Before Starting Your Own Business ...

I like working for a large company, but I understand the many others
who dream of owning their own businesses.

Lately, however, I've noticed quite a number of folks who have
started their own travel agencies. Several friends and family members
have approached me asking that I use their Web sites to make my
airline, hotel or car rental reservations. Mind you, most of them have
never previously expressed the slightest interest in helping people
travel.

Yet they have signed up with an online company that markets
home-based travel agencies. In this business venture, you pay a monthly
fee for a personalized Web site with back-office support. You then
direct people to your Web site to book travel on which you receive a
commission. In this network-building business, you can also make money
by getting others to establish their own Web sites.

It's not this specific business model that troubles me. My
concern is that too often people are so eager to earn extra money or
are looking for a quick way to wealth via entrepreneurship that they
are enticed to start a business in a field they have little knowledge
of. They get sold on a certain small-business venture because of an
inspiring hotel presentation.

Small-business ownership certainly has been a popular path to
prosperity in this country. Authors Thomas J. Stanley and William D.
Danko, in their researched book "The Millionaire Next Door," found that
two-thirds of millionaires are self-employed.

But even in a country of more than 25 million small
businesses, it is important to note that many fail. While two-thirds of
new employer firms survive at least two years, only 44 percent last
four years, according to the Bureau of Labor Statistics. This holds
true pretty much across all industry sectors.

To make sure your small business isn't a failure and a
financial drain on your family, consider the following advice from the
Small Business Administration and Score, formerly the Service Corps of
Retired Executives, a nonprofit made up of working or retired business
owners, executives and corporate leaders who volunteer to help budding
business owners:

• Know what you love and love what you do.
  If you want to own a successful business, start with figuring out what
  you do best. Don't fall for a cookie-cutter business franchise just
  because the presentation was impressive. Start a business that has
  meaning to you. If it's all about the money, there's a good chance you
  will fail.
• Plan to succeed. Yes, that means
  creating a detailed business plan. It doesn't matter what business you
  go into -- you need to have a business plan. You've heard it before: If
  you fail to plan, you're essentially planning to fail. A good business
  plan will, among other things, include an executive summary, a market
  analysis, a company description, how the business is to be organized
  and information about products or services. For details on what should
  be in your business plan, go to the SBA's Web site. Click on the link for
  "Small Business Planner."
• Get organized. You will have to decide
  whether you want your business to be a sole proprietorship,
  partnership, limited liability company or corporation. How you organize
  your business affects your personal liability.
• Do a budget. A business budget is as
  important as a personal budget. Many people are so eager to become
  their own bosses that they completely ignore the essential element of a
  successful business: making a profit. Notice I said profit, not
  revenue. Your goal should be to earn a profit. You may also consider
  keeping your job with a larger employer until you're confident you can
  earn a living being self-employed. Before you jump into an
  entrepreneurial venture, try it on the side for a while. I know you're
  excited about being your own boss, but your personal household bills
  still have to be paid.
• Know the competition. Spend some time
  researching. Spend a few months looking through magazines that cover
  your business area. Most important, talk to business owners who are
  already successful in the field that interests you. They've been there
  and probably made a lot of mistakes they can help you avoid.
• Pay your taxes. It's so tempting to
  spend your revenues and not set aside money for taxes, especially when
  times get tough for your business. Don't do it. It's a huge and costly
  mistake. For information on what's required of a small business, go to www.irs.gov.
  Click on the link for "Businesses."
• Get help. You don't have to do this
  alone. There are so many resources, many of them free. Take advantage
  of the vast knowledge of the volunteers who work with Score. If you go
  to Score's
  Web site, you can enter your ZIP code and find an office
  nearest to you.

This week, the SBA and Score will be recognizing successful small
businesses as part of Small Business Week. If one day you have
aspirations to be one of those success stories, make sure you are
passionate about the small business you start.

Source: Virginian - Pilot.
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