Embarking on a journey to become a business owner is always challenging. There is no guarantee that you’ll be successful and ready to deal with all the risks and obstacles that come along the way. However, the idea of starting a business from scratch can be motivating for new entrepreneurs and individuals who are working tedious nine to five desk jobs.
After all, having the freedom to decide your working hours, not having to report to your CEOs or Directors day-in and day-out, and the possibility of endless growth are three significant factors that entice individuals to start their own business.
These days, every rookie entrepreneur dreams of starting his or her own business. However, only 4 percent of startups manage to cross the ten-year mark. Furthermore, around half of newly-launched companies close up shop before crossing their fifth year.
Such a thing happens because new business owners have no idea about the amount of money, experience, and knowledge it takes to take their business to a level where it starts to break even or make profits.
That said, let us take a look at some of the factors you need to consider before you begin your journey of becoming a business owner.
Earn a business degree
As you can already guess, earning a business degree will equip you with the knowledge needed to understand the dynamics of the corporate world. Launching your own business or becoming a part of an already established one helps gather the experience you’ll need for making big decisions.
However, it is nearly impossible to launch a business that continues its operations for a long time without the necessary business knowledge and skills. As mentioned above, not all companies will end up crossing the five-year mark.
This is because their owners usually lack business-specific skills and education. Earning an advanced degree like an online MBA no GMAT AACSB will help you understand business fundamentals and equip you with the skills needed to identify business opportunities.
That’s not all; earning an online degree will also help you learn other business-related theories you’ll find helpful for the corporate world. A Master’s will put you in a commanding place to start your own business and find an excellent job if things go south.
Devise a business plan
Many experts and successful business owners agree that developing an effective business plan is the first step a prospective business owner should take to ensure the business idea they’ve envisioned becomes a reality. A business plan typically includes a business idea, a marketing and sales strategy, financial forecasts, an executive summary, a hiring strategy, etc.
A business plan allows you to anticipate any changes and obstacles you’ll face when starting a new business. For instance, if you’re creating a mobile networking app for young lawyers, you’ll have to consider the dos and don’ts of designing a mobile app.
A lot of thinking has to go into the designing process, and a business plan will allow you to know all the answers to questions that might arise during the design process.
Get a legal structure for your business
Understanding the importance of a legal structure is highly crucial. Typically, you can choose four types of legal structures: Sole Proprietorship, General Partnership, LLC(limited liability company), and C/S Corporation.
A sole proprietorship is suitable for owners who want to test out a business idea before turning it into a formal business. However, you’ll be liable for all your company’s debts and profits.
A partnership is perfect for business with multiple owners. That said, general partners have to file state returns and federal tax form 1065. But, you won’t have to file individual income tax returns.
An LLC is a legal structure that allows partners, shareholders, and owners to have limited liability. Plus, they can enjoy tax benefits just like a partnership. Under an LLC, You’ll be free from personal liability if nobody can prove that you acted in an irresponsible, unethical, or legal manner while carrying out business activities.
With a C corporation, you’ll have to pay tax as a separate entity. In comparison, S corporation businesses are suitable for small businesses looking to avoid double taxation. If you require more help choosing the best legal structure for your business, it would be wise to get in touch with a corporate attorney or a business accountant.
Finance your business
Unless you’re a seasoned investor or an experienced accountant, you’ll need to help nail down such an aspect of pre-business ownership. Potential investors will want to know about your company, your business goals, and how you plan on utilizing their money. Regardless of where you end up acquiring funds for your business, please write it down. That said, business loans from a bank or private lender are always the safest bet.
Include this step in your business plan as there are tons of potential investors out there who would want to take a look at it before making their final decision.
Calculate Startup costs
Identifying startup costs is probably one of the most important things to consider before putting your business idea into effect. First, you need to calculate the total cost required to set up and operate your company successfully.
For example, if you’re setting up a retail business, you’ll have to consider store costs, furniture costs, inventory costs, and capital needed to get through the early days. If you’re also setting up a manufacturing plant, you’ll also have to account for plant construction costs, equipment costs, maintenance costs, etc.
Conclusion
Lastly, go through the steps mentioned above one last time. When doing so, you’ll be able to familiarize yourself with your new business. It will allow you to identify things you should modify or omit from your business plan.
Furthermore, hire a competent attorney if you want to maintain compliance with all federal and state regulations and rules. Investing more time in the planning phase than usual will pay dividends in the long haul.