Starting your own business can be a very exciting endeavor. It allows you great freedom and opportunity to explore and develop your own business idea. You must decide what kind of business you want to start. It is also important to examine yourself and decide what you want from the business. Keep in mind that starting a business requires careful thought and planning. Many aspects of the business must be considered including legal issues, financing, marketing concerns, employee relations, accounting procedures, equipment purchases, and location. Research, preparation, organization, and planning are critical in a start-up venture to minimize risk and enhance your chance for success.
You might ask, “How do I know what kind of business to start?” or “How are businesses formed?” Business ideas emerge in many ways. Examples are:
- Finding and meeting an unfulfilled market need
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Building a business on an existing customer relationship
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Spinning off a business based on your experience and knowledge
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Capitalizing on a new invention or technology
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Growing a part-time business or hobby into a full time opportunity
Consider the following approach:
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Research your business idea (doing a business plan is a good place to begin)
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Develop a strategy
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Determine your marketing approach
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Address key operational issues
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Make your own decisions, but get advice from appropriate professionals
Successfully starting your own business can provide a sense of accomplishment and satisfaction in knowing you did it yourself. However, if the business fails, you must assume all the liabilities and emotional strain that goes with it. There are many misconceptions surrounding owning one’s own business. Consider the following common misconceptions:
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I will be my own boss. Being your own boss does not mean you can play golf or go fishing anytime you want. Reality is, the business and your customers become your boss and can demand 50-65 hours per week.
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I can get rich overnight. Small business and free enterprise provides a great opportunity to build wealth; however, it will take time. Studies indicate that more than a third of small businesses that grow significantly, do so after ten or more years of existence.
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I can expect immediate income from my business. This is not likely. Generally, it takes 6-12 months before a new business can start to pay the owner a decent salary. You should have a cash reserve or savings to provide financial support for you and your family during the start-up phase.
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I can start my business with little or no money. Poor capitalization is one of the major causes of business failure. Lack of capital results in negative cash flow which can result in poor business decisions and serious credit problems.
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I will incorporate and use other people’s money. Many books and articles have been written about OPM (other people’s money). It is difficult to borrow your way to wealth as a new business. The corporate shield probably will not protect you in case of failure. Most banks today will require you to personally guarantee the corporate loans for start-up businesses. Consequently, all your assets may be at risk.
