The Entrepreneur Urge
Sure the failure rate for new businesses is high, but that doesn't undermine the fact that starting a business is right up there with owning a home in living the "American Dream." So if you are thinking about striking off on your own what do you do so your dream doesn't go up in flames like so many other start-ups.
Well aside from ironing out a good business plan here are some things you can do to get yourself started.
- Don't Wait Till You Are Sure it Will Work: Nothing is guaranteed so might as well try. But, don't bet the farm unless you are willing to lose what you bet. This is the biggest reason people never start a company based on the great idea they have had for years -- individual risk tolerances and family issues prevent lots of people from ever trying.
- Weigh Your Risks: What is the worst thing that can happen? Running a business is a ton of work, but it also has a lot of reward and is less risky than many people make it out to be. Many young people will live their corporate lives without job security or a pension, not to mention social security. If your company might cut you free as soon as business slows down, why not take things into your own hands? Of course, you get to enjoy a lot more upside if you succeed and you are the guy in charge too.
- Pick a Name: It is important that you do some research to see if your business name has been taken. Search through your state's corporate records (most all of them have databases online) to see if your name is already in use. Check to see if your domain is already reserved (GoDaddy.com is great for this, especially if you Google for some coupons first). If your domain is taken you can run a Whois search to see who owns it and when it expires and try to have a firm like GoDaddy grab it if the expiration date is approaching for about $30.
- Get Some Legal Advice: Now if you are going it alone this might not be a big deal, you can form an L.L.C. for about $100 by filling out some paperwork online and receive a tax identification number. But, if you are going into business with a partner / family member / stranger you really need a buy-sell agreement. The agreement tells how the business will be wound up. If your partner leaves will they control the company even though they are absentee. What if a relationship sours and someone wants out. A buy-sell plans for those events that you can't envision while you are excited about your business prospects (kind of like a will or prenup).
- Choose Your Business Entity: Depending on your state you likely have plenty of options, whether it is an L.L.C. or L.L.P. that give you the tax advantages of a partnership (pass through taxes), but none of the pesky liability of a partnership.
- Test the Waters: You can start small. Most businesses start as side pet projects and run that way until the entrepreneur can gain some assurance that his or her idea won't be a total flop. A domain name costs $10 and hosting just a few more dollars per month. If you have an all-in-one printer, laptop, and phone you can replicate most of the modern conveniences that renting an office would provide... now if you want to manufacture widgets this might not apply to you.
- Get Some Credit For Your Company: Limited liability is great, but not if you have to personally sign for every document. Banks and other lenders won't extend credit to your new start-up without a personal guarantee because they know how risky a new business is. Head over to Staples and open up a business credit account. Buy some pens or something each month for about 6 months and ta da you have a credit history for your new baby.
Image: Jon Cage @ Flickr
