Starting Ones Own Business - Case Study Example

Starting Your Own Business Are you desirous of starting a business? If your answer is yes, then for you to start and operate a successful business proper guidelines will have are necessary. Starting and running a business may not be easy; however, with the right expertise your business will grow. Decide what kind of business you will start and begin making the necessary preparations. Finding the right business module makes it easier to be excited about your work (Jin). Most people who want to start their own business don’t have a ton of money lying around… (Armstrong). Whether you want to start a small consulting business or start selling accessories, you need money to get the business started and operate it until the business is profitable (Attard, ). Finding the money to start your business may be a bit difficult; however, there are ways for you to obtain the cash you need. One way to obtain the cash you need to start your business is to get a part-time job. Savings from working a part time job can add up and in some cases, also many business owners start out by sharing their business time with a part time job. In order to save on money, you can start your business from home. In fact, most successful business owners started out from their home. Later on when the business begin to pick up you may find a suitable location. To save money to start your business you may have to live frugally at times. Living frugally does not mean that you have to starve yourself. It means that you do not have to buy everything you see just for buying sake. In order to save effectively, you need to buy the necessary things. Another way to save to start your business is by applying for use of a credit card. A credit card is a loan given by a financial institution. The owner of a credit card has in his or her possession whatever amount the financial institution allows them to use with the expectation that they repay back the amount. Banks and other financial institutions often help new entrepreneurs to start their business by giving them business loans to do so. However, most financial institutions require that their customers have enough security to cover for the loan. If you are unable to find the necessary security that is required, you may seek the help of friends or family members to co-sign for you. By co-signing for you friends or family members will use their own assets to secure a loan on your behalf. Most ways persons get capital to start their small business is by borrowing from friends and family members. Unlike financial institutions, when you borrow from friends or family members you may not need to pay them back with interest. Money left as inheritance is another way by which many persons get capital to start their small business. When a person starts a small business through the means of inherited money, he or she does not have anyone to pay back and so the stress of saving for repayment purposes is out of the way. Another way of obtaining capital to start your small business is by using your insurance policy to do so. Life insurance polices that has cash value can be cashed in at any time and this cash used to start your business. If you own stocks and bonds, you can easily turn them into cash and use this money to start your business. In fact, sacrificing your stocks and bonds for your business may prove more profitable for you in the end. After you have your capital taken care of, the first step is to write a business plan. Why must you write a business plan? The reason being is that it is best to have a plan to follow. Without a business plan to follow, your business may be doom for failure. A business plan should have an executive summary, a description of the business, a plan for how you will market and manage your business, financial projections and the necessary business support documents. In the body of your business plan must consist of a description of the type of business that you are desirous of starting. A marketing plan by which to follow closely is very essential for the success of your business. What kind of competitive field that your business will be into is of great importance. How your business must operate is another necessity to take into consideration. Every business has to have someone working in the business, whether it is one or more persons. Some businesses started with only the owner working in the business; however, as time goes by he or she may employ another person to help with the day-to-day running of the business. A business owner needs to get enough insurance to cover for any future loses. Future loses may come in the forms of fire or any acts of God such as floods, hurricane or earthquake. To cover any thing to do with insurance, it is wise to seek the advice of an insurance agent. When starting a business, the financial aspects of the business dealt clearly with. As the saying goes, “you must first count the cost before putting your hand to the plough.” Every prospective entrepreneur before starting a business must first take time to consider how much to finance the business. The first thing to consider when financing a business is what your assets are and whether you have the ready cash to start your business. When starting your business you need to construct your capital equipment and supply list; however, this all depends on the type of business you are looking to go into. Some businesses do not need heavy equipment and this will lessen the cost of starting a business. A balance sheet is important to invest one’s time in. A balance sheet is a financial statement that summarizes a company’s assets, liabilities and shareholder’s equity. If you do not understand accounting principles, you can always employ a qualified accountant to assist with the accounts of the business. For the owner of a business to analyze the performance of the business correctly it is best to use a break-even analysis. A break-even analysis is a technique that is widely used by production management and management accounts. A business may make neither a profit or lose; hence, it is the break-even point. In order to arrive at a break-even point it is best to use a chart known as the break-even chart. The break-even chart is a graphical representation of costs at various levels of activity in the business. For the success of a business, it is important that every business owner understand its break-even point. To also keep track of the business, a profit and lose statement is necessary. What is a profit and lose statement? A profit and lose statement is a company’s financial statement that indicates how the revenue, (that is money received from the sale of products and services before expenses are taken out) is treated. A financial statement is also known as an income statement that gives operating results for a specific period. Entrepreneurs must have a vision of where the business will be in the future and so a three-year summary looked at stating where they expect the business to be at in those three years. When doing a summary of where the business should be in a given period, it is best to make monthly details. Some business owners however do this on a quarterly, semiannually or annually. When looking to start your business you must make a decision whether your business will be a sole proprietorship, partnership or a limited liability corporation. The type of business that you start will determine which kind of income tax you are required to file. According to the Federal Government, there are four main business taxes to pay. These are namely, income tax, self-employment tax, taxes for employers and excise taxes. In order to run a successful business it is best to get business assistance training. Some business assistance training and counseling are free while others you may have to pay. Business assistance training skill provides you with the know how to make out a business plan, securing financing to expand and relocate your business as well as other necessary training that might be needed. Choosing a location for your business is very vital. To choose a suitable location for your business you may have to do a feasibility study in your area. A feasibility study will make you aware of how many businesses in a particular area are offering the same service that you will be giving to the public. It also makes you aware of what public preferences are. It is best not to conduct an unregistered business as this may prove to be a problem later. To register your business name you must do so with your state government. After registering your business name with your state government, you must apply for a tax identification number. However, to do this you must learn which tax identification number you’ll need to obtain from the IRS and your state revenue agency. Register with your state to obtain a tax identification number, workers compensation, unemployment and disability insurance. Before starting your business, you must obtain business license and permits. You may do this by getting a list of federal, state and local licenses that is required for your business. Understanding employer responsibilities are legal steps you may need to take to hire employees. This is where you need to consult a qualified attorney to get the job done. Not only will an attorney help you with understanding employer responsibilities, but also he or she is able to assist you with setting up the legal aspects of your business. Owning your own business may prove good for you, especially in times of unemployment. You may just find that it is the best decision you have ever made. Works Cited Armstrong, Brian, “46 Ways to Start a Business with no Money.” 16, May 2008, web: www.startbreakingfree.com/273/46-ways-to-start-a-business-with-no-money. Attard, Janet, “Where to get Money to Start a Business: 12 Sources of Startup Funds for Small Businesses.” 2011, www.businessknowhow.com/money/startup-money.html. Jin. “How to Start a Business.” 14 June 2007. www.start-business.jinjinblog.com/2007/06/how-to-start-a-business.html Read More