There are a variety of reasons why people strike out of their own and start a new business. Some wish to avoid the daily grind of cubicles, middle-management overseers, and the nine to five grind. Others seek the satisfaction and feeling of freedom that can come with being your own boss. At times, especially in the 2009 era of lay-offs, corporate downsizing, and high unemployment rates, working for yourself may seem like the only viable option.
Before you begin a new business, however, you should realize that the first step is research. Nearly 65 percent of new businesses fail within their first five years of operation, with the primary reason stemming from a lack of proper research. There are steps that can increase your odds of success, and while they are not foolproof, they will increase your chances of survival.
The first step is to make sure that you are over-capitalized, making certain that you have enough funds to not only open your endeavor, but also to cover business and personal bills if times get rough. A business lacking adequate back-up capital is virtually doomed from the start. Before you ever sign a lease or open the doors, make very certain that you can afford five years worth of lean times.
Next, perform a demographic study of both your potential customer base and existing competition. Make certain that the town or city where you plan to open your business has both an age and income demographic that will allow people to purchase your goods or services. Further, spend some time identifying your competition. For example, it is not wise to open a floral boutique in an area where you will be competing with many similar operations that are well established and successful. Your goal is to fill a gap, not to battle a giant.
If all of these conditions are met, you can consider opening a new business. Understand that your costs and overhead will almost always be far higher than anticipated. The unexpected is to be expected, and will arrive in the form of everything from escalating equipment, lease, and insurance payments to surprise taxes and fees on the local, state, and federal level. Again, before you ever open your doors, hire a qualified certified public accountant (CPA) and attorney. The expense of obtaining the services of these two professionals will pay for itself many times over.
Your attorney and CPA will advise you on whether you should operate as a sole proprietorship or as one of the many varieties of small corporations. They will make certain you are complying with the inevitable maze of licenses, fees, and regulations, as well as handling the issues of tax payments and payroll. The CPA and attorney will free up your time to concentrate your energies on operating your business and planning strategies for success.
Last but not least, realize that, as a business owner, you will work longer and harder than you ever did as an employee. Your first five years will be filled with more than a little stress and sleepless nights. Starting a new business can also place great pressures on family life. On the other hand, should you make it past the magical five year point, you may well be rewarded with a sense of fulfillment and revenue that far surpasses that which you received when working for others.