Taking Stock: Are You Ready to Start a Business?

The idea of being in business for one's self is very attractive. Entrepreneurs typically go into a field that excites them; get to be their own boss; have the ability to create the company culture they'd like; are in charge of their own destiny; and so on. But the flip-side to all of this is the very real possibility of failure (most start-ups don't make it); the often-prohibitive cost of starting a business; the substantial time commitment; and the enormous responsibilities involved.

Going into business for yourself can be extremely rewarding, but you will need an appetite for risk and good understanding of what you're up against. Also, even the most successful businesses typically don't break even for the first several years of operation.

And even if you don't plan on hiring employees, you will need to be able to work with bankers, customers, suppliers, attorneys, accountants, and others involved in your venture.

The Business Plan

Not everyone who starts a business writes a business plan, but it is crucial to the success of any business. The business plan defines your business and its goals, outlining the market opportunity and long-term plan for how you will reach profitability. The plan also provides a balance sheet, income statement, and cash flow analysis. The business plan not only helps you stay on task, but also is required by most lenders.

Before you start writing your business plan, you will want to consider what service or product your business provides and the need it serves; who the potential customers are; how you plan on reaching those customers; and how you will fund the business.

Small Business Financing

Financing your startup will require a full understanding of the various options available and which options are best for your business. You may need different kinds of funding at different stages of growth, always considering the long-term implications of various funding sources. For example, you may need to seek debt financing if you believe fast growth is needed to get your business to where it needs to be. Inadequate funding can sink an another promising startup before it has a chance to prove itself.

Too much funding, or the wrong kind, also can be detrimental. For example, venture capitalists and angel investors may be able to infuse a large amount of capital at once, but they typically take a large piece of the company in exchange. And if growth expectations are unrealistic, too much capital may set your business on the wrong path.

Learn more about these and other aspects of starting a business by clicking on a link below.