STARTING YOUR OWN BUSINESS
Congratulations! If you’ve come this far on the road to being self-employed! It's a trying decision to make, and, it may take months for you to make that decision, while you are reviewing the steps necessary to be on that road, and what you need to do to accomplish your goal. We advise our clients to do their “homework,” (shown below), before another penny is spent in the new venture.
Step 1
Self-Examination
When it comes to any given work environment, there are two types of persons who exist:
A. There are some who feel comfortable working for someone else. They don’t have to worry about the day-to-day decision-making processes involved in running a business. They feel comfortable simply doing what they are told to do, and they do it. They like the simplicity of an 8-hour day, and the knowledge that they have a given hourly wage, managing their day-to-day life based on what it is they get paid. Typically this type of individual enjoys their “weekends-off.”
B. The Classic “Work-a-Holic:” They work like crazy— days, nights, and even weekends. They get involved in many aspects of the business they are working for; managing business advancement, making critical decisions as to where their venture should be. Others are involved in all aspects of their business; from the highest level to the lowest. This is the type of person who typically will ask “how” to take care of a task, and when to do it. It’s a simple job, but requires a great deal of experience. Don’t be afraid of failure! Experience and positive results go hand in hand. Ask yourself, and be honest— which category do you belong to? A or B. Believe me, if you belong to category A, it would be very difficult to put yourself into category B and vise versa. In my estimation, this is what is most important: to enjoy what it is you do, and your life as well. Good job, if you have decided to become self-employed!
Step 2
You’ve decided to become self-employed. The next question you have to ask yourself is, “Do I the education needed or the required experience,” in the field Into which I am entering? If the answer is “YES,” skip the next sentence and go to NO. 1. If the answer is “NO,” please read the next sentence and think more:
In case you lack certain knowledge as to how to run your business, or where to buy your supplies, you will rely on someone who knows all these tasks. What if the person does not show up for work the next day? What would you do? What if a particular employee decides, without notice, to quit the next day? If these kinds of scenarios happen often, you’ll be out of business!
Solution
You may want to start working in the same field of business you are trying to enter in to, or, possibly you may wish to enhance your knowledge of your respective business by furthering your education. Additionally, you may wish to delegate your duties to others, (which, I my estimation, demonstrates good management skills) but you are still the one in charge. For example, the owner of a small restaurant may not utilize their skill-sets as “cook,” or “table-cleaner,” but one should know to cook, clean, and set up a table for customers. It can only help to be versed in ALL the various modules of your business.
Step 3
The following are some suggested steps you may wish to take before you dive into your new business venture, depending on whether you start your business from scratch, or purchase an existing business.
If you are starting your business from scratch, consult a professional business advisor first about structuring and planning your business, what you should and should not do. Mr. Rowshan, MBA will be happy to work with you on these and other matters of your new business.
1. You will need to draw up a “Business Forecast” model. To put it simply, we help you gather up “data” from “income,” and “expenses,” you may have over your first 12 months in business. “Expenses,” meaning advertising, rental insurance, phone and internet, and related expenses.
2. Your first few months in business, expect some negative cash flow. This is normal.
3. What kind of capital do you need to start your new business with? Capital for, let’s say, purchasing your business, purchasing merchandise, equipment, employees, employee insurance.
4. Schedule an appointment with Newport Business Consulting, so we may review your business, help you more refine your business model and add what we may deem necessary to build more success into what it is you do.
5. Get help in deleting or reclassifying various categories of your business.
6. If you are purchasing an existing business, expect your job to be a bit more difficult. Review the financial statements left you, i.e., bank statements, payroll reports and other tax-related reports. These reports should all be comparatively reviewed by an experienced accountant. Here are some other helpful tips:
• No matter how good the new business financials may appear, you’ll want to make it a point to visit the new business location and observe the business. Based on the business daily cash flow, how close does the cash (by the numbers) compare over the last two years?
• Is there any existing litigation against the business you desire to purchase, any outstanding liens from government agencies, any outstanding loans which are not included in the financials? Some of these you may wish to have an escrow officer review.
• Make sure there is escrow involved, and never pay any money to the seller unless absolutely necessary.
• Depending on the business module, take into account your competition in the surrounding area.
• Is the business advertising, and where are clients coming from?
• Does the business have a website, have an email and fax number they can transfer to you?
• What equipment is leased or purchased, and what are the terms and conditions of the the equipment?
• What is the business relationship to its landlord?
• And one more very important thought to consider: Your place of work should be close to your residence. Traveling each day, back and forth to your place of business can be tiresome, and can be a cause for your business to fail.
• And there are so many more.
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