I Think Everyone Should Be In Business For Themselves

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• Tags: business, Debt, employee, entrepreneur, Entrepreneurship, self-employment, small business

I think everyone should at one time or another own and run a small business.  I co-founded and ran a company that provided outsourced technology services to other small businesses.  I was a managing partner of this company for about 8 years.  It was a great experience.  It gave me insights that I believe are very useful now in several areas of my life.  The company is still in business today, but I have moved on.

Small business is the backbone of the American economy.

According to the U.S. Small Business Administration, businesses with fewer than 500 employees make up 99.7 percent of all employer firms.  They generate 60 to 80 percent of all the new jobs and produce 13 times more patents per employee than large firms.  This is all pretty impressive especially when you consider that over half of all businesses in this category are home-based.  Entrepreneurs are vital to the U.S. economy.  If you start a business, then you are being a good citizen.  What a bonus!

Owning a business is as American as apple pie.  I think that it is fantastic that anyone in the U.S. can decide today that they want to be in business for themselves and presto they are.  Whatever it is that you do, in most cases, you could be doing it for yourself.  There are pros and cons of self-employment, but it is an experience that I think everyone should have.  I grew up around it and I can’t imagine going through life without having done it myself.

Let’s assume that you want to start your own business.

Pull up a chair, sit down, and let’s talk about it.  You ask, “As a former business owner, what advice do you have for me?”  Well, I believe there is money to be made if you do it correctly.  As with almost everything in life, there is a right way and a wrong way to do this.  I do not claim to know everything about starting and running a small business.  In fact, I highly recommend getting professional assistance.  However, based on my experience from the first time, I do have some thoughts that might help.  You can probably find this same advice elsewhere, but since you asked, here’s what I would recommend.

Get the advice of other small business owners.

First, I recommend that you talk to every entrepreneur that you can to find out what worked for them and what didn’t prior to striking out on your own.  In addition to helping you avoid mistakes on the front-end, this is a great way to build a network of other like-minded people that you can call upon for advice once you get the company started.  Even though your company may be a one-person shop when you start out, it is never good to be all alone in business.  Most business owners love talking about their experiences and are usually very helpful to others.  This is a great way to learn from other’s successes and mistakes.  In addition, you might discover a great source of referrals or a new customer along the way!

I remember talking with several business owners to get their opinion on what type of entity to create because I wasn’t clear on whether to form an S Corporation or an LLC.  I also asked around to find out if anyone knew a good accountant.  Of course, whatever advice you get you should always corroborate it with multiple sources prior to acting.  This can save you time, money, and grief.

Find a squeaky clean accountant to keep you out of trouble.

I think this was one of the best business decisions that I ever made.  I engaged a CPA to help me get my business up and running from the start.  I cannot emphasize this one enough.  I have heard too many horror stories about small business owners that get in  trouble with the IRS or another government entity.  A good accountant can avoid these pitfalls and will represent you should you ever need to answer any IRS inquiries.  I hired a Certified Public Accountant that specialized in small business.  It was not that expensive.  In fact, it was less that I thought it would be and worth the peace of mind.  The accountant did all my invoicing, payroll, and produced financial statements.  This freed me up to concentrate on the core of the business.

Start small, be frugal and avoid debt.

Avoid multi-level marketing gimmicks and getting in too deep right off the bat.  You can usually make more money by going into business in an area where you already have expertise and can provide a valuable service to others.  I’d suggest getting started while you still have full-time employment.  This will help you to test the waters and work the kinks out before you jump off into the deep end. 

Once you get things up and running, only buy what you absolutely need to get started.  You have to be very conservative as a small business owner.  I recommend avoiding debt and credit cards if at all possible.  I was in the service business so I did not have to buy inventory.  This made it much easier for me to avoid debt initially.  It is very easy to overextend yourself and then get behind.  This may lead to even more debt which can quickly lead to a death spiral.  Always ask yourself if the item you are about to purchase will contribute directly to the bottom line.  If it does not, then you should probably wait.  I made the mistake once of leasing office space.  It increased my overhead tremendously and was really more of a luxury than a necessity.

Open a separate checking account just for the business and do a budget.

No matter how small your operation is you need to open a dedicated bank account for the business that is totally separate from your personal account.  I would also strongly suggest that you create a budget so you can adequately control your money.  Any competent accountant will advise you to do these things as well.  Think of it this way, if you were managing this business for a silent owner that you only met with quarterly, how would you set things up?  You would want everything to be easy to track and explain when the time came.  Use this when setting up your business and it will save you grief down the road.  Deposit all the income from your business and pay all business related expenses from this separate account.  Whatever is left over is your profit.  This keeps everything nice and clear.

Incorporate to protect your personal assets.

Again, I have no professional expertise in the law so I recommend you discuss your particular situation with competent professionals.  In my situation, I was advised by professionals to form a corporation because it would limit my liability.  Specifically, I formed a Subchapter S Corporation.  It is my understanding that if you do not incorporate and operate instead as a sole proprietorship, then you are fully liable for the business and your personal assets are at risk should you ever default on any debt or lose a lawsuit.  You should check into this yourself.  Consult your accountant and possibly a lawyer.

Customer service is priority one!

Serving your customer is your business.  No matter what it is that you do, whether it is cleaning houses, building computer networks, laying tile, selling insurance, or doing people’s taxes, your real business is keeping your customer happy.  Without customers, you have no income and therefore no business.  In my opinion, the best way to do this is to set your client’s expectations up front and then exceed those expectations.  If you tell your client that you will be there at 8 a.m. to start the job, then be sitting in their driveway at ten till.  If you told them that you would have the job finished by Friday, then finish it on Thursday and let them know you are done.  Do a little more than what you promised to do and your customer will be impressed.  It never ceases to amaze me how so many small business owners don’t get this.  They tell you one thing and set your expectations for that and then something completely different.  This leads to disappointment and complaints.  Always, always, always set and exceed your customer’s expectations!

It was nice having this chat.

Well, thanks for asking my advice.  I hope I have told you something that will help.  I wish you all the success in the world as a small business owner.  It is a great adventure and something everyone should try.  If you have more questions, please feel free to ask.  My door is always open and I enjoy helping others!

Photos by Djenan and numberstumper and RW PhotoBug