Hello readers and potential future entrepreneurs. I understand the feeling; Desire to create, operate and succeed. During my professional career I have learned that there are numerous steps that need to be taken to organize the opening and running of a small business. I’ve put together a few questions that aspiring entrepreneurs should read through at least once. There are many questions that can arise when starting a small business, and I will briefly address some of these questions in the following list of brainstorming questions.
What kind of business do you want to open? There are various business ventures in which an entrepreneur might engage. It all depends on what knowledge you have or are willing to acquire. Are you a restaurateur? Handyman? Plumber? Home health/help? Do you have any experience of managing or working in such institutions? Do you need formal training from an institution? Do you work as a sole proprietor or as a partner/member? In addition to sole proprietorships and partnerships, research limited liability companies (LLCs). S corporations are another option, but they are intended for shareholder business and may not be appropriate for your particular business application.
What types of licenses and/or permits are required? Every company has different licensing requirements; it all depends on what the entrepreneur ultimately decides to do. A restaurant would need a food safety license in addition to the basic business license and if alcohol is on the menu – there is another permit the entrepreneur would need to legally sell alcohol on premises. At a minimum, repair-oriented businesses require a business license to repair, but if they also sell parts, they must list “retail” in their business license in addition to “repair.” Healthcare services require at least formal training and licensing as an LPN, RN, or one of several other healthcare-related licenses. Be sure to check your state’s laws to ensure what is required to operate your type of business.
What education/training/certifications are required to legally run this business? We addressed this in Licensing/Permissions, but there is much more to it than the licensing required. For example, one cannot run an auto crash repair business without having the knowledge of performing these types of repairs. There are schools that can be attended to learn what needs to be learned to run almost any type of business effectively. However, there are also companies where experience is enough to work effectively without the need for formal training (lawn maintenance, house cleaning, to name a few). Also, there are certifications for training in almost, if not all, of the nursing professions.
Does this business need a window? Retail businesses will undoubtedly need a storefront. Keep in mind that the retail business will have a much larger initial investment than a service-based operation. This initial investment is inventory. Some service businesses may not need a storefront to function as much of the services provided could very well be provided locally. If a storefront is required, remember to consider delivery or on-site service if feasible for your operation.
How much will it cost? This number will vary widely depending on the type and size of business you are planning. For smaller companies, that number can be as low as $200 for a license and/or permit, or as high as $1 million or more. Obviously, inventory is very expensive, as are specialized tools for performing extremely precise work. Calculate the expected opening and operating costs. Determine what size storefront is needed (if applicable) and research local commercial properties, locations, and prices. Renting short-term is absolutely cheaper, although the thought of a paid-off property is very tempting. Prices for most things vary by location. Employees are another cost factor if your company needs employees. When employees come into the equation as opposed to sole proprietorships or partnerships, one needs to add additional insurance for the business (e.g. unemployment insurance). Check with your chosen insurance company to determine what types of additional coverage are required and whether it makes sense to offer health insurance. These employees must also have taxes paid on their wages – partly from the employee’s paycheck and partly from the company. Another potential expense is paying off loans if you don’t already have the capital needed to start your business. Basic running costs must not be forgotten as heating/cooling, internet connection and utilities are regular expenses for any business. On-site service operation costs very little compared to a physical store.
How can an individual pay for this? If you don’t have the funds, which is very common, applying for loans is one way to get funding. Make sure you have a business plan with projected expenses and income. There are other ways to raise money for a business. Check scholarships. While not very common, they are still a potential source of support. If many people believe in your dream, one could possibly receive donations from these people.
What about the accounting? Accounting is a necessity – do some research to determine which bookkeeping/accounting software is best for the type of business you are planning. Point of sale (POS) systems are required to “call” and sell inventory or merchandise to the customer. POS systems track sales, sales taxes, employee labor costs spent, and many other things. If you are able to create spreadsheets, you may be able to track your own inventory depending on your particular business model.
I hope this short list of questions and possible answers has been helpful to aspiring entrepreneurs. While there are countless successful entrepreneurs who have little or no formal business education, it’s never a bad idea to research courses in administration and management. Visit the Small Business Administration website at http://www.SBA.gov for additional helpful information.