Starting your own business is an exciting and nerve-racking prospect, and it is not a choice to make lightly. You may have been planning to become self-employed for a few years, or you might have just had a moment of inspiration. Either way, there are several important factors to consider before making a move to become your own boss.
When you start a business, everything from marketing to taxes and insurance is on your shoulders, so it is worth taking the time beforehand to do research, make plans (and contingency plans), and prepare carefully for starting on your own.
Consider the alternatives
Choosing to become self-employed is a big decision, and it is worth taking the time to carefully consider if you really want to start your own business. Inevitably, things will go wrong. There will be challenges and debts and difficulties.
If you are aware of the risks and potential pitfalls of business ownership and you would still prefer the excitement and freedom of being self-employed to the security of working for a paycheck, then you are ready to begin planning your next steps.
Develop a plan
Drafting a business plan is a way to organize your thoughts and solidify your ideas and plans. By writing out all of the questions you have and trying to understand all the steps needed to launch your business, you will develop a sense of where you need to start and the next steps you need to take.
Your business plan should include your strategies, contingency planning, and your exit strategy. Although you do not want to have to think about your business failing before you have launched it, it is nevertheless a good idea to have an exit strategy to be prepared to leave the company when needed.
Do your market research
When starting your business, you may have already worked in the industry for many years and understand its customer base, competitive landscape, and trends. However, if you start a business in a sector in which you have limited experience, it is necessary to conduct as much research as possible before launching your company.
No matter how small your business, you should try to learn all you can about the industry, its main trends, and the future outlook. Also, the competitive landscape and major players in the space, and any gaps or niches that currently exist, which you can exploit.
It is also worth putting in the effort to learn about customer needs, desires, and expectations for the industry you are about to enter. Finding your niche can be tricky, but if you do your research and learn about potential customer needs that you can fill, your company will be more likely to succeed and to adapt should anything change in the future.
Understand the financials involved
When starting a new job, you will need funding for operational costs, licenses, legal fees, equipment, and more. Depending on the type of business you are launching, you can try looking for financing from investors, taking out small business loans, or crowdfunding. The U.S. Small Business Administration has additional resources for helping small businesses to secure funding and support.
Alternatively, if you are looking to start small, move slowly, and maintain control of the business and any debts you have, you can always “bootstrap” your company and self-fund it for as long as needed.
Take time to understand insurance
Many owners of small businesses do not consider their insurance needs until it is too late, and they have a claim they have to handle themselves. You can take control of your business’ insurance needs early by proactively insuring it and, when the time comes, also any employees.
As a owner, it is a good idea to find an insurance firm that understands the specific needs of small businesses, such as the insurance plans provided by Next Insurance. Next Insurance specifically works with small business owners and will be able to provide you with much-needed information, support, and industry-specific insurance plans.
Keep track of numbers
There will be a million things to do when you start your business, but it is essential to prioritize organization from the outset. Your future self will thank you for maintaining accurate, well-organized records, accounts, and commercial statistics from the beginning.
If you are not particularly organized, this may take some time to get used to, but it will be worth it in the future when you are looking to expand, are calculating taxes, comparing your yearly performance, or even facing a lawsuit.
Start small at first
Knowing when to expand your business can be tricky. On the one hand, if your company is gaining significant business, you might want to take advantage of the windfall and hire employees to continue the upward trajectory. However, you might also be concerned about expanding too quickly and having to hand over some of your control of the business.
It is a decision only you can make, but it is essential to take the time to consider the pros and cons of each decision before deciding to expand and, when you do expand, to do so slowly.
Try to maintain a work-life balance
As a small business owner, it can be challenging to separate yourself from the work, and your job will begin to feel like it is a part of who you are. Although it is difficult, it is important to separate yourself from your company – if your business fails or suffers challenges, you do not want it to take over your life.
Focusing on maintaining a healthy work-life balance and trying to introduce a measure of emotional and psychological separation from your company will help you to relax. It may also help you to make rational decisions.
These are just a few of the many steps and processes involved in starting a business and becoming self-employed. Every small business experience is unique and has specific challenges, successes, and failures. Still, by taking the time to prepare and plan before launching your company, you will be ready to face the ensuing ups, and downs self-employment brings.