How to Survive When Starting a Business…
Starting a business takes patience, drive and faith in one’s self and one’s abilities. Being in control of destiny is appealing to many but realized by few. Thanks to technology and software starting a new venture is now easier than ever. According to Forbes 50% of the working population works in a small business environment.
There are countless articles, blogs and literature on the subject of starting a new business so before making the leap consider this:
Don’t Do it Alone
A sole proprietor gets to call the shots… all of them. This is probably the best option for control nuts. But for those who don’t mind sharing ideas and financial returns, creating an LLC or Partnership is a better idea. While you will share the profits, you will also share the risk, and in the case of a corporation or limited liability corporation, the burden of liability is put upon the business itself. In other words, if the business goes belly up the only thing liable to debt collectors are the business assets and inventory and not personal bank accounts.
While many new businesses use their own equity to cover start-up costs, securing a loan or getting investors is a better way to fund a business because of the shared risk. Not only will it limit the amount of burden it also will demonstrate that the business is viable and a good choice in the current market.
Keep Current Employment for the Time Being
Stay employed until there is a solid business plan and investors. Set funds aside for initial startup costs and as an alternative source of revenue for at least the first year, five if possible. Having funds set aside for will insure for the “what if’s” during the first years of business. According to the U.S. Bureau of Labor and Statistics, 50% of businesses fail in the first five years, and even large companies like Twitter, Google and Amazon struggled to turn a profit during the first few years of business.
Budgeting is key to a successful business. It’s crucial that if the business needs an extra injection of capital to stay operational, or something significant happens to have the extra funds to take care of it. Know when to tighten the belt and where.
Starting a business is unlike any other job. The burden of responsibility is ultimately and totally that of the owner as are any mistakes that affect others. It’s important to realize that in order to lead people in a new venture means being mentally prepared for anything and everything.
Just remember Harry S. Truman’s famous idiom…. “The buck stops here”.
By Jack Stieber – President – American Receivable
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