Starting a Business

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You may be on the hunt for successful business results that bring more money. Or you may need the freedom to feel good about your work product without having someone breathe down your neck. Or you may want to be able to reduce conflicts between family and work, balance your lifestyle, spend less time working, or work in a way that’s best for you. Whatever your motivation, starting a business may be the right thing for you, especially if you can profit from something that you enjoy doing.
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Starting a Business – Who, What, Where, When and Why

Thinking about starting a business brings up question after question. Below, you’ll find ten topics that typically come up when considering what to research when starting a business. This is a good way to start even if you have more questions.

Starting a Business Similar to What You Know or Like

To generate ideas on starting a business, many business owners begin with popular businesses. This may be as simple as researching ideas such as starting a t-shirt business. Younger entrepreneurs, educated with computer and technical skills, may immediately consider e-commerce or online business start-ups. This is the idea generation stage.

With success on your mind, it makes sense to begin by researching things that you know or like, and that you believe can be successfully sold to others. This could mean turning a hobby (DJ) or occupation (Courier) into a business. Maybe you were born with a talent that others will pay to benefit from. For example, a talent for organization could translate into starting a wedding planning or virtual assistant business.

Another way to get business start-up ideas is to look at successful businesses that you like and doing something similar. You may then begin to get ideas about starting a business like (for example) Facebook, Amazon or Uber...but better.

After you’ve come up with an idea and done your research, you’re ready for the test. Will your business idea produce a profit – more money than what you spend?

Many entrepreneurs turn to the sole proprietorship as a way to test the waters. A sole proprietorship allows you to learn so that you’re able to expand a successful business idea or move to another business in the future. If you’re testing your business idea while holding your job, the sole proprietorship gives you a flexible work situation and a financial cushion if the idea generates income. You may also find that you’re able to use your new skills to empower further growth at your day job, or in other ventures.

Click to learn more about starting a sole proprietorship business. Call to discuss how to start your business today: (212) 658-1752.

What to Research When Starting a Business

You’ll be looking into ways of starting a business now that you have some business ideas. Your particular situation and idea will determine what you research as you start your business. To start, it’s usually helpful to look at businesses that are similar to what you have in mind. The more similar, the more useful the comparison. Also, it may help to look at both successes (what to do) and failures (what to avoid).

Here’s a list of basic questions when starting a business:

  1. what will your business sell
  2. who will your business sell to
  3. what can you realistically expect to earn
  4. what will be the costs of starting the business
  5. what will be the costs of running the business
  6. how will the cash flow (e.g. amount and timing of expenses compared to money generated from customers)
  7. what licenses and/or permits will be needed, or other legal requirements
  8. how do you pay yourself
  9. how do you pay employees
  10. how do you reduce taxes using deductions, etc.

Your objectives when starting a business will be to make money and save money. One of the considerations of starting a business is the potential cost of employees (labor cost). Most businesses prefer permanent employees. However, to satisfy their need to both make money and save money while doing it, businesses try to maintain flexibility. Research shows that 34% of businesses with employees supplement their workforce with contractors, subcontractors, independent contractors, and/or outside consultants. If you’re starting a construction business, this number rises to 60%. Businesses also use day laborers and temporary staffing from agencies.

Click to learn more about starting a sole proprietorship business. Call to discuss how to start your business today: (212) 658-1752.

Starting a Business with the Right Amount of Money

One of the big questions is how much money do you need to start a business? Is starting a business with no money possible? How about with no money and bad credit? Can you start with $100 or $1,000? Or is $5,000, or $10,000, or $20,000, or $50,000, or $100,000 necessary?

The answer is that it depends. An SBA study shows that nearly 28% of all U.S. business owners started or acquired their business with no capital. This 28% includes 12% of businesses with employees and 33% of businesses that do not have employees. It’s possible that by “no capital” the business owners mean that they used someone else’s money but none of their own. One way this could happen is if some of the business owners contributed sweat equity (they did the work) while a partner supplied the funds.

To figure out just how much money you’ll need to start your business, look at other similar businesses and your own circumstances. For example, if you’re thinking about starting a daycare business, your research may show that similar daycare businesses spend $1,000+ advertising. However, you may know many people who want you to provide the service. That may allow you to avoid spending money on advertising.

Another question is financing – small business loans or credit. It is notoriously tough for start-ups and new small businesses to get outside financing. The answer is self-finance and/or friends and family. The SBA reports that “60 percent of U.S. businesses were self-financed—those using their own or family finances or assets to start or acquire businesses...Self-financed firms were prevalent in four industries: accommodation and food services (79 percent); manufacturing (78 percent); wholesale trade (74 percent); and retail trade (72 percent). About 9 percent of all businesses used credit card debt and at least 11 percent (22 percent of employers and 8 percent of nonemployers) took bank loans.”

Click to learn more about starting a sole proprietorship business. Call to discuss how to start your business today: (212) 658-1752.

Personal Status when Starting a Business

Who can start a business is another question that comes up. As a potential business owner, you may be anxious to find out if your personal status will make it more difficult to start a business. If you’re a kid or a teenager, it’s possible that legal obstacles could make things difficult. Of course, assuming you’re under legal age, the biggest legal obstacle could be your parents! But for the most part, your age shouldn’t block you from moving forward.

Other personal status questions typically revolve around college, experience, and job status. You may wonder whether you need a college degree. If you’re in college, you may be researching how to start a business as a college student. What if you have a great business idea without any experience in that particular business?

Generally, the level of education that you’ve achieved, and/or your experience, is taken as a way to estimate whether you have the technical skills and other skills needed to start, build and grow a particular business. In order to make a real determination, try to get a good understanding of the skills needed to make your particular type of business successful. Then compare your skills to the set of skills you absolutely need to successfully start and grow your business. If you find that additional skills are needed, make a list of those skills and start looking for one or more partners. If you simply have to get something going today because you or your family need the money, look to areas where a high level of formal education is unnecessary, such as construction and ground transportation.

If you’re thinking of starting a business with a job or without a job, you can relax because you’re in good company. Many workers, both hourly and salaried, start and own a side business. The same is true for retirees and the unemployed. In fact, in the U.S.A., research shows that when unemployment increases, more non-employee businesses are created.

Whatever the facts of your personal situation, consider testing the waters by starting your business as a sole proprietorship without formal employees. You can get your sole proprietorship going relatively quickly and with little expense. If things work out, great. If not, you’ve got some experience under your belt for your next venture. Older workers, who may have recently lost their job or retired, can easily put spare cash to work using a sole proprietorship. If you’re younger, looking to get your feet wet with your first internet startup, the sole proprietorship allows you to stretch your dollar.

Click to learn more about starting a sole proprietorship business. Call to discuss how to start your business today: (212) 658-1752.

Reasons for Starting a Business

Your reason for starting a business may vary. Some people are starting a business to reduce taxes. Others start a business to make money for themselves, their family, to pay for school, etc. You may be starting a business to buy property that you will lease, or to flip real estate. Businesses can also be started out of a desire to help others. If you’re more corporate finance oriented, you may be starting your business with your eye on the exit: to sell or IPO. These are all good reasons to start a business, and there are probably plenty more.

SBA data gives us some insight into why people start businesses. Of the single person businesses that do not have formal employees, 9.2 percent start a business as a way to make money while practicing a hobby. Others, 29%, start their business as a way to add another source of income. The SBA found that the number of non-employer businesses increases when the unemployment rate increases and decreases when the unemployment rate goes down. For businesses that have formal employees, the SBA found that startups generally follow the overall economy, increasing when things are good and decreasing as the situation tightens.

Click to learn more about starting a sole proprietorship business. Call to discuss how to start your business today: (212) 658-1752.

Where to Start a Business

As you move closer to opening day, you need to know where to start setting up your business. Depending on what you’re planning, you could be trying to determine which state or which city. How about starting a business without an address? Or in your home? Or online?

Determining where you start your new business will depend on the type of business, number of employees, capital available, etc. One survey found that 50% of the businesses that responded to the survey were home-based. Of the home-based businesses, 58% were non-employer businesses (no formal employees) and 22% were businesses with formal employees. As businesses increased in size, they were less likely to be home-based. For businesses with 1-4 employees, 29% were home-based. Only 11% of businesses that had 5-9 employees were home-based. Of businesses that had 10-19 employees, only 6% were home-based. The survey found that four industries made up the largest share of the home-based businesses: (a) professional, scientific, and technical services (19%); (b) construction (16%); (c) retail trade (11%); and (d) other services (10%). FYI, a “home-based” business may own or use facilities outside of the home while maintaining a separate, tax deductible, home office.

It’s likely that your answers to the questions under the above topic, “What to Research When Starting a Business,” will guide you to the business location that will save you money while helping you make more money.

Click to learn more about starting a sole proprietorship business. Call to discuss how to start your business today: (212) 658-1752.

Advantages and Risks of Starting a Business

The advantages of starting a business and the risks of starting a business may be at the top of your mind. Should you start a business? On your own? From scratch (meaning you have to put together each and every part yourself)? What will be the benefits, disadvantages, risks, mistakes, problems and challenges of starting a business? Some of these questions will be answered as you go through the topics above. Others will depend on your ability to put together the technical skills and other skills needed to start, build and grow the type of business you’re interested in.

As you gather more information, you should be better able to figure out the advantages or risks of starting your business. Part of your challenge will be successfully working with the information you gather. Researchers found that if two similar businesses are given the same information, one could have better results than the other. The first reason is that businesses differ in their ability and capacity to determine the value of information. The second reason is that different characteristics and experiences cause businesses to make different decisions about where to get information and how to weigh the information. That’s a long way of saying that the risks and advantages of starting a business depend on you and your circumstances. Your advantage may be someone else’s risk and someone else’s advantage may be your risk.

To better prepare, investigate three types of challenges that all startup businesses face: technological; scale (ability to satisfy increasing customer demand); and demand for your product or service. Businesses tend to start small and either overcome these three challenges or exit the market.

Click to learn more about starting a sole proprietorship business. Call to discuss how to start your business today: (212) 658-1752.

Person to Start a Business With

One of the big questions is whether you should start a business on your own. If starting a business on your own is not for you, you may already be looking at alternatives. You may be considering starting a business with a partner, or with friends, or with your spouse.

Like most of these questions, the answer will depend on your own particular circumstances. Starting a business on your own may be a good option for you, or it may be a terrible option. It all depends. That said, business partners may allow you to fill in gaps in skill, may bring more resources, and may increase available time. When 23 million businesses were analyzed, it was found that 75.5% were non-employers (no formal employees, just the owner). Partnerships and corporations were found to have significantly higher revenue, on average. It was also found that, when compared to sole proprietorships, non-employer partnerships and corporations are more likely to eventually employ workers.

Maybe the key question is whether you can initially get your business started better with or without a partner. Either way, start small and work hard to fill skill gaps. You can fill skill gaps using formal partners (equity holding business partners) or using informal partners such as consultants, temp workers, etc. As long as you’re growing your business, you’re good. SBA statistics show that a certain percentage of businesses start without formal employees, grow over time, and eventually go on to employ one or more workers.

Click to learn more about starting a sole proprietorship business. Call to discuss how to start your business today: (212) 658-1752.

Doubts about Starting a Business

Fear of starting a business is natural and may even be desirable. This type of “rational fear” is known as good fear because it signals that you should get more information before moving forward. Questions such as should you start a business, can you start a business, and why would you start a business may alert you to your need for more helpful information.

Learning more may help you overcome your fear. According to Robert Fairlie’s Kauffman Index of Entrepreneurial Activity, nearly 4% people who’ve never owned a business are starting businesses every year (0.30% per month). Immigrants are more likely to start a business, 0.46% per month compared to 0.27% for home-grown Americans. These numbers fluctuate over the months and years. So Americans are starting new businesses every month of every year and you are welcome to join.

You may be further comforted if you consider Boyan Jovanovic’s theory of entrepreneurial evolution. Part of this theory is that potential business owners are unsure about their ability to start and manage a new business. The new business owners cannot determine their ability until they actually start the business. After starting the business, the new business owner learns the business’s “cost function” or ability to efficiently create profits as compared to other similar businesses.

Based on the above, if you have doubts about starting a business, collect more information, but don’t worry too much.

Click to learn more about starting a sole proprietorship business. Call to discuss how to start your business today: (212) 658-1752.

Time it takes to Start a Business

You’ve done your research and now want to start your business as soon as possible. You may be thinking about whether starting a business in 24 hours is possible. The answer is, it depends.

Most states now offer expedited services that allow you to form an LLC or corporation in a matter of hours and certainly within 24 hours or less. These expedited services do come at a significant additional cost, so they may not make sense for your particular business.

Of course, by now you know that starting a business is about much more than filing papers to create an entity. Getting all the pieces to work may take time, but you do not have to go it alone.

Click to learn more about starting a sole proprietorship business. Call to discuss how to start your business today: (212) 658-1752.

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