This is Joe. Joe is a hard working individual with a wife, two kids, a mortgage, a white picket fence and a lab. And Joe’s got big plans. Oh yes, for Joe is following a American dream of starting his own small business. Now they can run things the way in which he wants to run it. No longer Reports. No longer spreadsheets. No longer can time cards and you forget bosses. Yep, Joe’s future is looking pretty bright and he can’t wait to have started.
And for those of you looking to start you have small company, I have good news and some bad news. What’s promising is that starting a small business is a life changing experience. The bad news; starting a small business is a life changing experience In reality the Small Business Administration estimates that only 50% of small businesses flourish in the first five years, because of not enough capital, experience, and deficiencies in planning.
We’ve always heard, do everything you love and you’ll never work each day in your life. Well if you love reading financial management statements, bookkeeping, management, and marketing, you’re planning to be doing something that you do not like. Also, Joe must under consideration the total amount of hours it requires to run a small business successfully. In the first year or two, 70 – 90 hours a week are not uncommon and it will take a mental, mental, and physical strain on you. Now I don’t wish to discourage Joe, however lots of serious thought is needed, research should be done, and before he starts his own business. Business Planning Now let’s take a peek at business planning. It’s pretty simple really. It’s that blueprint for your organization that individuals were just talking about. You wouldn’t just rush out and start buying lumber and appliances and start building. You would need a blueprint, with a layout and a budget and milestones. Small businesses are not different. Yet I see people on a typical basis begin a restaurant, by buying some food, signing a lease, and voila, they’re in business.
Does this show that someone needs to have 50 pages filled with charts and graphs? What Joe needs to complete is create a plan which will address marketing, management, and financial needs. How much cash does it decide to try starting your organization and how much will it make. Financing so, how are you going to finance your organization? He needs to figure this part out, before he gets started.
1. Personal savings – The most frequent way people begin a small business.
2. Family or friends – If you do this, be sure you still make use of a contract. Planning to MeMaw’s house for Thanksgiving won’t be nearly as comfortable if he doesn’t.
3. Credit cards – Be mindful with one of these! You know what never mind. Just don’t. We’re not saying don’t ever use charge cards, just to not begin a business.
4. Commercial loan from a bank – With this you traditionally need some capital and collateral.
5. Investors – The least likely, however there could be people who believe in your organization that want to invest.
6. Small Business Administration Loan through a bank – The government doesn’t loan money directly. This is actually the government cosigning with you at the bank. You see we didn’t say grants. There are grants however, they’re primarily for educational institutions, non-profits, and local government projects.
I’ve never seen someone obtain a grant to begin a small business. It doesn’t mean they’re not on the market, I’ve just haven’t seen it. Lastly, let’s discuss what the requirements are to begin a business. Joe lives by the motto it is safer to ask for forgiveness, than to ask for permission, Generally I that way motto, however I’d abandon that thinking for this last section. Always ask before just assuming anything regarding licenses, taxes, codes, permits, or zoning. You will need to select a legal structure. This is where an attorney comes in very handy. Legal Structure • Sole Proprietor • Partnership • LLC – Limited Liability Company • S Corp • C Corp Government Requirements Taxes – There are federal, state, and local taxes that are usually applicable to most businesses.
This is in which a good accountant comes in handy. Licenses – You may need a county and city business license. Codes, Permits, Zoning – Just give your city hall and county zoning board a call and they’ll put you in the proper direction. Although small company ownership has its challenges, it can be quite rewarding and allow someone like Joe, a way to turn his dream right into a reality.