Thinking about starting your own company? Do you have what it takes? Is it worth all the pain and suffering?
There is no way to eliminate all the risks associated with starting a small business. However, you can improve your chances of success with good planning and preparation. A good starting place is to evaluate your strengths and weaknesses. Carefully consider each of the following questions.
Are you a selfstarter? It will be up to you - not someone else telling you to develop projects, organize your time and follow through on details.
How well do you get along with different personalities? Business owners need to develop working relationships with a variety of people including customers, vendors, staff, bankers and professionals such as lawyers, accountants or consultants. Can you deal with a demanding client, an unreliable vendor or cranky staff person in the best interest of your business?
How good are you at making decisions? Small business owners are required to make decisions constantly, often quickly, under pressure, and independently.
Do you have the physical and emotional stamina to run a business? Business ownership can be challenging, fun and exciting. But it's also a lot of work. Can you face 12hour work days six or seven days a week?
How well do you plan and organize? Research indicates that many business failures could have been avoided through better planning. Good organization of financials, inventory, schedules, production can help avoid many pitfalls.
Is your drive strong enough to maintain your motivation? Running a business can wear you down. Some business owners feel burned out by having to carry all the responsibility on their shoulders. Strong motivation can make the business succeed and will help you survive slowdowns as well as periods of burnout.
How will the business affect your family? The first few years of business startup can be hard on family life. The strain of an unsupportive spouse may be hard to balance against the demands of starting a business. There also may be financial difficulties until the business becomes profitable, which could take months or years. You may have to adjust to a lower standard of living or put family assets at risk.
It's true, there are a lot of reasons not to start your own business. But for the right person, the advantages of business ownership far outweigh the risks.
* You get to be your own boss.
* Hard work and long hours directly benefit you, rather than increasing profits for someone.
* Earning and growth potential are far less limited.
* A new venture is exciting.
* Running a business will provide endless variety, challenge and opportunities to learn.
There is no way to eliminate all the risks associated with starting a small business. However, you can improve your chances of success with good planning and preparation. A good starting place is to evaluate your strengths and weaknesses. Carefully consider each of the following questions.
Are you a selfstarter? It will be up to you - not someone else telling you to develop projects, organize your time and follow through on details.
How well do you get along with different personalities? Business owners need to develop working relationships with a variety of people including customers, vendors, staff, bankers and professionals such as lawyers, accountants or consultants. Can you deal with a demanding client, an unreliable vendor or cranky staff person in the best interest of your business?
How good are you at making decisions? Small business owners are required to make decisions constantly, often quickly, under pressure, and independently.
Do you have the physical and emotional stamina to run a business? Business ownership can be challenging, fun and exciting. But it's also a lot of work. Can you face 12hour work days six or seven days a week?
How well do you plan and organize? Research indicates that many business failures could have been avoided through better planning. Good organization of financials, inventory, schedules, production can help avoid many pitfalls.
Is your drive strong enough to maintain your motivation? Running a business can wear you down. Some business owners feel burned out by having to carry all the responsibility on their shoulders. Strong motivation can make the business succeed and will help you survive slowdowns as well as periods of burnout.
How will the business affect your family? The first few years of business startup can be hard on family life. The strain of an unsupportive spouse may be hard to balance against the demands of starting a business. There also may be financial difficulties until the business becomes profitable, which could take months or years. You may have to adjust to a lower standard of living or put family assets at risk.
It's true, there are a lot of reasons not to start your own business. But for the right person, the advantages of business ownership far outweigh the risks.
* You get to be your own boss.
* Hard work and long hours directly benefit you, rather than increasing profits for someone.
* Earning and growth potential are far less limited.
* A new venture is exciting.
* Running a business will provide endless variety, challenge and opportunities to learn.
Some Terminology:
* Asset – anything that puts money into your pocket.
* Liability – anything that takes money out of your pocket.
* Interest – the profit gained in goods or money that is made on invested capital
* Profit – the amount gained after selling goods at above the cost of production.
* Investment – anything that you share with the goal of gaining interest in the future.
* Capital – the amount of investment in a business activity.
* Capital gain – the increase in value of asset between the time it was bought and the time it was sold.
* ROI (return on investment) – time it takes for your invested money to return and then start generating income for you.
* Income – money generated by business or employment activity.
* Amortization – payment made for a loaned product or services equally distributed over a period of time.
* Loan – products or services acquired in advance with interest, promising to pay at some future time.
* Liquid – a financial state wherein you have lots of cash and no loans.
* Risk – the possibility of loosing your investment
* Financial Freedom – a state in life where in your investment and money works for you and not the other way around.
Some Tips
1. Don’t buy depreciating items on credit (cellphones, cars, appliances, clothes, shoes, etc.) buy them in cash , save and wait till such time you can afford them. Settle for items you can only afford. At current market interest, your total payment is almost 3 times the selling price by the time you finished paying your amortization if you buy on credit, while the market value of your purchased item already went down to near 50% or more of the original price.
2. Beware of marketing promos . There is no such thing as a “0” interest loan amortization . Sellers actually included the interest in your monthly amortization but advertise 6 or 12 months “0” interest. If you want to buy a “0” interest item in cash, you should ask the seller to give you the “interest free” price or tell them to remove the “hidden interest” in exchange for cash purchase. Or ask for discounts for cash payments.
3. Compare prices for the same item in different stores if you have time before actually buying .
4. If the item has no price tag, you should ask for discounts on the asking price of the seller.
5. Avoid impulse buying especially expensive items. Think it over for a day or two then decide if you really need it “now”. Control your spending habit. If you don’t , you will always complain your income is not enough.
6. Keep only ONE credit card, use it for convenience NOT for credit. Always pay the full amount once you get the bill. Choose a reliable credit card company . Sometimes you will encounter malfunctioning Point of Sale systems, tell the establishment to call the credit card company directly and then ask for approval via phone. As much as possible, always have cash on hand or in your ATM card and use it as the Credit card backup.
7. Don’t get a Gold Credit Card if you are after the “being rich” perception. You will pay 2x the membership fee as the regular card . And your spending temptation will be 2x as powerful as well.
8. Always save at least 20% of your income. Opportunity always comes, and usually those with “cash on hand” gets it.
9. Invest a percentage of your savings to generate more income. There is no harm in not investing and just playing safe on bank savings accounts, but your money will earn more if you invest. (stocks, bonds, mutual funds, real estates , start a business etc.) There are risks involved in investing money and sometimes you loose your investment. But the lesson learned in that failed investment is usually worth a lot more. Knowledge and experience gained is priceless in this information age. Start your investment activities while you are employed , it will prepare you in your retirement years.
10. Be aware of “Get Rich-Quick” Investment scams. If the promised interest rate return on investment is “unusually large” compared to the actual market rate, most probably it is an investment scam. No legal business will pay you double or triple the current market interest rate . If somebody promised an interest rate of 5% or more per month, that will be a 60% interest rate per annum. No business can generate that big profit for their investors. It is usually a scam and they will use your investment money to pay the interest of the other investors . This is commonly called as “pyramiding” it will crumble at some point in time only the pyramid owner will be rich and ran off with your money.
11. Conduct garage sales at least every 2 years to dispose of your old-unwanted items and generate additional income. You will also learn a lot in the “garage sales process”. Your “garbage” is usually a precious item to others. Sell low and sell only those you think are worth buying. Donate those that are not . You will get a good reputation as seller and will be usually successful in your other future “selling activities”. Donate or give for free all unsold items at the end of your garage sale. You will feel great happiness – and that is priceless.
12. Work hard and be a responsible employee. You will be financially rewarded accordingly when your business grows as a result of your collective hard work. A good work attitude is contagious and will always bring harmony in the work place.
13. Live within your means. Never mind if you have old clothes, old shoes, old cars, old and in-expensive cellphones/appliances , small house in a non-exclusive area, etc. because it is what you can afford for now. It is much better than having all the new luxuries that you can’t afford and then crack your brains every pay day thinking how to pay all your bills and loans. This is called “pay-check to pay-check” living. A lot of people have fallen to this “trap” mostly brought about by credit companies and bank loans (credit cards, loan sharks, etc.) We all make mistakes and had experienced this lifestyle brought about by modern living one time or another. The more important this is to learn from our mistakes.
* Asset – anything that puts money into your pocket.
* Liability – anything that takes money out of your pocket.
* Interest – the profit gained in goods or money that is made on invested capital
* Profit – the amount gained after selling goods at above the cost of production.
* Investment – anything that you share with the goal of gaining interest in the future.
* Capital – the amount of investment in a business activity.
* Capital gain – the increase in value of asset between the time it was bought and the time it was sold.
* ROI (return on investment) – time it takes for your invested money to return and then start generating income for you.
* Income – money generated by business or employment activity.
* Amortization – payment made for a loaned product or services equally distributed over a period of time.
* Loan – products or services acquired in advance with interest, promising to pay at some future time.
* Liquid – a financial state wherein you have lots of cash and no loans.
* Risk – the possibility of loosing your investment
* Financial Freedom – a state in life where in your investment and money works for you and not the other way around.
Some Tips
1. Don’t buy depreciating items on credit (cellphones, cars, appliances, clothes, shoes, etc.) buy them in cash , save and wait till such time you can afford them. Settle for items you can only afford. At current market interest, your total payment is almost 3 times the selling price by the time you finished paying your amortization if you buy on credit, while the market value of your purchased item already went down to near 50% or more of the original price.
2. Beware of marketing promos . There is no such thing as a “0” interest loan amortization . Sellers actually included the interest in your monthly amortization but advertise 6 or 12 months “0” interest. If you want to buy a “0” interest item in cash, you should ask the seller to give you the “interest free” price or tell them to remove the “hidden interest” in exchange for cash purchase. Or ask for discounts for cash payments.
3. Compare prices for the same item in different stores if you have time before actually buying .
4. If the item has no price tag, you should ask for discounts on the asking price of the seller.
5. Avoid impulse buying especially expensive items. Think it over for a day or two then decide if you really need it “now”. Control your spending habit. If you don’t , you will always complain your income is not enough.
6. Keep only ONE credit card, use it for convenience NOT for credit. Always pay the full amount once you get the bill. Choose a reliable credit card company . Sometimes you will encounter malfunctioning Point of Sale systems, tell the establishment to call the credit card company directly and then ask for approval via phone. As much as possible, always have cash on hand or in your ATM card and use it as the Credit card backup.
7. Don’t get a Gold Credit Card if you are after the “being rich” perception. You will pay 2x the membership fee as the regular card . And your spending temptation will be 2x as powerful as well.
8. Always save at least 20% of your income. Opportunity always comes, and usually those with “cash on hand” gets it.
9. Invest a percentage of your savings to generate more income. There is no harm in not investing and just playing safe on bank savings accounts, but your money will earn more if you invest. (stocks, bonds, mutual funds, real estates , start a business etc.) There are risks involved in investing money and sometimes you loose your investment. But the lesson learned in that failed investment is usually worth a lot more. Knowledge and experience gained is priceless in this information age. Start your investment activities while you are employed , it will prepare you in your retirement years.
10. Be aware of “Get Rich-Quick” Investment scams. If the promised interest rate return on investment is “unusually large” compared to the actual market rate, most probably it is an investment scam. No legal business will pay you double or triple the current market interest rate . If somebody promised an interest rate of 5% or more per month, that will be a 60% interest rate per annum. No business can generate that big profit for their investors. It is usually a scam and they will use your investment money to pay the interest of the other investors . This is commonly called as “pyramiding” it will crumble at some point in time only the pyramid owner will be rich and ran off with your money.
11. Conduct garage sales at least every 2 years to dispose of your old-unwanted items and generate additional income. You will also learn a lot in the “garage sales process”. Your “garbage” is usually a precious item to others. Sell low and sell only those you think are worth buying. Donate those that are not . You will get a good reputation as seller and will be usually successful in your other future “selling activities”. Donate or give for free all unsold items at the end of your garage sale. You will feel great happiness – and that is priceless.
12. Work hard and be a responsible employee. You will be financially rewarded accordingly when your business grows as a result of your collective hard work. A good work attitude is contagious and will always bring harmony in the work place.
13. Live within your means. Never mind if you have old clothes, old shoes, old cars, old and in-expensive cellphones/appliances , small house in a non-exclusive area, etc. because it is what you can afford for now. It is much better than having all the new luxuries that you can’t afford and then crack your brains every pay day thinking how to pay all your bills and loans. This is called “pay-check to pay-check” living. A lot of people have fallen to this “trap” mostly brought about by credit companies and bank loans (credit cards, loan sharks, etc.) We all make mistakes and had experienced this lifestyle brought about by modern living one time or another. The more important this is to learn from our mistakes.
