One of the cornerstones that helped build America is the opportunity for free enterprise. While successive generations of Americans have been following the spirit of their forefathers by building their own businesses, the recent and continuing downsizing of corporate America has produced a new wave of aspiring entrepreneurs.
While some people take to entrepreneurial activity more naturally than others, there is one common characteristic of all successful entrepreneurs—a passion for their enterprise! Because of the risks, hard work, and sacrifices involved in starting a business, very often it is the unbridled enthusiasm of the founder that makes the difference when the road gets bumpy.
If you have “caught the spirit,” what are the basic factors and issues to consider that will help you get your business off the ground?
Laying the Foundation
Write up a business plan. This plan can help you spot mistakes before they happen. The plan should include:
- A description of the product(s) or service(s) you will provide—who are your competitors, who is your target customer, and what special means (e.g., copyrights, patents, licenses) must you possess?
- Your marketing strategy—including promotion, advertising, pricing, distribution, sales, and customer service.
- Your management plan—the personnel structure, your management expertise, and securing key employees.
- A financial statement—covering your source of financing and how you will repay loans.
- A review of the financial condition of your company—including anticipated start-up costs, projected cash flow for the first year, and a “breakeven” date.
While you’re doing the initial research for your business plan, here are some other points to consider:
- Will you buy an existing company or develop one “from scratch”? There are advantages and disadvantages to both. Many small business purchases are done through leveraged buyouts. This means that the seller accepts a down payment and you pay the remainder from your new business’s cash flow over a set time. This can decrease the amount of money you would need upfront. Another advantage to buying a pre-existing company is that you would have a company that is already up and running. The downside is that you would also inherit its problems.
- Determine how your company will be structured. Since there are legal, tax, and financial considerations to take into account, seek professional counsel on whether a sole proprietorship, partnership, S corporation, C corporation, or limited liability company (LLC) would be most appropriate for your situation.
- Hire the right employees and staff. This step can either make or break a small business. To help your business succeed, find employees that are competent, responsible, and hard-working. Most important of all, if you hire people who share your enthusiasm and treat them with respect, you will significantly improve the chances that your business will survive and prosper.
There are other factors and issues to explore when considering starting a business but, if you take the time to research it well, you can “capitalize” on your independent spirit and join the ranks of successful business owners.