Going into business for yourself can be daunting. Many entrepreneurs have succeeded, but many have also failed. Before launching a business, ask yourself these questions:
Do you have the psychological make-up to handle a start-up?
The process of starting, building, growing and managing a business is hard and sometimes frightening work. Most successful entrepreneurs have an innate ability to accept and manage risks. Does that sound like you?
And are you ready to accept the impact that starting a business may have on your lifestyle and your family — considering the long hours, constant distractions and sacrifices it will entail?
What type of business makes sense?
Consider the current and potential markets for whatever business you are considering. Examine the strengths and weaknesses of competitors. And find a line of business that matches your skills, experience and interests.
If you are looking at buying an existing business or franchise, investigate it thoroughly. Have a professional review the financial statements and any contracts you may be signing.
Are you going it alone or should you have a partner?
Running the business alone gives you the opportunity to make all the decisions, but then you must live with the results. A partner can bring skills, experience and capital.
If you choose to have a partner, you may also want to discuss how your partnership can be ended. Having a buy/sell agreement or a contractual agreement may avoid difficulties and hard feelings later.
Where will you get the financing you need?
You will need funds for office space, equipment, inventory, marketing and working capital. Arranging for the needed capital should be undertaken early in the start-up process. Once the business is operational, you will want to focus on running it rather than constantly looking for funds. Be sure to speak with your bankers about what criteria they consider when lending to a new business.
What are some of the other legal, financial and tax issues you need to consider?
One is you will need to choose a business form (sole proprietorship, partnership, corporation, sub-chapter S corporation or limited liability company). Your attorney can be very helpful in evaluating the options and drafting any documents you need.
Your personal financial and tax situations may also change when you become a business owner. You may lose the predictability of a monthly paycheck and the other benefits of working for a larger company. You may also have to pay for your medical insurance and fund your retirement account on your own.
Risky but rewarding
Starting your own business can be risky as well as rewarding. Considering these questions early in the process can help position you for success.
This news is provided as a service to you by Marlin Business Services Corp., a nationwide leader in commercial lending solutions for the U.S. small business sector. Marlin’s equipment financing and loan programs are available directly and through third-party vendor programs, including manufacturers, distributors, independent dealers and brokers, to deliver financing and working capital that help build your success.