In a day and age where the economy seems to go up one minute and then head south the next, why on earth would you want to quit your job to start a small business?

For some folks, the answer to that question is the desire to become their own boss. But becoming your own boss in 2012 is a risky proposition, especially given how fragile the economy has been. Just when the job market was starting to pick up and unemployment was slowly falling, a spike in gas prices has tempered that good feeling for many.

If you find yourself with the desire to forgo your given salary at work and strike out on your own, weigh the pros and cons of such a move.

On the positive side:

• You have freedom to make decisions and do not have to answer to anyone other than yourself;

• You set your own hours, although expect in most cases to work more hours now than you did under someone else;

• You have the ability to have an unlimited income as opposed to having a set salary under someone else.

On the challenging side:

• You are making all the decisions and the ability to consult with co-workers and get their advice is removed;

• If you are not disciplined, you could find it hard to put in the necessary time commitment for the job, especially with a family involved;

• In the event your business takes a while to get going, what are you going to do for a regular source of income? If the decision is to start a new business, do you have the business plan up and running? If the answer is no, this can be your first and biggest hurdle to climb.

Putting a Business Plan in Place

One of the biggest mistakes start-ups make is not having a well thought out business plan in place. Remember, starting your own business is not something you just dive into.

Prior to writing a business plan, be sure to research your market and compile up to date industry data. If you’re unsure about how to write the business plan, take note that there are a variety of business plan software packages available to new entrepreneurs. Many of the packages offer document templates, sample plans at no charge, along with advice on conceiving a plan.

As you put your business plan together, don’t be afraid to ask for advice from family or friends who run their own companies.

Once the plan is completed, make sure that a friend or family member/s reviews it to look for any holes or unanswered questions. In the event you are going to require a small business loan to get things up and running, you will likely be required to produce a formal business plan that speaks to your needs.

Finally, determine if your writing skills are up to the challenge, as the last thing you want is turning in a plan that is riddled with grammar issues, etc. If you will require financial information that is either above your abilities or unavailable to you, consider working with a certified public accountant.

With a business plan in tow, the necessary funding (if required), and support from your loved ones, you could very easily make your own business the centerpiece of your life.

Remember, your dreams and hopes that may not have been achieved under someone else could now be for the taking.

Dave Thomas writes extensively for Business.com, an online resource destination for businesses of all sizes to research, find, and compare the products and services they need to run their businesses.

Views: 179

Comment by Sandra McCartt on March 2, 2012 at 1:34pm
Dave, a CPA is known as a Certified Public Accountant meaning he or she is licensed to represent the public and act as their agent with the IRS if needed. To my knowledge there is no such thing as a "Certified Professional Accountant".
Comment by Dave Thomas on March 2, 2012 at 1:49pm

Sandra,
Thanks for the catch, updated it. :)

Comment by Sandra McCartt on March 2, 2012 at 2:14pm
Anyone starting their own business should consult an attorney and or a CPA first to determine the best way to structure their business. There are advantages to being an 1120c corp, an LLC, partnership or operating as an individual with under a DBA. The biggest wrecks that people get into is getting advice from their family and friends. Even if they own their own business, each person is in a different financial situation or a different type of business. It takes an experienced professional to evaluate each situation , then discuss, tax and reporting requirements and recommend the best organizal format.

Advising a new entrepreneur to rely on friends and family is right up there with advising people to only go to the doc if their friends and family can't diagnose what is wrong with them. Attorneys and CPA are well worth paying for help with a business plan. They are not only trained and experienced with writing business plans but due to their experience assisting clients start businesses they often have relationships with banks or the SBA and can quickly prepare a financial statement in the format they know a lender requires. Anyone borrowing money will be required to provide a financial statement as well as a business plan and many times the CPA or attorney will go with a client to meet with a lender to assist with any questions the lender may have. Many lenders will ask for a projection of revenue and expenses and will rely more strongly on what the CPA or attorney projects than on what an excited new business owner thinks he can make or what his overhead and tax position will be.

Unless a person has family or friends who are bankers, attorneys, or CPAs listening to uncle Fred who knows all about it because he started his own successful bicycle shop is a recipe for disaster, unless you are starting a bicycle shop.

Everyone should also consult an insurance agent after they know their business format. Insurance is not only a vital need it is a significant business expense. There may also be licensing requirements both city and state that are applicable to some industries and not others.

Your post touches on a few things that people need to consider but I think advising anyone to rely on family and friends leaves out an important need to consult a professional as the first step.
Comment by Dave Thomas on March 2, 2012 at 2:24pm

Sandra,
No doubt consulting a professional is definitely advisable.... Having worked in the insurance arena for a number of years, too many start-ups forget about such needs. That first client who comes to your office and falls on the ice leading up the steps to your door may be the one that puts your small biz in a financial hole with a lawsuit should you not have the proper insurance in place. The ton of layoffs in recent years has definitely opened the doors for some people to go into business for themselves. While some have found their calling, it certainly isn't for everyone.

Comment by Sandra McCartt on March 2, 2012 at 2:41pm
In our business errors and omissions coverage is also important, as you know many landlords require a business to carry a general liabilit policy as do some clients if they are a Government entity. If someone is planning to work from home it is also advisable that they check any zoning regs if they plan to even put a sign under the mailbox or will be having candidates come to a home office.

Failing on borrowed money due to overestimating has been the ruin of many a poor recruiter.
Comment by Dave Thomas on March 2, 2012 at 2:46pm

Very well said. Unfortunately, insurance needs sometimes get pushed to the back burner when it comes to small businesses. As for zoning regs, I worked and lived in a community here in California for years that would cite business owners if their signs were too big, placed in the wrong areas, etc. Much to do as a small business owner other than the everyday run of business.

Comment by Sandra McCartt on March 2, 2012 at 3:39pm
That's why they pay us the big bucks. Administriva and sweating payroll does not generate revenue.

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