The Top Ten FAQs About
Starting a Business
Answers to the Top Ten
questions of many Entrepreneurial
Parents wanting to start their first home
by Terri Lonier
1. If I want
to start a small business, what should I do first?
Starting a small business is
like putting together a jigsaw puzzle. You're facing a pile of
scattered pieces and it may be a little overwhelming where to
I've found that the best place
to start is to figure out the frame, or the border. (Remember
looking for those corner pieces and the ones with flat sides?)
Begin by taking a look inside yourself: at your talents, abilities,
interests, and personal motivations. It's important to be clear
about why you want to start a business, and what "success"
would mean to you.
For some, it may be matching
the income level at a former job. Others may want more control
over their work, or time to spend with young children at home.
These core values give you the frame into which you can figure
out where to place all the other pieces.
2. How do
I choose the right business?
Most small businesses are a reflection
of the personalities of their owners. Here's a checklist to help
- Make an objective list of your
talents and abilities. Ask friends and family what they think
you're good at doing.
- List the activities you enjoyed
as a child. This often will point to natural abilities, and can
translate into business ideas.
- How would you spend a "perfect"
day? The answers will help you understand your interests and
- Listen "between the lines"
to what your friends and colleagues are saying they want or need.
Their comments may inspire you to start a new service.
- Put on a new pair of "glasses"
and see potential business opportunities all around you. Many
exciting businesses didn't even exist a few years ago!
Remember, a good idea doesn't
automatically translate into a successful business. There must
be a market willing to pay for your product or service.
3. Do I need
a business degree to start a company?
While many successful small business
owners never took a business course in school, all will admit
they've learned a lot about business along the way.
These entrepreneurs know that
there are two very different abilities needed for business success:
1) You must be skilled in your
field; whether it's carpentry, selling, cooking, designing, computer
2) You also must be able to master
"the business of running a business." This includes
being able to manage time, projects, people, and money.
Fortunately, there are many ways
to improve your business skills. Consider:
- Taking a class at a local community
- Subscribing to business magazines
- Reading business books
- Checking out the resources offered
by the SBA (Small Business Administration) in your area
- Browsing online business sites
(the SBA's site is a great starting point, www.sba.gov)
- Asking small business owners
in your area what they wish they'd known when they started!
4. Do I have
to write a business plan?
A business plan is an important
document for any size business. Like a road map, it helps you
decide where you want to go and the best way to get there.
Unfortunately, business plans
have a bad reputation, mostly for being long and boring and incredibly
difficult to create. In truth, a business plan for a small company
can be as simple as six to eight pages, presenting an overview
of your business ideas and strategies.
Here are seven components to
include in your simplified business plan:
- 1. State your purpose
- 2. Describe the business
- 3. Define your market
- 4. Explain your production/delivery
- 5. List staff, suppliers, and
- 6. Chart your timetable
- 7. Calculate your finances
Keep in mind that a business
plan is an "organic" document. Refer to it often, update
it as needed (after all, it's on your computer, right?), and
use it to chart your progress.
5. What about
It's true, starting a business
does take some money. But I've seen very successful businesses
launched from back bedrooms, with an ironing board as the desk!
First, be clear about how much
money you'll need. (This is where your business plan is crucial.)
Most small businesses are started with personal funds from savings,
a company buy-out/retirement lump sum, or a loan from family
members. Some people take part-time jobs so that they'll have
a steady source of income while their business gets going. Be
creative in exploring funding sources.
If your business requires greater
funding, talk to your banker about options such as a credit line
or a home equity loan (if applicable). There are also government
programs to assist entrepreneurs. Before lending any money, a
banker will want to know how much you'll need, what you'll use
it for, and how you'll pay it back.
6. What kind
of equipment will I need?
These days, technology enables
even one-person businesses to compete with companies many times
their size. Here's a list of office equipment found in most small
- Printer (many prefer laser printers
for the professional image they create for marketing materials,
- Fax machine (some entrepreneurs
use a fax/modem with their computer, but this requires that your
computer be on to send/receive faxes)
- Seperate telephone line for
business number (with voice mail, no call waiting beeps!)
- Separate telephone line for
- Internet connection (including
e-mail and web browsing capabilities)
Some businesses also invest in
multifunction machines, such as those that combine a printer,
fax, scanner, and copier in one unit.
In addition, your business may
require you to invest in other specialized equipment or tools.
Be sure to include these purchases in your budget when you're
planning your business.
I start a business in my home, or in a rented office space?
Home-based businesses are the
choice of millions of small business owners because they offer
low-cost office space, as well as giving you the freedom and
flexibility to structure your work days as you want. You can
also enjoy what I call "the 10-second commute!"
Some businesses may not be appropriate
for home environments, however. If you're operating dangerous
equipment or doing things that conflict with residential zoning
laws, you'll have to locate your business elsewhere. Also, if
you'll have numerous employees, or customers visiting your premises,
your neighbors may feel you're violating the residential character
of the neighborhood. A discreet check of your local zoning laws
is a smart move.
Some small businesses set up
shop in "incubators," which are low-cost shared office
complexes, often underwritten by government funds. Others swap
space for bartered services. And today, some small businesses
operate a "virtual" company and have no office space
at all, have laptop and phone access, will travel!
8. What about
When you're working on your own,
there's no such thing as a paid sick day, and health insurance
is one of the biggest challenges facing small business owners.
Fortunately, there's power in
numbers, and many small business associations have sprung up
that offer group health insurance policies. Or, check out the
associations in your particular field or profession. Closer to
home, your local Chamber of Commerce may offer a group plan.
If you're currently employed,
see what options are available to continue your coverage after
you leave. Many firms will let you continue paying premiums for
a few months until you find another plan.
When shopping for insurance,
be sure you compare policies and coverage on an equal basis,
including deductibles, maximum coverage limits, or services not
Asking other small business owners
in your profession or geographic area is another good way to
locate the best health insurance provider for your business.
I start a business with a friend or family member?
Since starting a business can
be a scary proposition, many individuals decide to team up. Partnerships
can be a beneficial arrangement. You can divide the work, the
costs, the ups, and the downs. You can split the risks and share
Since starting a business can
be a scary proposition, many indiStrong partnerships are based
on trust and clear communication. The old saying, "Put it
in writing," is true! Don't jeopardize your relationship,
or your business, by not clearly stating your arrangement.
A written agreement also helps
clarify individual strengths, weaknesses, and interests. For
example, let the math whiz keep the books, while the gregarious
one handles the customers.
Your agreement should also include
an exit strategy -- what to do when one or both of you decide
you want out. While it may seem grim to think of this in the
excitement of starting your company, it can be crucial to the
survival of the business later on.
the biggest mistakes that new business owners make?
In my experience, I've seen three
1) Being too timid (or arrogant!)
to ask for help. Reach
out and network with other small business owners. You'll be surprised
at how similar your challenges are. Ask, ask, ask. This is one
area where ignorance is NOT bliss.
2) Underestimating financial
needs, particularly cash flow. Cash
flow. the amount of money coming in and going out of your firm
on a monthly basis, is the oil in the engine of your business
machine. Without it, your business will grind to a halt. Be sure
you have a solid understanding of the best and worst-case scenarios
for your company, and plans on how to handle both.
3) Not realizing that marketing
is an ongoing, relentless activity. To grow your business, you must serve ongoing customers
- © 1997-2000 Terri Lonier, all rights reserved. The above article
is excerpted from Working
Lonier (© 1998, second edition, published by John Wiley
& Sons, all rights reserved.). For
reprint permission contact Working Solo, Inc. at [email protected],
or 1 (800) 222-SOLO.