Do you dream of owning your own business? Of being your own boss?
Have you come up with the next million-dollar idea?
Do your friends and family rave about your photography/sewing/baking/gardening/design skills and say you should be paid for your talent?
Starting a business can be an exciting and life-changing adventure. It is not, however, for the faint of heart and it is certainly not for the uninformed. Before you quit your day job, order up a box of business cards, and hang out your shingle, here are a few essentials you need to understand in order to become a successful entrepreneur.
Know What You’re Getting Into
Do you know what’s involved in starting a business?
It’s not enough to have an idea, a product, a skill, or a service to monetize. In addition to creating and selling whatever your business will create and sell, you need to actually run the business. This includes things like bookkeeping, marketing, managing supplies, calculating costs and expenses, paying taxes, and possibly even managing employees.
In addition, you must know what the rules and laws are for your business in your city. When I was a brand-new entrepreneur, many years ago, I did not even know what I didn’t know. I didn’t know the questions I needed to ask, and all the skills I would have to acquire to run a successful photography studio.
Look for Community Resources
If you need help learning what you need to know and do to start your own business, and most new entrepreneurs do, you can choose from a variety of free and low-cost resources, especially designed for new business owners. One of my favorite resources is the Small Business Development Center, run by the SBA. Located across the country, they offer free and low-cost business development classes. When I moved to a new state and wanted to start another business, I received a tremendous head start that saved me countless hours. To have learned everything I needed to know on my own would have taken weeks or even months.
Next up is SCORE, who offers free small business mentoring and advice. And finally, check out your local community colleges and universities. Many now offer courses, certificates and degrees in entrepreneurship.
These organizations will do a LOT more than just help you with the legal side of business. They can help you clarify your focus and your business plan, help open your eyes to both the risks and rewards of entrepreneurship and help you with all the questions you don’t even know you need to ask when going into business for yourself.
Know How to Run a Business Legally
If you are exchanging goods or services for money, you have some legal obligations to attend to. If you’re not planning to be a legal business, don’t bother starting one. In most states, you are required to register with your state tax board. Different states call it by different names, but it is the entity that is responsible for overseeing the collection of sales tax. This is not an entity you want to run afoul of.
Many years ago I met an auditor for California’s State Board of Equalization (California’s sales tax authority). One of the first questions he asked me is if I was collecting, reporting, and remitting my sales tax properly. Thankfully, my answer was then and still is, yes. He told me he always asked his friends so he could warn them that tax boards have the power to seize your business for non-payment or underpayment of sales tax revenue. And generally, if they have reason to believe you aren’t compliant, they have the power shut you down and THEN investigate.
Don’t fall into the mistaken assumption that if you are only “doing it as a hobby” that you are exempt. Find out the law, before you find out the hard way. And while we’re on legalities, if you are planning to run your business out of your home, learn whether it’s permitted in your municipality. Some cities allow home businesses, some do not. Some allow signage for home businesses and some do not. And others allow certain types of businesses to be home-based, like a photography studio, but don’t allow others, like a hair salon. There’s nothing that can put crimp in your entrepreneurial dreams quicker than a grumpy neighbor who doesn’t like the extra traffic you’re generating and reports you to your city’s zoning board.
Don’t Forget Your Insurance
Do you have the necessary insurance for your small business? If you are working from home, call your insurance agent. Every policy does not cover every home business. Do NOT assume your homeowner’s insurance will cover your business activities. You don’t want to find out the hard way.
Do you have sufficient liability insurance to cover the possibility that a client or delivery person might be injured while on your property? Do you have liability insurance in case your product injures someone? If you are providing a service, do you have professional liability (errors and omissions) insurance? And what about your business equipment? If it’s not insured and it’s stolen or damaged, you could be out of business that fast. Be smart and help to ensure you can become a successful entrepreneur by insuring your business.
Know Your Commitment Level
The key to success as an entrepreneur is to consistently deliver a quality product or service in a timely manner that your customers find valuable.
Running a business can be harder than it looks. The early stages of your business will likely be time-consuming with little return on your investment. Add to this the necessity of continuing at your current employment to pay the bills, and becoming an entrepreneur can be exhausting.
If you have a family, you need to make sure that they are onboard with your entrepreneurial aspirations. If they aren’t, the time may not be right to start a business.
You need to be able and willing to commit to your business, and to follow through on your promises, even when the work is tedious (and much of what we entrepreneurs do is incredibly tedious). Learning to not promise more than you can deliver, and being willing to admit to mistakes and do whatever it takes to make them right are also critical skills. Developing the self-discipline to do these things on your own can be a challenge. These were some of the most important lessons I learned when I started as a young entrepreneur. And they are still critical skills in business today.
I have sadly seen more than a few small business owners who went out of business, and some who even ended up with legal troubles, because they did not act with integrity in their businesses. If you are willing to be realistic, and commit yourself to your business, you can become a successful entrepreneur.
Know Your Support Network
Entrepreneurship can be a lonely dream. Having a support network is essential to keeping that dream alive. While you need supportive friends and family, you also need to get out and meet other entrepreneurs who can provide support. Other entrepreneurs understand better than anyone the sacrifices and challenges of becoming a successful entrepreneur. They will understand aspects of your life and business that even your family doesn’t. And not only do they understand the entrepreneurial journey, but you can also learn from one another, and they may help you grow your business through referrals, becoming customers, or collaborations and partnerships.
Know Whether You Can Accept the Possibility of Failure
There is a popular mantra that says “failure is not an option” but in the business world, it often does.
Failure doesn’t necessarily mean going out of business. As a new entrepreneur, or even as a seasoned one, you will make mistakes. You may have a product that flops, you may miscalculate costs and have overruns, you may have unexpected things happen that will impact your bottom line.
Knowing that failure is a possibility can help you plan for the hard realities of the business world. No one goes into business believing they will fail, but the most successful people go into business knowing they can and making the necessary plans and preparations that will help them avoid failure.
Do You Want to Know More About How to Become a Successful Entrepreneur?
Are you considering starting your own business and want to learn more? I would love to help you determine whether entrepreneurship is the path for you. I have been helping to create successful entrepreneurs for many years. To learn more about becoming a successful entrepreneur, click here to set a no-obligation consultation appointment.
Do you have any general entrepreneurship questions for me? Feel free to post in the comment section below. You can also reach out on social media.