determination, patience, persistence, money, hard work, and lots of hours. How much time each day will you be able to devote to your business? How will your new business fit in with your current routine and your family? If you will need to pay for childcare for your children, will the cost of this negate your income?
What are your strengths and weaknesses? If you're more of an idea person but hate marketing and sales, think about hiring someone to handle that aspect of the business, or consider partnering with someone who complements your skills and interests. Regardless, make sure you have all your business bases covered.
Know Your Product and the Market. Is there a place in the market for your product or service? You don't necessarily need a revolutionary idea - you just need a new or different way of doing it. Or, the market may be robust enough to support another player. Either way, do your research and plan your attack carefully.
Where will you market your product or service? The Internet is invaluable as a marketing tool and you can set up a website fairly quickly, easily and cheaply. But once you've got a website, how will your customers find it? Try posting your product on EBay, which has become a small business owner's dream come true, or pay to run a banner ad on another website. Or run ads the old fashioned way in relevant newspapers, magazines, and trade journals.
Write a Business Plan. Writing a business plan may sound intimidating, but it's just a detailed explanation of your idea and how you plan to run your business. Break it down into little sections to make it more manageable. If you need help, check out the business plan guide on the Small Business Administration website.
Secure Financing. There are several means of financing your venture, with different terms and conditions, as well as risk.
Personal savings. This can include personal credit cards, savings, or other investments. While credit cards may be convenient, their high rate of interest is a disadvantage.
Friends and relatives. If you are comfortable borrowing money from them, friends and relatives may be a cheap way to go. They will often offer more lenient payback schedules and a lower - or no - interest rate.
Banks and credit unions. These institutions are where most small business owners head for startup cash. Many offer special loans for small business owners, but you'll have to prove your business model is solid in order to secure the money.
Venture capitalists. These are usually a group of wealthy investors, investment banks and other financial institutions that will loan small business owners cash in exchange for shares in the company. These loans are usually high risk, but offer the potential for above-average returns.
Have a Plan B. Unfortunately, approximately half of all small businesses fail within the first five years, according to the Small Business Administration, so it's a good idea to have a "Plan B" in case you fall into that category. At what point will you throw in the towel? What will you do then?
For more information, check out the Small Business Administration website. This agency, part of the federal government, provides information, tips, articles, as well as online courses on starting a business and can be a great resource.