Business: Basics Of Starting Your Own Business

An overview of things that need to be taken into consideration when starting your own business.

Starting a new business can be both exciting and terrifying, especially if you don't know where to start. The task can often seem so daunting that many people give up on their dream, choosing instead to live their life wondering about "what might have been." This guide is designed to at least give you a starting point so that you'll know what considerations you should have when investigating the matter further.

First, let's look at the benefits of starting your own business. Most obviously, there's the fact that as owner of your business, you'll have the freedom to do more or less as you wish. You'll also have greater control over your wages, and also greater control over the everyday activities of your business life in general. Most importantly, though, you'll be able to use your creativity effectively, not having to worry about what your boss thinks about your decision to do this instead of that. Be warned, however, that too much freedom can sometimes be a bad thing; a lot of people prefer a more structured life, and as a business owner you'll have to deal with the random occurrences that you've never noticed before as a mere employee. Yes, you'll have freedom, but you'll also have the responsibility and consequences of that freedom.

Once you've decided that going into business for yourself is something that you want to do, you need to determine what kind of business you're going to do. Will you be manufacturing a product, or will you be performing a service? Is what you have planned commonplace in the market, or is it an original idea? Perhaps you're not sure what you want to do at all. If that's the case, then take a moment to survey your life. What are your interests, and your abilities? What prior experience do you have? All of these things should be taken into consideration.



Another big consideration when deciding what sort of business you should start is how much money you have to invest into it. It's very difficult to get any sort of loan or investment on an unproven business, so there's a good chance that you'll have to front the expenses yourself. If you do apply for a loan, you'll likely have to apply for a personal loan... that means you'll be putting your credit (and possibly your car or house) on the line if your business goes under.

Next, let's look at your goals. You should be able to clearly define two sets of goals for your business: short term goals, and long term goals. Your short term goals are anything that you want to be accomplished within a year, and your long term goals are anything that you want to be accomplished within 2-5 years. Each year they should be revised, with more of the long term goals becoming short term, and with more long term goals added. Always reach for something more to keep your business moving ahead.

You also need to consider the structure of your business... how you want it to be run. Do you want to be the sole owner (or proprietor), or do you want partners? If you do take partners, how active will they be in the running of the company? Will they be a silent or limited partner, merely contributing financial backing, or will they be an active partner who helps to run the business? Or will you take things a bit further and incorporate the business, allowing shareholders to be the owners and having the business viewed as a separate legal entity? Each of these options has its own advantages and disadvantages... think carefully on how you want the business run before deciding on anything.

Once you get the ball rolling with your business, you're going to want to think about what it should be called. If you're going to use anything other than your real name, you'll have to file a Fictitious Name Statement (also known as a Doing Business As statement, or a d/b/a) with your city or county government. The d/b/a allows you to register the name of your business, so that it is legally recognized as your business, and no one else can use that name within the same area. You'll also want to apply for an Employer Identification Number with the IRS for tax reporting purposes (and while you're doing that you should also get a copy of IRS publication 937: "Employer's Tax Guide" so that you'll know how, when, and how much to pay out to the IRS).

As your dream of a business begins to become a reality, you're going to have to start thinking about sales and marketing. Marketing is the process by which you select your products or services, price them, advertise and promote them, and even how you distribute them. Sales is the steps that you take once your product is on the market to get your customers to buy it. Of course, those are overly-simple explanations of sales and marketing, and you'll want to do additional market research before rushing in to anything.

Finally, you're going to want to make sure that when money starts coming in, that everybody is getting theirs. You'll have to pay taxes to the federal government, and possibly to state and local governments, most likely filing your tax returns quarterly. Payments will have to be made for each employee from each paycheck, so you might want to get a payroll accountant unless you really have a head with numbers and know how much and when to pay everyone. And while you're figuring up income taxes, don't forget that you've also got to pay unemployment, and then there are all of the non-payroll expenses... you can see how this can be an overwhelming process.

In closing, keep in mind that running your own business is very definitely work... too often people tend to ignore that part of it in the beginning, and end up out of business or bankrupt. Remember that caution and planning are your best bets for staying out of trouble and in the black... and best of luck to you in the future.

© High Speed Ventures 2011