Many people dream of owning their own business. To many on the outside looking in, it sounds like the perfect situation. You get to do something you love every day, set your own hours, and independently control how much money you make. You can be free from thankless managers, annual reviews, and office politics. You are the boss, and you don't have to answer to anyone. Sounds great, right?
While some of those perks may be possible, you would be very hard-pressed to find a successful small business owner who says that his or her situation is perfect. The reality is that small business ownership can be challenging, requires an immense amount of hard work, and isn't something that you can dive into overnight. It takes a lot of research and planning—along with having certain skills and personality characteristics—to succeed as a business owner.
Here are some key questions you need to ask yourself before deciding that it's time to start a small business:
- Do you have a business idea, and have you thoroughly evaluated it?
- Are you a good communicator who can work with many different types of people?
- Are you willing to sell yourself and your business?
- Do you know what it will cost to get your business off the ground, and have you outlined a plan to get your hands on the capital?
- Have you talked about starting a business with your family, including what life will be like during the startup phase?
- Are there certain aspects of business ownership you know you don't want to do, like accounting, marketing, administrative tasks, and hiring and firing? If so, have you lined up people to help handle those tasks?
- Are you willing to give your business everything you've got in order to make it a success?
Getting Started: Finances and Business Plan
If, after this reality check, you decide you're still cut out for entrepreneurship, then now the real work starts. It's time to get your finances in order, create a business plan, give your business a name, start building your team, set up your business location, and get out there promoting your business.
The good news is that not all of these steps have to happen immediately. Two of them, though, need to be started as soon as possible: Getting your finances in order and creating a business plan.
When it comes to your finances, you will need to conduct a financial feasibility study to estimate how much capital you need to get started, what it will cost to keep the business up and running every month, and what you need to make in sales in order to reach your desired level of return. At this stage, some of your numbers will be estimates, but it's important to get them down on paper.
Once you know approximately how much you will need, it's time to explore various small business funding options. Keep in mind that you can also leverage funds from more than one source to cover your bases as you get your business off the ground.
After finances, one of the essential steps in starting a small business is creating a business plan. If you are looking for an investor or if you plan to apply for a loan, you will need a traditional and structured business plan. In fact, even if you are planning to launch without outside financing, you will still need a business plan (though it may not need to be as long or as formal as a traditional business plan).
At a minimum, your business plan should outline what your business is all about, what your goals are, how you plan to accomplish those goals, what it will cost to do it, and what kind of profit you can expect to make. It should also include your feasibility study and other essential financial information. Your business plan will be one of the most powerful documents you create in your business.
Your business plan and finances are the most important elements of the start-up process, but they're just the beginning. Explore the articles in this section to get help with each step of the business startup process and get moving on the path to small business ownership.