A small start-up company has a share of ups and downs. When I started my business nearly nine years ago, running my own small business was both rewarding and challenging. It has enabled me to find a better balance in my life by reducing the administrative burden Corporate America places on each of its employees and replacing it with more time to develop content for my clients.
Given the choice to run my own small business, the best option for me is at this stage of my life. I can work out of my house, see my kid regularly, focus my work effort on content, rather than administration and yes golf a bit. However, I am repeatedly asked by others “what it is like to be in business for yourself” when they think about making the leap from business to sole proprietorship.
While it’s not for everyone, here are some of the considerations you should consider before making the leap to starting your own small business:
One of the advantages of being a small business owner is the autonomy of “being in charge”. You are the boss and can control your business at your own discretion. Many think they like this setup, but in reality when it comes to being the self-motivator needed to succeed – the “guy” you go to – many are left behind. Before you read on, ask yourself if you are the “go to guy. If not, you can save yourself a lot of time and frustration. Just stay in the corporate world.
Develop a business plan: So why is business planning so important? In a word, it provides “clarity”. The time required to develop a plan leads to a precise clarification of the corporate vision. It also provides a mechanism for measuring business performance and forms the basis for future growth plans. In the long run, it improves the company’s valuation through fiscal responsibility, which provides every future investor or employee with the history of opportunities. Business planning is a one-piece strategy and tactic – but where the sausage is actually made lies in implementation. The execution takes place in the hard work that is necessary to execute a plan, and the accountability for your activities through its pursuit.
Understand the tax burden: Regardless of the political rhetoric surrounding tax laws and their impact on small businesses, it is a fact that these businesses are subject to a variety of taxes. I am shocked at how many budding entrepreneurs do not understand the taxes that small businesses pay. My company essentially has one of the simplest business models that a small business can have. I invoice a few customers a month, receive a few checks a month, pay a few bills a month, and have very little inventory and/or depreciation of fixed assets. Nevertheless, my tax return last year was 84 pages long. Submitted as S-Corp, my tax expense is between 25% and 39% of federal taxes; North Carolina State income taxes between 6.0% and 7.5%, social security and health insurance (twice as natural for employers and employees) between 15.3%, so almost 50% of all income goes into taxes and fees.
Replicate yourself: Given that you are a one-stop shop, a small business owner must replicate himself wherever possible. Tools like social media and the acceptance of teleworking through online collaboration have enabled small business owners to be in many places at once. To succeed, small business owners must use these tools to maximize their engagement with potential customers and reach customers outside their immediate trading region. Before these tools were readily available, my business was limited to the state of Illinois (where my company was originally located). Because I used these tools to replicate myself, I had customers in thirteen different states.
Navigate to third-party challenges: A small business owner wears many hats and relies on third-party vendors for important alliances. When Go Daddy had a failure of his website and email server in September, around 5.3 million websites and emails from small businesses were excluded. Small business owners rely on these support companies and are sometimes held captive when problems arise. While my company doesn’t trade much through my website, many lost small businesses.