Whether supplementing your income by selling skateboard parts on the Internet or pursuing a lifelong dream of opening a florist shop, starting a business is one of the great American pastimes. Before you start, there are a few things to consider.
1. Show yourself the money. Do the financial plan- how will money come into your business every month, and what will it really cost to operate? Do this on paper, not in your head.
2. If it’s a hobby, it’s a hobby…and that’s okay. If you don’t think you’ll make a profit, however, you generally cannot deduct the expenses, at least not for long. (The IRS will figure this out, too.)
3. Use independent contractors when you can. When you hire employees, it is a whole different ballgame in terms of responsibilities.
4. Business is business and friends are friends. Never do business with friends. If you ignore that, don’t ignore this: Never do business with friends without writing down your deal. That goes for family, too.
5. Learn from others’ mistakes. If you can, first work (or volunteer) for someone else in the business. Join a trade association. Take someone in the biz to lunch. Everybody remembers their mistakes, and who can resist giving advice?
6. Use free help. America’s business is business, reflected in the myriad of free business resources. Local small business development centers and sba.gov will get you started. For in-person consultations with actual retired businesspeople, go to SCORE (score.org). They’ve seen it all.
7. Pay attention to your gut (unless you know you are paranoid). If a deal doesn’t seem right, it probably isn’t. If it seems too good to be true, it probably is.
8. There are bullies in business, just like in high school. Never let yourself be rushed into a decision.
9. Be a cheapskate. Keep your business in your home until your mate wants to leave you. Hold off on hiring an employee until your children threaten to turn you in for violating child labor laws. We exaggerate, but you get the idea.
10. Give yourself a back door. Commitment and a belief in your business are essential to business success. However, you’ll alleviate a lot of anxiety (and get more sleep) if you develop an exit strategy. Cautious optimism is key.:
Source: Your little legal companion. (2006). Berkeley, CA: Nolo.