Before you get ready to make that jump to becoming an employer instead of an employee, there are a number of things you will want to consider, especially if you are looking to sell your structured settlement to do it. Dropping a bag of money on an idea is no guarantee of success or your financial future.
By the Numbers
Businesses in 2014 the US: 26,500,000
- 514,332 opened doors
- 548,159 closed shop
- 55,250 bankruptcies
- Most likely to succeed after 5 years
- Least likely to succeed after 5 years
- Religious organizations
- Plumbing, heating, air conditioning
Habits to Avoid
All too often, an entrepreneur will take on too much or cut corners in their own compensation in order to maximize profits. Eventually, these measures take a toll. Clearly defined roles, policies and budgets at the onset can help you avoid making these mistakes:
- Assuming too many roles and responsibilities
- Skipping time off
- Poor work/life balance
Your business will be your livelihood. Be clear about what you are doing. Know what it will take to be successful in the market you are entering. Avoid these common pitfalls of first time business owners:
- Starting it for the wrong reason
- No clear focus
- Advice from friends and family
- Wrong time wrong place
- Not understanding the market
- Underestimating time requirements
- Pressure from family about money & time requirements
- Getting too close to the product or business
- Investing too much money
- Not understanding financial responsibilities & awareness
- Misplaced attitude (too optimistic/pessimistic/realistic)
Steps to Take
Before you start, take some time to answer these important questions:
- Do I have the time to invest in this fully?
- How much will it cost to start?
- Why do I want to do this?
- Do I care enough to make it work?
- Do I know enough to make it work?
- Has it already been done?
- If so, how well?
- Is there a gap in the market?
- Who is my potential customer base? What do I know about them?
- How well have I researched the market?
What type of plan best suits my business?
- Miniplan Plan
- Presentation Plan
- Working Plan
- What if Plan
What type of business am I operating?
- High Tech
How many employees will I need?
Is my pitch as good as it can be?
Have I fully identified my strengths, weaknesses, opportunities, threats
Have I covered the 9 basics part of the Business Plan
- Who is my target market? What is the best medium to use to reach them?
- Is my business seasonal? Will it affect the time of my marketing?
- When is the best time to market?
- What type of advertising best suits my business?
- Where is my marketing money best spent?
- How much marketing can I afford?
- Are there more cost-effective alternatives available?
What do I need to start my business?
How much money do I need to start it up?
Can I handle the costs myself?
How much will I need to borrow?
Where will I get the best interest rates if I borrow?
Which lending institution best suits my type of business?
Does the government offer help?
Who can I approach for the money?
- Angel investors
- Venture capitalists
- Friends or family
Do I have an annuity that I can access?
How soon will I be able to pay back the borrowed money?
What name will I operate under?
Does anyone else own it?
Do I want federal and state trademarks?
Do I want to have a Board? Partners? Shareholders?
What type of business do I want to be?
- Sole proprietor
How am I going to be taxed?
What paperwork is needed to incorporate?
Permits, Licensing and Insurance
- Will I need state and/or federal permits?
- How do I get my local business license?
- Will I need to get a Tax ID number?
- What type of ID Number will I need to operate my business?
- What type of insurance will I need?
- product liability
- personal liability
- Will I need to add workers compensation?
Equipment, Location and Infrastructure
- Do I know all of my business operations local rules and regulations?
- Do I understand my:
- supply chain
- How much competition do I have in the area?
- Are the zoning and taxes a good fit for my business?
- Is there room for growth should I need it?
- Will I need to write more into my budget for upgrades and refurbishment?
- What type of equipment will I/my employees need?
- Is it easily accessible for customers? Package delivery/pickup?
- What level of technology will I require? How much of it will I need?
- New or used equipment?
- What kind of office supplies will I need?
What system will I use to pay myself?
Do I have a means of payment to accommodate all my customers?
- Bank draft
- Electronic transfer
What terms am I going to offer for payment schedules from customers?
How do I address customers who go beyond terms?
What type of bookkeeping software will I need?
Should I hire an accountant?
A Few Tips for Budding Business Owners
- Be honest with yourself about your strengths, weaknesses and capabilities.
- Don’t leave it up to your gut. Research and understand your playing field. And then research some more.
- The idea might be great, but knowing the demographics of your potential customer base is better.
- Check Census data.
- Read related industry articles.
- Spend some time with your branding efforts.
- Look to LinkedIn as a good networking resource. Your support network is important.
- Talk with experts.
- Lean on the support and advice of those that own their own businesses.
- Look at organizations like the Small Business Administration, local chamber of commerce, Score and niche associations.
- Have money in reserve. Your business might not be an immediate success.
- Have numerous payment options. The easier it is for your customers to pay, the more likely that they will do so.
- Don’t be afraid of help.
NOLO — http://www.nolo.com/legal-encyclopedia/start-own-business-50-things-30077.html
Bplans — http://articles.bplans.com/seven-steps-to-starting-your-own-business/
forbes – http://www.forbes.com/sites/martinzwilling/2012/09/16/10-reality-checks-before-starting-your-own-business/
SBA – https://www.sba.gov/content/follow-these-steps-starting-business
statisticbrain – http://www.statisticbrain.com/startup-failure-by-industry/