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Wednesday, January 28, 2015

10 Things To Consider Before Taking The Plunge From Employee To Entrepreneur

If becoming an entrepreneur crossed your mind, you may have wondered; what does it really take? So you are currently in a job or may not have one. Yet the thought of starting a business to support your family or just to make extra money seems like a good idea. One small problem: you have never been an entrepreneur. The word entrepreneur or business owner might illicit fear, if not dread. Maybe this stems from being trained to work for money as an employee in someone else's company. However, this should not stop you from providing a useful service or product. The best way to overcome your fear is through knowledge. The more you know about taking the plunge into your business venture, the better chance you will have of succeeding. Below is a list of a few things that an employee needs to consider before diving in head first into their own business:

1. Why are you starting this business?
What is your "why" for starting your own business? If you are in it just for the money, you will find that you will get very despondent quickly. It takes a lot to start and run a business. There are many challenges to face in starting this new venture that may quickly test your will. In the beginning you may wear many hats such as CEO, general manager, accountant, computer technician, sales person, secretary, etc. The different skills needed for each of these may not come easy for you. The good news is you can get help from people you know or hire someone to cover these. The aim here is to have a strong enough why to keep you going when you feel challenged. Write your "why" and read it daily. This will ensure you have enough steam to keep going when the going gets tough.

2. What is your product or service and how good is it?
Your service may be cutting lawns or selling pizza (a family recipe). The thing that will stand out is how good you are at what you do. Using the example of a landscaping company: Are you friendly, reliable and competent compared to other landscapers servicing that area? Think about adding a discount on a six month contract for cutting their lawn as an extra. Using the example of selling pizza: How does your pizza taste compared to similar pizza sold in the area? If your product or service is similar add value to your service, maybe offer free delivery during the week.

3. Who are you offering your product and services to?
This may seem like an odd question, people would be your answer. However, what do these people have in common and what do they want? The sooner you can answer these questions the better you will be able to serve them. FedEx, for example, offers fast, reliable overnight shipping. When FedEx first opened, USPS was already delivering packages. However FedEx figured out that businesses needed faster delivery to keep their businesses going. FedEx met the needs of other business owners.

4. How will you show what you have to offer?
If this sounds like marketing, then it is. Don't be scared of the word marketing. Marketing can be considered as a way to show your costumers what you have to offer. Then consider what method you will use to communicate that message to them. The internet has created a whole slew of ways to market for free: Facebook, twitter, LinkedIn and others are examples you can use as leverage for free. Or you may want to go the traditional route of word of mouth, ads in the newspapers or flyers. Another option could be hiring someone to do it all for you. Starting a business also means letting others know how to find what you have to offer.

5. Where will you exchange your goods and or services?
Depending on whether you offer a service or a product you may have operating costs or very little. If you sell a product only online there may be no need for an actual physical location in addition to your garage. However, take for example, an education consultant. He or she may visit his or her clients in person or have an office. Either one will generate a cost associated to conduct business; one may be less than the other. Travelling may cost the consultant time and money in transportation, this possibly limiting how many clients he or she can see in a day. When compared to having an office, the rental cost may be unaffordable in the beginning. It all boils down to how your costumers will get your product or service.

6. Do you have all the supplies you need and how will you acquire the supplies?
In addition to location, do you have the tools to do the job? Example: Let's say your new business involves selling hand-made jewelry. You decided you can do this from home. Your list consists of strings, beads, storage containers for you supplies and finished products, etc. After listing these items, you may find a local hobby store that is both conveniently located and reasonably priced.

7. How will you get paid?
Consider your method of payment from your clients. Setting up a merchant account and getting equipment are important in your store front or you can take only cash and checks. If you are an online only business you may set up a merchant account like PayPal. The more payment options you have available the better it will be for your costumers.

8. How will you set up your small business?
Registering your business is a very important part. You can choose to operate as a sole-proprietor, limited liability corporation, limited partnership, etc. The important thing is to remember to file the necessary paperwork with the federal, state and county where applicable. As a business owner you are now responsible for paying your taxes. You are now the employer of yourself and anyone else hired. In addition you wouldn't want to miss out on the tax benefits of owning your own business. The best way to set up your business is to seek professional advice from your lawyer and accountant. Or you can get assistance from legalzoom.com, Score, or the US Small Business Administration.

9. What will your total start up cost be?
Having answered the questions previous questions, you are now better able to answer this one. Your businesses start up costs maybe small or large. Example: a freelance writer may have a much smaller start up cost than starting a pizza restaurant. Knowing what your numbers are allows you to be better equipped to start. If leaving your job to start your own company is your choice, knowing this number will tell you where you need to be. The aim is to be best prepared for the success of your new venture.

10. Where will you get your funding?
Will your 401k, savings account, or trust fund provide the funding to start your company? Or will you need a loan? Answering question number nine truthfully will help you answer this one. It maybe you want to start with your savings or borrow the money from a friend or relative. They may be able to give you a much lower interest rate than the bank. Or you can opt for a business credit card. Or grow your business as you make more profit. There are many options available if you do need it.

Starting your own business boils down to your mindset. Entrepreneurs know that in order to be successful, they have to think success. Their success is directly proportional to how creative, resourceful, and imaginative they can be. In the beginning, you are jack of all trades. However, none of this should stop you. Remember, the more you know, the better equipped you are to succeed. And if you aren't sure of something, always seek professional advice. Prepare to succeed and keeping providing the best product and services you can.

Lily Wong is a life and business coaching helping new entrepreneurs develop the mindset and tools to go from employee to self-employed. Please visit http://www.lilywongcoaching.com for more assistance.

By Lily E Wong

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