IS ENTREPRENEURSHIP FOR YOU?
There is no way to eliminate all the risks associated with starting
a small business. However, you can improve your chances of success
with good planning and preparation. A good starting place is to
evaluate your strengths and weaknesses as the owner and manager
of a small business. Carefully consider each of the following
questions.
Are you a self�starter? It will be up to you - not someone
else telling you � to develop projects, organize your time
and follow through on details.
How well do you get along with different personalities? Business
owners need to develop working relationships with a variety of
people including customers, vendors, staff, bankers and professionals
such as lawyers, accountants or consultants. Can you deal with
a demanding client, an unreliable vendor or cranky staff person
in the best interest of your business?
How good are you at making decisions? Small business owners are
required to make decisions constantly, often quickly, under pressure,
and independently.
Do you have the physical and emotional stamina to run a business?
Business ownership can be challenging, fun and exciting. But it's
also a lot of work. Can you face 12�hour work days six or
seven days a week?
How well do you plan and organize? Research indicates that many
business failures could have been avoided through better planning.
Good organization � of financials, inventory, schedules,
production � can help avoid many pitfalls.
Is your drive strong enough to maintain your motivation? Running
a business can wear you down. Some business owners feel burned
out by having to carry all the responsibility on their shoulders.
Strong motivation can make the business succeed and will help
you survive slowdowns as well as periods of burnout.
How will the business affect your family? The first few years
of business start�up can be hard on family life. The strain
of an unsupportive spouse may be hard to balance against the demands
of starting a business. There also may be financial difficulties
until the business becomes profitable, which could take months
or years. You may have to adjust to a lower standard of living
or put family assets at risk.
ON, THE UPSIDE
It's true, there are a lot of reasons not to start your own business.
But for the right person, the advantages of business ownership
far outweigh the risks.
GETTING STARTED
HOW TO START A SMALL BUSINESS
Starting and managing a business takes motivation, desire and
talent. It also takes research and planning.
Like a chess game, success in small business starts with decisive
and correct opening moves. And, although initial mistakes are
not fatal, it takes skill, discipline and hard work to regain
the advantage.
To increase your chance for success, take the time up front to
explore and evaluate your business and personal goals. Then use
this information to build a comprehensive and well�thought�out
business plan that will help you reach these goals.
The process of developing a business plan will help you think
through some important issues that you may not have considered
yet. Your plan will become a valuable tool as you set out to raise
money for your business. It should also provide milestones to
gauge your success.
Getting Started
Before starting out, list your reasons for wanting to go into
business. Some of the most common reasons for starting a business
are:
Next you need to determine what business is "right for you."
Ask yourself these questions:
Then you should identify the niche your business will fill. Conduct
the necessary research to answer these questions:
The final step before developing your plan is the pre-business
checklist. You should answer these questions:
Your answers will help you create focused, well�researched
business plan that should serve as a blueprint. It should detail
how the business will be operated, managed and capitalized.
Types of Business Organizations
When organizing a new business, one of the most important decisions
to be made is choosing the structure of a business. Factors influencing
your decision about your business organization include:
The advantages and disadvantages of sole proprietorship, partnership
and corporation are listed below.
Sole Proprietorship
This is the easiest and least costly way of starting a business.
A sole proprietorship can be formed by finding a location and
opening the door for business. There are likely to be fees to
obtain business name registration, a fictitious name certificate
and other necessary licenses. Attorney's fees for starting the
business will be less than the other business forms because less
preparation of documents is required and the owner has absolute
authority over all business decisions.
Partnership
There are several types of partnerships. The two most common types
are general and limited partnerships. A general partnership can
be formed simply by an oral agreement between two or more persons,
but a legal partnership agreement drawn up by an attorney is highly
recommended. Legal fees for drawing up a partnership agreement
are higher than those for a sole proprietorship, but may be lower
than incorporating. A partnership agreement could be helpful in
solving any disputes. However, partners are responsible for the
other partner's business actions, as well as their own.
A Partnership Agreement should include the following:
In New York State, you must file an Assumed Name Certificate with the
clerk of the county/counties in which a general partnership conducts business. If you want to operate
a limited partnership, you must file a Certificate of Limited Partnership
and Affidavits of Publication with the Department of State and publish a Notice of Formation in the newspapers.
Corporation
A business may incorporate without an attorney, but legal advice
is highly recommended. The corporate structure is usually the
most complex and more costly to organize than the other two business
formations. Control depends on stock ownership. Persons with the
largest stock ownership, not the total number of shareholders,
control the corporation. With control of stock shares or 51 percent
of stock, a person or group is able to make policy decisions.
Control is exercised through regular board of directors' meetings
and annual stockholders' meetings. Records must be kept to document
decisions made by the board of directors. Small, closely held
corporations can operate more informally, but record-keeping cannot
be eliminated entirely. Officers of a corporation can be liable
to stockholders for improper actions. Liability is generally limited
to stock ownership, except where fraud is involved. You may want
to incorporate as a "C" or "S" corporation.
If yo want to operate a business corporation in New York State, you must file a
Certificate of Incorporation (signed by at least one incorporator)with the
Department of State. If you want to operate a limited liability company,
you must file Articles of Organization (signed by one or more organizers)
with the Department of State.
BUSINESS PLAN OUTLINE
The following outline of a typical business plan can serve as
a guide. You can adapt it to your specific business. Breaking
down the plan into several components helps make drafting it a
more manageable task.
Introduction
Operations
Concluding Statement
TO LEASE OR NOT TO LEASE: THINGS TO KNOW
Marketing
Financial Management