You have a dream. You have motivation. Hopefully, you have some money. That’s not enough to start a small business, though. You’ll need to take these six logistical steps before striking out on your own. Ellen Thrasher, director of the U.S. Small Business Administration’s office of entrepreneurship education, explains what to do next.
1. Be Painfully Honest About Your Venture “The most important thing is to be candid with yourself,” Thrasher says. “Are you the right person at the right time to make this business successful? If you have passion, can sustain risk, and can create a vision—then the rest will fall into place.” Thrasher recommends asking yourself these 20 questions to evaluate your readiness.
2. Recruit the right mentor. Many people don’t realize that advice is available through the SBA for a variety of scenarios. For example, the SCORE mentorship program offers free, confidential counseling for potential owners through a nationwide network of executives and trained volunteers who have run their own businesses. Most sessions last one to three hours in person or online, and you can return as often as needed. Their Small Business Development Centers offer help writing business plans, conducting market research, dealing with lenders, and more.
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3. Find the best spot. Thrasher says that many businesses flounder because their owners failed to do proper location scouting. This means evaluating nearby competition, ensuring that the area is safe and open to growth, and that it’s convenient for commuting, should you plan to hire employees. Check out these considerations before deciding on a venue.
4. Borrow smart. Finances are key. No surprise there. Be aware that the SBA has many lending programs, from general small business loans to programs geared toward equipment, real estate, or not-for-profit businesses.
5. Visit an accountant and an attorney. You’ll need to understand whether and how you should incorporate, how to structure your business (sole proprietorship, limited liability company, S corporation, partnership, etc.), and what kinds of taxes you’ll have to pay.
6. Get down to the nitty-gritty. Choose a business name, obtain proper licenses and permits—which vary by state and also by type of business—and get a federal tax identification number (your tax obligations differ state to state too).
Most of all, says Thrasher, “You don’t want a technical misstep to derail your dream. At the SBA, we’ll give you a candid assessment of your readiness.” Visit the Learning Center to kick off your planning.
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