Entrepreneurs often start their own business in hopes of achieving financial security. Rather than working to help another company succeed, they can use their entrepreneurial-driven spirit to grow their own business. More importantly, it allows them to do something they love, and that’s the real benefit of working for one’s self. Before starting a new business, though, there are a few things that entrepreneurs should know.
It Requires Capital
While no two businesses have the exact same funding needs, all businesses need some level of capital to get up and running. Census data cited by Intuit suggests that 40 percent of U.S. small businesses started with less $5,000. There are ways to secure capital for a business without taking on debt, however. A 401(k) business financing plan, for example, allows entrepreneurs to use their savings without getting taxed for distribution. Equity capital is another solution, which involves selling stock shares to investors.
Partner With the Right People
Many entrepreneurs make the mistake of partnering with family members or friends when launching a business. While seemingly harmless, mixing business and family may not be a good idea. If a falling out occurs at the business, it could strain the otherwise close relationship between the entrepreneur and his or her family member. Furthermore, family members and friends often expect special treatment or handouts because of their special relationship.
It’s a Learning Process
From hiring the wrong to workers to overpricing their products, every entrepreneur will make mistakes when starting a business. Instead of overlooking these mistakes, entrepreneurs should explore them to better understand how they can be prevented. If an entrepreneur hired the wrong person, perhaps he or she can vet candidates more thoroughly in the future.
There are Different Business Structures
Choosing a business structure is a critical step in starting a business. Some entrepreneurs are eager to get their business up and running, so they use a sole proprietorship structure without considering its ramifications. Although it’s the easiest business structure, it also offers the least protection of personal assets. If a customer sues the business, the entrepreneur’s personal assets could be forfeited. A limited liability company (LLC) or corporation offers a higher level of protection for personal assets while also yielding certain tax benefits.
Those first few steps are often the most difficult when starting a business. After getting started, though, entrepreneurs can focus on attracting customers and optimizing their operations.
Nick Zamucen is the founder of Bio-One Inc., the first successful franchised crime scene and hoarding clean-up company and the founder of B.O.R. Restoration, the first restoration company that will collect insurance invoices for franchises. He’s also a published author, business strategist, and award-winning serial entrepreneur. Read more on his entrepreneurship advice or check out his Twitter!