Articles

Practical Advice About Becoming Your Own Boss

(Not in a late night infomercial kind of way)

 

By: Susan E. Wells

During 2009, accordingly to the Ewing Marion Kauffman Foundation, an average of 558,000 new businesses, per month, were started in the United States.  It was the highest year on record, including the peak technology boom years of 1999 and 2000 and reflects a 4% increase over 2008. 

If you've been laid off or downsized and unable to find other employment to replace your income at the level that you've previously enjoyed, you may be considering starting your own business.   45% of the companies on the 2009 Fortune 500 list were started during a recession.  You will be in good company. 

Among the factors that are in your favor are:

  1. Commercial space is available on extraordinarily good terms.
  2. Talented labor is abundantly available at reasonable rates.
  3. Goods and services can be found at discounted prices.
  4. Competition may be scarce.

 While there are opportunities, be careful to fully evaluate the business sectors to increase your chances for success.  Some essential considerations include:

  1. Selecting a business in one of the performing sectors is essential.  Although suffering some adverse effects, the healthcare, senior care and information technology industries are faring better than most industries.  
  2. Choosing a business with a bright future is essential.  Businesses that respond to the increased niche market for "green" or "sustainable" products or lifestyles may be an avenue to pursue.  According to The Futures Company, Americans have adopted a new sustainability mindset.  Between 2007 and 2010 alone, there was a 6% increase in people's purchases of products based upon their belief that those products were better for the environment.  In addition, there may be federal or state subsidies or tax credits available for "green" sectors.
  3. Due to the ongoing credit crunch, businesses with lower capital requirements, such as service businesses and home-based businesses, may be good choices. 

So you've decided to start your own business!  What are your next steps?

  • Due Diligence: Once you select a business to consider pursuing, perform your due diligence.  Are you the only one who thinks it's a great idea or does there seem to be a genuine need for the product or service you are offering in the community in which you are offering it?  Is that need already being met by companies more established and better-capitalized than you?  If so, what improvement or unique feature are you bringing to the table?  Do you have the necessary skill set and resources to execute your plan?  If not, are you prepared to bring in people with complementary skill sets or capital, recognizing that you may have to give up a significant ownership interest in the business to that?  Asking the hard questions that might discourage you from pursuing the first venture you consider is not a negative or pessimistic approach; realistically and objectively evaluating your proposed venture is critical.
  • Prepare a Business Plan: Too often entrepreneurs articulate a great idea and foresee its ultimate success, but gloss over how they progress from the inception of the great idea to implementation and success.  This is when the hard work starts.  Think through the process and stages that it will take to implement your ides.  You can start with an outline.  It is important that you finish this process with business plan that includes budgets.  Without taking those steps your great idea will be nothing but a pipe dream.
  • Capital Requirements: Another area to focus on is the amount of capital you will require for your company, as well as at each stage of development.  How will you meet those capital needs?  What are the available sources?  Although in extraordinary cases (do you hold a patent on a "better mousetrap?") a venture capitalist or an angel investor may provide the necessary capital for a reasonable percentage ownership of your business, most small businesses are funded with the business owner's own funds, together with the funds of family and friends.
  • Use Resources: There is a myriad of advisors, consultants, non-profit agencies and others willing to assist you in developing your business, marketing your business, developing websites to promote your business, raising capital and for virtually any other purpose.  Some are free or low cost.  Certain Small Business Association (SBA) resources and programs are invaluable and cost-effective.  For example, the Service Core of Retired Executives (SCORE) provides free advice and mentoring for small businesses.  If you are using a for-pay service, seek referrals from successful friends and colleagues and trusted advisors and fully check references from numerous clients who are independent and have long-term experience with the advisor or consultant. 
  • Create Board of Advisors: Gathering a board or network of advisors can be a tremendous asset.  The more diverse your advisors, the better.  Different people bring different experience, expertise and advice to the table, all of which is important.  The more diverse the advice, the more advice you actually receive.  You might not initially understand what they are telling you, but they will give you good information for free. Your accountants, attorneys, suppliers, customers, bankers and realtors may be good choices.  
  • Listen: Listening, rather than talking, is crucial.  You cannot learn anything new by talking.  The more you listen - truly hear someone's advice or idea - rather than immediately discounting or discrediting it, the more advice you actually receive. 

 Starting your own business can be a frightening prospect.  However, now may be the perfect opportunity.  Nolan Bush, the founder of both Atari and Chuck E. Cheese, said, "The critical ingredient is getting off your butt and doing something.  It's as simple as that.  A lot of people have ideas, but there are few who decide to do something about them now.  Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer."

About the author:  Susan E. Wells is business lawyer and a partner at the Phoenix law firm of Jaburg Wilk where she assists both business owners and entrepreneurs.   She has extensive experience representing both franchisees and franchisors. 

 

 

 

 

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