What You Should Know Before Starting a Business
Okay now, hold your horses one second while we cover some important points. We understand you’re roaring to go after coming up with a fantastic business idea, but if you’re serious about learning how to start a business, there’s some questions we should address upfront.
Think of them as little mini-exercises that can help stave off common issues, and, DRAMATICALLY improve your chances of surviving the first few years in business. Enjoy!
Our #1 Suggestion Before You Do Anything Else
This needs to be said, and if you take just two ‘wisdom-nuggets’ away from this exercise shoot for these:
- Work with the best legal expertise you can afford!
- Work with the best tax professional/accountant you can afford!
- Subscribe to SBA.gov.
For some this help may come from family and friends, perhaps college students or a small business foundation, while for others it means full-fledged law and accounting firms. Setting the real foundation of a new company happens on paper first – legalities & taxation! Once you get this groundwork laid, only then should you move onwards to really building your initial platform.
Are You Truly an Entrepreneur?
Not trying to be cliché, not at all, but the truth is that most new entrepreneurs imagine it’s going to be glamorous once they go into business for themselves until reality smacks them with monster truck force.
Anyone can become an entrepreneur, but not everyone can handle the rigors. Let’s just touch on a couple more salient points then we’ll move on to the next question.
1) You’re Not Actually the Boss!
Nope. So, who’s the boss? Well, first there’s the need to handle taxes on state and federal levels, and if your company messes things up you'll eventually run into serious issues. Then of course there’s the suppliers and other companies you rely on. Then there are your employees and customers who ultimately determine the fate of your brand.
Good management goes a long way, but it can’t perform miracles. If the service isn’t there, if the marketing doesn’t work, and if your customers aren’t identifying with your brand then your company either better make some dynamic changes or fold up shop before you’re neck-deep in debt.
2) There’s No Such Thing as Work/Life Balance
Anyone who tells you there’s some sort of mystical equilibrium you can reach where all your friends and family are satisfied, AND, you’re able to give your growing brand everything it needs…is flat out lying to you. It doesn’t exist.
You’re just going to do the best you can with what you have and in accordance with who you are. Sometimes you’ll give more of your time and energy to the people in your life that you need (support), and at others they might not even really see you for months at a time until you’re ready to burn out. Think of it more as an ebb and flow, or a tide you must learn to surf. There really are no lines between life and business once you commit to the entrepreneur lifestyle.
3) Did Someone Say ‘Freedom’?
Freedom? What? You think you’ll have time for vacation while building a new business? You imagine you’ll magically achieve financial freedom in a year? You think you’ll be able to do all kinds of fun and exciting new things with your time instead of keep your head above water?
4) Working Harder for LESS Money
Technically the income you can make running your own show is limitless, but you have a better chance of winning the lottery twice on a Saturday than seeing huge income within the first 3 years. That’s the truth, if you and your new brand survive that long…which roughly 80%+ of new startups don’t.
For the first core phase you’ll probably be working twice, if not triple the amount of hours per week as you would for a “normal job” and be making less (perhaps substantially). But, that’s how it goes. You build, and over time ratchet up until you’re where you envisioned you would be.
What are the Advantages of Starting a Business?
How about we get past all the other clichés you’d expect in this section and get right to the heart of it…there aren’t many real advantages. Really, it could be argued there’s only one: the ability to build something your own and see it become successful.
That’s the nutshell version. The hours will probably be long. There will ALWAYS be issues and drama to deal with, and unless you strike it rich in terms of your team/partners, finding and hiring great talent will be a real pain in the butt.
Another upside is that whether you’re successful or not, you’re going to learn a ton about yourself and quickly. Most new entrepreneurs find out if they can hack it within the first year.
What are the Disadvantages of Starting a Business?
We’ll keep this brief and straightforward.
- Typically much longer work hours/schedule.
- It really sucks to fail (until you finally “succeed” anyway).
- No financial security for a while.
- Always facing tons of risk, which can increase your stress load.
- 100% responsibility as the founder for every decision.
- Bootstrapping and getting funds can be a real hassle.
What Kind of Business Entity Should I Choose?
While we’d love to be able to answer this question for you, that’s what an attorney’s for. There are so many variables here! Three of the most common choices in the U.S. that you’ve engaged with in countless ways throughout your life are…
How Will You Fund Your Business?
The website, marketing & advertising, payroll, expansion, hiring new employees, adding new products, upgrading your services, furnishings, gas, the costs of insurance, licensing, and the many assorted fees…
The list of expenses you can expect is endless, and that’s not a joke. It really doesn’t ever end. New companies will consume a lot of capital before you blink if you’re not careful.
Can you bootstrap? Absolutely! But bootstrapping is a skill all by itself. We hear the word all the time these days, but the amount of entrepreneurs and teams who can successfully achieve it are relatively few because the desire/instinct to get more, do more, and be more is always at your back.
Funding & Budgeting 101 – The Business Plan
If you aren’t already aware, Startup Savant is a growing community of entrepreneurs from all walks of life and backgrounds. We shoot to interview close to 200 a year, so yeah, we have a pretty good idea what the average entrepreneur considers planning.
All we’re going to say is that you should heavily consider taking your planning seriously when it comes to the budgeting and funding departments. Thankfully these days you’ve got modern software solutions that are a) totally inexpensive, and b) like a guide that takes you through professional planning step by step.
Below are links to 5 of our core resource guides that can introduce you to some savvy tools and insight if you’re not already familiar, for example the planning software we mentioned above, or perhaps leveraging one of the new business website builder platforms.
- Business Incorporation Services: Our top pick is IncFile.
- Business Planning Software: Our top pick is LivePlan.
- Business Accounting Software: Our top pick is Xero.
- Business Bank Accounts: Our top pick is Capital One.
- Business Website Builders: Our top pick is Wix.
The above content regarding how to start a business is by no means legal advice, it’s for basic informational purposes and nothing more. For genuine legal assistance as you learn how to start a business contact an attorney, other accredited professional, or service provider.