Let's Start A Business
General Business News
Let's Start A Business
We trust you had a happy and safe New Year's Eve and have about a dozen resolutions to promptly forget. Well, we have a few resolutions of our own, and the first one is to do everything we can to help you realize your dreams.
As we were thinking about helping you realize your dreams, it occurred to us that there may be many of our friends who dream of owning their own business, but donât really know how to go about doing it. If you are in that group, after the next few months, we hope you will no longer be in the dark. Over the remainder of this year, we intend on taking you step-by-step through the process of starting a business and managing it through itâs lifetime. This may seem a bit rudimentary to those who already own a business, but after the first article, much of what we talk about will be management of a business and be as applicable to an established business as it is to a new venture. So, without further introduction, letâs get started!
The five Wâs of Who, What, When, Where and Why are as applicable to a new business as they are to a good story plot.
Many times a good story will start with the Who part of the equation, but we already know that Who would be you, and perhaps partners, but the first question you must ask yourself is Why? Why do you want to own your own business? Are you interested in independence or maybe security? Are you tired of someone else reaping the rewards of your hard work or are you bored with doing the same thing day in and day out? Perhaps you have a really great idea and just know you could make a bundle with it, but the employee manual says you have to bring all your ideas to the company.
Just about any one of these could be a reason for starting your own venture, except if you are looking for security. Too many people think that there is such a thing as security these days. Unfortunately, in todayâs global marketplace, it doesnât exist. Whatâs more, about the most âinsecureâ thing you can do is quit your job, tie up your life savings in a new venture and work day and night building a business. Most businesses do not show a profit in the first year or two and even those that do many time put a great deal of cash into inventories and capital assets.
Bottom line â you should expect to work hard and get no real income from the business in the first several years. If you are married and have kids, you best get their buy-in and make it clear you may miss a lot of school plays and games, at least in the first few years of a new business.
We are not trying to scare you away from starting a new venture; we are simply trying to make it clear to you that your reasons for starting a new business are so deeply ingrained in you that you and your family will be able to weather the inevitable personal and business storms.
If you are happy with the Whyâs of starting a business, next you need to go to the Whatâs. What is your business going to do or sell? Will it be a service business or sell products? Will it be a new restaurant or coffee shop with a new concept? Aside from the reasons for establishing a new business, this will be the single most important question to answer. If you donât have a product or service to market and a unique concept that will help you stand out in the marketplace, your chances for success are slim.
Make sure you are passionate about your product and use it yourself, where practical. Include in your thinking consideration of the market you are in, who the competitors might be and whether there might be a franchise opportunity that would allow you to shortcut some of the pains involved in starting a business. If there is a successful franchise offering what you plan to offer somewhere else in the country, you might take the time to investigate purchasing a franchise. Franchises can be expensive to buy and maintain, but many times, the support you get from name recognition, operations know how and assistance in determining proper location can make the cost bearable.
Ok, now we are back to the Who question again. While we know that Who necessarily includes you, who else may be involved and what will their relationship to you be. If you are married or have children, will you be partners with your family members or perhaps hire them? Will your venture involve you in one capacity and one or more partners in other capacities? Will you need capital and will that force you to seek partners? Will you need employees? If you decide that you need to operate as a partner with one or more other individuals or companies, remember that a partnership is very much like a marriage. Be certain you are comfortable with a potential partner and that you expect to be âmarriedâ to your partner(s) âtil business dissolution do you part.
Ok, now we have a reason for going into business, one or more products and/or services and a team; whatâs next? Although the two remaining Wâs are close in vying for fourth place, let us suggest that you look at the When first. When will you start this venture? Is there a natural business cycle for the industry you will operate in? For example, assume about 60% of the typical CPA firmâs revenues are generated in the first 3 Â½ months of the year. Would it make sense to start a new company, hire personnel and lay out the funds necessary to start the business in the middle of the year when income will be very slow? If you donât have the revenue, how will you pay the employees? Since cash is king to your employees and creditors, donât put yourself behind the eight ball by starting at a time when revenue will be at its lowest point.
Finally, we reach the end of the Wâs. Where are you going to conduct this business? Will this be a retail or service establishment where location will have a major impact on success, or does location not really matter as long as you can deliver the product? Will you set up shop in a mall, a freestanding building or strip shopping center? What can you afford to pay for rent or how large of a note payment can you handle? Do you need convenient access to freight terminals, or will the mailbox do for your needs? Perhaps you donât need anything but a home office and Internet access. Many good companies have started off this way.
Starting a business is one of the greatest adventures you will ever take. Itâs got all the elements of an Academy Award winning movie; drama, humor, sometimes sheer terror, elationâ¦the list of emotions and plot twists could go on forever. If you are thinking of starting a business, give us a call. We will be glad to help you set up your new venture and serve as an experienced sounding board on a wide variety of business issues.
Have a great January and please remember to keep our troops in your thoughts and prayers.
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.