Folks dissatisfied with their present careers (or lack of) are good candidates to make their dreams of working for themselves come true. All it takes is the right idea and the dedication necessary to draw up a plan and stick with it. Not everyone is cut out for the entrepreneurial life however, and knowing when to quit one’s day job and go for it is often a matter of good timing and having an understanding of opportunity when it knocks.
Step One: Is There A Market For Your Product or Service?
So you want to be your own boss? Great, the very first thing that you should consider doing is conduct a simple feasibility study to discover if there is a demand for the service or product you want to offer. The idea behind the basic feasibility study is that there is no point in investing any of your precious time or money into an enterprise, if it turns out that there is no demand for what it. In business terms, you want to validate the market for your proposed product or service before you take the plunge. During this phase you will want to try to discover the size of your target market and identify who your customers might be. In short, you want to gauge the demand for what you propose to offer and learn if it really solves the problems and provides the value you believe it will. One effective way to evaluate market demand for your business idea is to conduct an inexpensive crowd funding campaign. The feedback that you will receive from this effort will be invaluable.
Step Two: Choose a Business Entity
Once you have concluded that your business idea is viable, the next step is to define your business entity. There are three forms of business entities with some sub-sets in some classes. They are: proprietorship, partnership and corporations. If you plan to start out working as a one-person shop, then an individual proprietorship is appropriate for you. If you will be working along with others as equals, then forming a partnership with a formal partnership agreement is advisable. If you are planning to accept investor money to fund the start-up of your business, or if you think you will be hiring a staff, then a corporation is the right business entity for you.
Step Three: Licensure
The regulation and licensure of small business activity is something that can take place on several levels of government. The business you plan to open can be subject to licensing and regulation by your local, county, state and Federal government. An example of this is a hair stylist who must obtain a license to practice Cosmetology in their jurisdiction. The first thing that you will want to do in connection with permitting and licensing is check with your Municipal Clerk’s office to ask them everything that is required of the city or town you live in. Then, call your County Courthouse to learn what they require. You will likely need a Federal Tax ID number. If you do not already have a family attorney, then it may be advisable to at least sit down with a lawyer to discuss ways to keep you in compliance of all the laws you may not even be aware of.
Step Four: Hire an Accountant
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If your business takes off, one of two things will be true. You will either need to hire an accountant or you will need to become very good at bookkeeping. Perhaps your business is too small at the start to justify hiring an accountant. If so, you should at least sit down for some consulting with a CPA so that at least you can speak the language and keep your books straight. For many new self-employed persons, their first education in the realm of accounting comes from their interaction with electronic accounting software programs like Quick Books. It won’t hurt you to give it a try.
Step Five: Insurance and Administration
Running a business is about managing risk. Some of these risks can be mitigated through the purchase of business insurance products. Partnerships can benefit from having partnership insurance, which pays one partner if the other is unexpectedly lost. Corporations can benefit from having “key man” insurance, which protects them from the loss of indispensable personnel. “Brick and mortar” businesses that operate out of a retail location should invest in a business protection insurance package that will include general liability insurance as well as protection against loss from casualty and theft.
Management consultants believe that prospective entrepreneurs who fail to plan do not really give themselves an adequate opportunity to succeed. Proper planning, including paying heed to the above steps, will enhance the average budding entrepreneur’s prospects of turning their idea into a thriving business.