Small Business, What You Need to Know First

I'm sure everyone has thought at one time in their lives, how nice it would be to work for yourself and not someone else. You put in long hours of hard work only to bring home a less than satisfactory paycheque. You are only working to make someone else rich. Wouldn't it be nice to work for yourself and make yourself rich? Maybe you've been thinking about starting up your own business for quite some time now.

In starting up a small business, some would suggest that you "think big". To think big is to imply that you intend for your business to expand and be nothing less than a huge success. However, often times some will make the mistake of thinking too big, too quickly and will inevitably fail. They may make the mistake of either over-producing their product or borrowing too much money for start up operations. This can sometimes get the small business owner into a lot of trouble. It may be to your best interest to first draw up a formal business plan so that you have an idea of where and how to start, which options might best suit your company and how to avoid any pitfalls along the way. A well laid out plan can start you on the right path.

As well, if you will be depending on a bank loan to get you started, they will most definitely be expecting to view your business plan before lending you the money, so be sure to have one ready.

Below are some methods and ideas that may be beneficial to first consider before starting up your company:

* First of all, be sure that you are entering a business plan that will hold your interest for years to come. There is a lot of work and effort involved when embarking on a new business venture. You have to live, eat and breathe your new venture during its conception phase and well after, so be sure it will hold your interest for years into the future. To quit in mid-stream, should you later find that this isn't exactly how you want to spend the next ten or twenty years of your life, would be a great waste of your time, energy and money.

* Be sure that there is a market for your product or service. Doing a lot of research well in advance will give you a better idea if this is the venture you want to pursue, or if it is worth pursuing at all. For instance, if you are thinking of opening a flower or gift shop, or starting up a construction or other service company, consider whether your community has a need for such an operation. If there is already too much competition in your area or little interest, a low profit margin may prove to be discouraging even before you get your own company off the ground.

* Consider the amount of time that you will have to put into actually operating your business. Running your own company is definitely not a 9 to 5 job. Being the company owner will often mean that you will be putting in double time. Are you up for the challenge?

* Don't get in over your head. Often, it is too tempting to go all out, purchasing all the latest and newest available equipment and supplies, or even possibly a new company vehicle or a storefront in a prime location. These can greatly add to your expenses and reduce your expected profits. Sometimes one can be a success by starting out small and gradually, or with used or re-conditioned equipment. Then as the business shows a progressive upswing, newer and better can be added later.

* Understand all of the expenditures your business will entail. Too often people will mentally add up what they think they can earn, giving them overly optimistic expectations. However, they give little thought to the costs incurred in actually running a business. You are entering the world of business, not only to put money back into the company for future growth purposes, but also as your own personal income. Be sure your business income allows for both expenses, that of your company (including paying off loans owing if money was borrowed) and of your personal day to day expenses. Draw up budgets for both so you know where you stand financially.

Now that you have decided on what your business venture will be and have considered all the pros and cons. And you still want to embark on the challenge, a few more things to look at are:

* Find a good, reputable accountant, which of course, adds to your business expenses as well. You may do fine on your own in adding up your expense receipts and the money you are bringing in, but an accountant is better informed on what portions you can keep for yourself, and what portions the government will expect to get. An accountant will keep you in good standing with both local and federal governments, making sure that everyone gets their fair percentages.

* Know in advance if you will be employing others in your company. You will need to be knowledgeable in making out payrolls, which includes hourly wages, holiday pay, pension plans, income tax deductions (both federal and provincial or state), unemployment insurance and possibly a health insurance plan.

* Other business expenses, off the top, that you will mostly likely need to consider obtaining are, a city license, corporation fees (if you intend on incorporating your business), workers' compensation. You will also need to obtain a federal government business number, which allows the government to keep track of you and your company. Advertising is yet another expense to consider.

Above all, be patient. Don't expect to become a millionaire the first year of operation. "Get rich quick" companies are very few and far between. It often takes the average business several years for the income to surpass the outgoing expenses. It takes years and a lot of hard work and perseverance for your business to gain recognition and a good reputation within your community. Once you have established yourself, and your business, within and around your community, you should be well on your way to being a success.