How To Get Started In Your Business
Let's face it, starting your own business is no small task. People think owning their own business will make them rich and in control. On the contrary, owning your own business will be the hardest thing you've ever done. A business owner must be able to wear all the hats of the business, including taking out the trash and answering the phone. Being self-employed takes dedication and the desire to succeed. If you think you can get investors to give you tons of money and think you'll just hire people to run your business for you, you're sadly mistaken.
Most business owners start off with little or no money. You may be able to get a loan or investors, but be very careful when using someone else's money. A typical bank loan is the safest way to get your business up and running, but be prepared to put up collateral such as your car or even your home. I was able to get a loan for $10,000 to buy my computer equipment and use the equipment as collateral against the loan.
Now let's talk about investors. Anytime you bring in outside money, be prepared for someone else to want to be in charge. Remember that you're using their money to get started, and the investor will expect a portion of the business through ownership and/or control. Make sure you're incorporated at this point. Never start a partnership, especially when there is an outside investor involved. Keep in mind that its a good idea to have a business plan before looking to get money from investors or the bank.
Let's say that you have all the money you need and you're ready to begin. You should first start a business plan and determine your goals over the next 3 to 5 years. Include how much money it will cost you, including employees, insurance, rent, etc... Make sure you include all of the goals of your company and how much money you expect to make and how you plan to make it. A business plan is a good way to have your goals laid out in front of you and help make your business more successful.
Corporation or Sole Proprietorship
After you've determined what you plan to do, you should decide if you plan to make your company into a corporation or a sole proprietorship. If your business consists of more than you as the owner, my suggestion is to get incorporated. If you're incorporated -- you can better protect yourself from the other partners, taxes and lawsuits. Consult with your CPA and corporate attorney to determine the best type of corporation for you and your partners.
A sole proprietorship is the simplest way to operate a business. You pay fewer taxes and don't have the corporate hassles. It's also the least regulated business, but you're at greater risk. For example, when you're a sole proprietor, you're personally responsible for all business debt and damages from lawsuits. If someone sues you and they win, they could take your personal assets. If you're incorporated, there are corporate laws to protect you as the owner and shareholders of your company. Be careful when deciding which direction you want to go. I started off as a sole proprietor, but I wanted to see if I was going to be successful first before I spent the money to get incorporated. Always look at your risks and consult a professional CPA before attempting to decide which road you need to follow for your company.
Choosing a company name
As for a name, you need to think about what is going to catch the attention of people. Try not to use your name. The reasoning behind this is if the business fails, your name could go down with it. Also, your name conveys what you do. Be creative with your name, so that at first glance, it catches people's attention and lets them know immediately what your company does.
Getting a DBA
When you have decided on a name, go down to your County Clerk's office and check to see if your name has been taken. Keep in mind, you're only checking your county's records for the same name. If your name is being used in your county, then be prepared to choose another name. When you're sure your name is available, then you're ready to get a DBA (doing business as - "fictitious name" - If you're getting incorporated, you should check with your corporate attorney first before getting a DBA, you may not need to do this process). When you're at the County Clerks office, you can register for a State Tax number and a Federal ID number (EIN). If you're operating as a sole proprietor, then you can use your social security number instead of applying for a Federal ID number. I recommend that you apply for a Federal ID number (EIN), so your social security number is not open to those with whom you're doing business.
A good location for a graphic designer is not the same as what a retail location may consider. A retail location needs store front visibility to promote their products. If you have the opportunity and the cash flow to open a highly visible location, then I suggest you go for it. For most graphic designers, working out of their house has been the most economical and most feasible way to conduct business. If you operate out of your home, you can claim part of your rent/mortgage, utilities and phone on your taxes (consult with your CPA). The biggest disadvantage to working out of your home is having clients stop over. Most of the time, I meet my clients at restaurants or go to their location; this is the easiest way to conduct business myself.
Keep on working
Starting off in business takes up a lot of your time and money. If you plan to go full speed ahead with your company, then you should make sure there is plenty of money stored away in savings to support you. My suggestion is to continue to work full time and do freelance work after hours and on the weekends. Many people say that they don't have time to do this. Well, I say if you don't have time to do this to get started, then you won't have time to start your own business. Having your own business takes dedication and many hours of hard labor. You'll be putting in twice the time you would at your normal job. This is why I suggest to start off slow and build your client base. You'll then determine if you like what you're doing and who knows, maybe you'll land a big client that will enable you to quit your full time job.
A successful owner is a successful company!
Don't be afraid to jump into owning your own business. Keep a clear head and make smart decisions. Be careful about business partners and try to do as much on your own as you can. Having business partners and outside parties involved in your company can cause many problems. I lost thousands of dollars by trusting in bad business partners. Keep things simple and easy to manage. Don't start out trying to be the big dog in town, work at being the smarter dog -- they always win.
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