More people than ever before are leaving their traditional forms of employment and are setting up their own business. This has proven to be a very popular career move as it provides individuals with more freedom and the opportunity to have more say over their own working day. However, if you are thinking about starting up your own business, then you should know that it is by no means an easier alternative to being employed by an employer.
Starting your own business is a daunting and life-changing career choice to make, that will affect you and your family. So, we have put together this guide on the eight things you should be sure to think about before starting your own business and going it alone.
Research the Market
If you have a business idea that you feel passionate about, then you are already one step ahead of anyone else who wants to start their own business. However, depending on what your business idea is, you may find that the market you are wanting to get involved in is already saturated. Therefore, you should be sure to do your research before you invest too much time and any money into your business idea. Researching the market involves investigating your potential customers and thinking about what sort of person would be interested in buying what you have to offer. You should consider the age, gender, and income of your typical customer and establish what would make them buy from your business instead of a competitor.
Start Up Costs
One of the biggest obstacles that those who want to start up their own business must face is the financial responsibilities that come with becoming self-employed and how they will find the money to cover the startup costs. Your startup costs will vary depending on what sort of business you are thinking of starting up. If you are going to be working from home, then you may find that your startup costs are limited. However, if you want to open your own office or restaurant, then you will have expenses such as rent, insurance, furniture and stock to think about. It is important to think carefully about the different expenses as, if you fail to account for something, then you may find yourself running out of money before your business has even opened to customers.
Create a Business Plan
If you are unsure how you are going to fund your startup costs and are considering going to the bank for finance, be it secured or unsecured, or even revenue based loans, you will likely need to have a detailed business plan to show that your business is going to be a success. It is important that you can show how much your business will cost to start up, but then be realistic about how much money you can expect it to make. Ensure that you are realistic when you are predicting how much money your business could make as, if your business plan looks unrealistic, then you may find lenders are put off.
While some people disregard a business plan as unnecessary in modern day business, they are a great way for you to get your head around your business and learn it inside out. They are a worthwhile document to create as, even if you aren’t applying for a business loan of any kind, it still gives you the opportunity to document expenditure and potential profit margins.
There are many different skills that are required of you when you start your own business and it is important that you don’t bury your head in the sand. You need to face up to even the most difficult of tasks even if you don’t feel confident with them. When you are an employee working for someone else, you are usually only required to work within one area of the business. But when you are running your own business, then you are responsible for everything. For example, you will be responsible for your own accounting, which may require you to take additional training courses, such as Microsoft excel training. It is advisable to undertake any necessary training before you go ahead with starting your own business.
Think About Location
Depending on what sort of business you want to start, you will require a suitable location. Many businesses are now being started online which is a cheaper and easier alternative to setting up a physical shop. However, depending on what product or service your business is offering, starting up an online business may not be an option available to you. If you are going to need to set up premises for your business, then you need to consider where is the best place for you to be based.
However, be sure to think carefully about where to set up your store as this could make or break your entire business. It is advisable to go for premises that are in a popular area so that your business is noticed by customers. Many businesses rely on passing trade in order to survive and you are unlikely to benefit from this if you aren’t in a good location.
Read Up on What Being Self Employed Involves
Being self-employed involves being in charge of your own taxation and accountancy records as you won’t have an employer doing it all for you. Therefore, you should spend some time researching what will be expected of you once you become self-employed. The self-employment tax rate in the US is 15.3 percent, and this consists of Social Security and Medicare taxes. You will have to declare your gross earnings to the IRS and then the tax you owe will need to be paid by you directly. Being self-employed will require you to be fully aware of the law surrounding taxation and declaration of earnings, or you may find yourself with a hefty bill to pay, or even find yourself in trouble.
Start Small and Grow
When starting your own business, it is easy to get carried away, but it is important that you start small and don’t get ahead of yourself. Developing your own business can be very demanding and challenging, so you should be sure to take things slowly at first and not expect too much from yourself or the business. It usually takes a new business the first twelve months of being open to establish themselves to potential customers, so don’t be disheartened if business is slow at first.
Get a Business Bank Account
You should open your own business bank account before you go ahead with starting your own business as it is essential that your personal and business finances are kept separate. Even if you plan to put some of your personal money into the business, then you should still do this through your business account so that you can keep a track of how much money you have spent.
As your enterprise inevitably grows, you may also want to protect your finances through the integration of open source software. Open banking in particular is cheap to integrate, needing only a small amount of staff training, and once set up you can keep a thorough tab on all transactions in and out of your business.
Starting your own business is one of the most challenging career choices you will make, so it is essential that you take enough time to consider your options and discuss it with those closest to you.