1. Living Funds – Unless you are one of the very lucky few, your business will not be profitable from the word go. Remember, it took even mighty Google a couple years to even find funding to make a serious effort at becoming an Internet giant. How much money do you have set aside for living expenses? Six months to a year is a good range if you will be working full time on your new business.
2. Time – Running your own business can be incredibly rewarding. That being said, it is going to take a lot of your time. Do you have a family? Kids? Other time obligations? You can expect to spend 10 to 12 hours a day during the first year getting up and running, so make sure you have the wiggle room to handle it.
3. Business Form – When starting out, you need to determine what form your business will take. Will it be a corporation, limited liability company or just a sole proprietor. The decision is primarily one of risk. The bigger the chance of getting sued, the more you should consider undertaking the expense of a corporation or limited liability company.
4. Taxes – Uncle Sam wants and gets his money. Every business plan needs to account for tax issues. You might live in a state that has a favorable tax climate for business, but then again you may not. Some of the best money you can spend when starting out is to find a good accountant. They can save you a bundle. The best accountant is a proactive one. By proactive, I mean they work with you to put together plans on how to save on your taxes at the beginning of each year. Find one and spend the time to get it right.
5. Passion vs Profit – People are often looking for the “best” business idea. This is a mistake. The best business idea is the one you are very interested in. If you love fishing, start a business that has something to do with fishing. You should generally avoid starting a business because you think you can make a lot of money. It is going to take a ton of work, so go with something you are passionate about so you can get through the tough times.
If you take these factors into account, you will be well ahead of many people that start their own businesses. Find something you are passionate about, be prepared and your chances of success will be much better.
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