10 Steps To Begin Your Own Business
Small business owners control, manage and operate a company or organization. They can work in a variety of industries and provide goods or services for local and global customers. Learning more about this career path, including the potential advantages and traits for success, could help you determine whether this is the right opportunity for you. In this article, we provide the potential benefits of owning a small business, traits that could help you succeed and the steps you can take to become a small business owner.
More independent decisions : Small business owners make many important financial, business and marketing decisions. They often have more power and control over these decisions when owning their own business.
Unique company culture opportunities: Small business owners can design their own workplace culture and environment. This can include planning work events, designing the building layout and planning employee benefits.
More chances to meet new people: Networking is an important part of building a business, and small business owners may get the chance to connect with local professionals, investors and clients each day depending on their industry.
More remote opportunities: Depending on the industry, some small business owners can work from home or remote locations. They may establish remote options for the company or choose to complete their work from home on certain days.
Are you a business owner?
When we use the words business owner , meaning one who individually or with partners is in control of monetary and operational decision-making, we are talking about a true sense of ownership. The business owner has ultimate control over the company and decides what to delegate and to whom.
Though the image of the young Silicon Valley prodigy often comes to mind, the average age of a business owner in the US is closer to 50 years old. A business owner can earn a monthly salary and typically earns more than an average American, but he or she is not an employee and is the only one in the company who has the right to take a net profit at the end of the year or reinvest that money back into the company.
To gat her whether you are a business owner or operator, it all comes down to one question: Are you running your business, or is your business running you? To determine the answer to this question, ask yourself the following: Are you able to be strategic, or are you doing the same things over and over because you’re too busy to create an atmosphere of innovation ? Are you able to step back and see the bigger picture? Or are you caught in the weeds because your team can’t effectively run the ship without you?
How to become a business owner
If you can’t step away from your company and let others steer the course, your new goal is this : Learn how to become a business owner instead of an operator. Choose to make that shift in both your identity and your business. How? As Tony said, a business owner is the ultimate strategist.
If you ask yourself “What is a business owner ?” then you likely have some areas where you can improve when it comes to running your own company. Want to learn how to become a business owner and get out of operator mode? Here’s what it takes .
1. Wear a variety of hats
Though the goal is to build a cross – functional team that can handle most aspects of your business without you, this won’t be the case in the beginning. As a new business owner , you will find yourself answering phones and mopping the office floor in addition to making presentations and landing big deals.
You’ll likely need to learn new skills as well, like accounting and reading financial statements . A business is only as strong as the psychology of its leader, and there’s no shame in admitting that you have weaknesses. In fact, it’s essential to ask for help when you need it or even outsource some work so you have time to focus on what really matters.
2. Make personal sacrifices
A business owner will have to make some short-term sacrifices to grow their company. This could mean long hours, missed vacations and putting extracurricular activities on hold. However, the bigger picture is that this effort will help you achieve long-term goals.
Remember that there is no such thing as work-life balance – there is only work-life integration . When you’re doing what you love, your work and life are naturally integrated. And once you’ve built your business and found ways to increase profits , you can enjoy the freedom you’ve earned.
3. Invest in yourself
Think that becoming a business owner means making big bucks right away? Think again. Most new business owners end up investing any profits in their companies rather than paying themselves. In fact, the answer to “How much do you pay yourself as a business owner?” is often “Nothing” in the first few years. According to Fundera, 30% of small business owners take no salary at all, and 83% pay themselves less than $100,000 per year.
As a business owner , you may be required to invest some of your savings in the business as it grows. However, just as the personal sacrifices are usually short term, so are the financial ones. You’ll have some lean years, but when you’re doing what you love, it will be worth it. And once you grow your business beyond the infancy and teen phases of the business cycle , you’ll achieve both financial and personal freedom.
4. Focus on what’s important
When you look at the business owner definition, you’ll notice it does not include putting out fires. A business owner focuses on top-level issues like creating a positive organizational culture and developing new strategies to increase customer loyalty . You create a compelling vision for your company and inspire others to follow you through that vision.
5. Build the right team
A true business owner maximizes his or her business by leveraging not only their own ideas, but the abilities and strengths of the talented individuals around them by building the right team . You certainly need to have your own leadership skills , but you also need to strategically hire so that, over time, they can step into major leadership roles and handle the day-to-day operations of the business without you.
Ensure that you have a team you can trust with this “baby” you have poured so much love and passion into. Otherwise, your business will always be limited by what you as a business owner can personally do each day and you’ll always be stressed . If that’s the case, then you don’t have a business – you have a job. You’re restricted when you have a job that you have to be at every day, but you’re financially free when you have a business that can effectively run without you.
Does becoming a business owner seem a little overwhelming? This doesn’t mean you can’t do the things you love or be a part of the business. By all means, you can still be the operator where it makes sense to be the operator. But allow yourself and your business to thrive by making this necessary shift in your mentality.
Channel the great traits of an entrepreneur and have a vision in mind for your company. What’s your ultimate goal for launching your own business? Chances are, it was to experience greater financial freedom or to have more time to focus on the things you love, like your family, interests or worthy causes. Keep this end goal in mind as you make the shift from business operator to business owner .
Write a Business Plan
Creating a business plan will help you set (realistic) goals and figure out how much cash you’ll need in your first year. It’ll also make you think about the number of clients you need and the type of marketing required to attract those clients.
Entrepreneurs need to be able to explain why their business idea will succeed. Part of this involves identifying how you’ll do things similarly to your competition and how you’ll do them differently, according to Inc.. The different part is key—it’s better to not go up against your major competitors directly but find a niche.
Use the Small Business Administration’s SizeUp tool to get a comparison to your competitors. This will help you not only sell your business idea to others, but identify and resolve any weak spots in your business idea from the beginning.
Identify Your Audience
Who are you writing this business plan for? For example, you may be writing the plan to apply for a loan. So you’ll want to lay out all your costs and projected return on investment (ROI). A lender will want practical and level-headed details, like how the loan will be repaid. Don’t promise huge profits as this can signal big risk. And make sure to outline any risks associated with your business.
Use a Template
The Small Business Administration has a business plan template that’s free to download. It’s important to have a structure to follow so you hit all the key points (and ensure you look like a pro, not a rookie). It’s also a good idea to Google business plans to see what other companies like yours have done in the past.
Register Your Business
Whether you need to register your small business depends on your location and structure. The Small Business Administration can guide you through this process. You may need to register both federally and with your state and some business structures need an agent to register. You can also register your business name locally. Registering usually costs less than $300.
Ideally, a small business owner should have enough money to cover three to six months of operating expenses before even starting their company. Operating expenses include rent, equipment and insurance.
You’ll need to rely on your own skills or learn new ones to manage your finances and run your marketing campaigns. FreshBooks has a comprehensive list of tools every entrepreneur needs. Many are free or low cost, helping you run many aspects of your business at minimal cost.
Some types of businesses work better with the bootstrapping model, including creative freelancing (writing or graphic design, for example), tutoring or working as a virtual assistant.
Larger businesses can apply for business incubators and accelerators—Entrepreneur lists the best incubators and Forbes has a list of top 2017 accelerators. These programs help businesses grow by giving guidance. They can also lend capital and offset costs by providing office space and support staff.
Small businesses that need more funds than bootstrapping can provide need to look at other options. That said, funding can be hard to secure without a track record of success. And each source has its pros and cons.
- Borrowing money. Small business loans will leave you with complete control over your company. You need a business plan, financial projects for the next five years and an expense sheet to apply for a loan. The Small Business Administration has an online tool to match you with SBA-approved lenders.
- Crowdfunding. This involves raising money from a large group of people. These people don’t get control or ownership over your company in return. Instead, they receive a gift (your product or another perk). It’s also a low risk funding option. Explore your options in this FreshBooks blog post.
- Venture capital. Only for high-growth companies. Instead of providing a loan, venture capitalist provide funding in exchange for a degree of ownership and control over your company.