What does it take to start a small business?
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America has a wonderful entrepreneurial culture. A lot of people (myself included) would love to throw off the shackles of The Man and start their own businesses. For myself, it’s more a matter of time and credentials. For many others, it’s about the cash. So, how much does it take to stick your thumb in The Man’s eye?
A Wells Fargo study found the average startup costs to be $10,000 for a small business. 73% of startups were primarily funded by the entrepreneur. 53% of small business owners stated that had they had more money from the outset things would have been easier (well, duh). One of the main problems with getting funding is building a business plan.
The study found that only 31% of the startups had a business plan from the beginning. That’s not good. A plan is a necessary part of starting a business. It’s the only real way to know if you are on the right track. 39% said they would have had an easier time had they understood basic financial management a little bit better before starting their businesses.
So, the key to building a small business appears to be having money and a mentor. But that’s not all it takes (or does it necessarily take those items). One is understanding the market you are going into and your worth in it. Is the marketplace crowded with competitors? How do you make yourself stand above the rest? How much will/can you charge?
Another is understanding how much money you will truly have to make to continue. You’ll need much more than your current salary because you’ll have expenses, pay higher taxes, and need health insurance if you already get it from work.
The last, and most important part, is understanding yourself. You’ll have to be a salesman whether you like it or not (unless your dream is playing poker). You will have to sell yourself and/or your product to people that might not want or need it. If you are unwilling to do so, being an entrepreneur is probably not the best choice for you.