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If you have ever had a business idea, you may have wondered if you have what it takes to be an entrepreneur. With the current economic climate, it is easy to be wary about starting a business. However, according to University of Tennessee Research, 75% of new businesses are still in business after the first year.
There will always be risks to starting a business, but it is important you make a note of the many benefits as well. Once you fully understand the challenges ahead of you, you can make informed decisions that increase your odds in succeeding at owning your own business.
Benefits of Starting a New Business
There are a number of benefits associated with starting your own business. One of the most fulfilling is the chance to be your own boss: when you run your own business, you have nobody to answer to but yourself. You keep your own schedule, make your own rules, and are in complete control of your employment future. There are other benefits as well, including:
Startup Business Pitfalls
The biggest pitfalls encountered by new business owners that result in business failure are incompetence (46%), lack of managerial experience (30%), and lack of experience in the industry (11%). Although new business owners don’t like to think of themselves as incompetent or inexperienced, they need to be aware of the dangers so as to take steps to mitigate their own personal and professional weaknesses.
The specific pitfalls associated with incompetence include: emotional pricing; living too high for the business; nonpayment of taxes; no knowledge of pricing, financing, or record keeping; and lack of planning.
Lack of managerial or industry experience can result in: poor credit granting practices; overly rapid expansion; inadequate borrowing and inventory; lack of knowledge of suppliers; and wasted advertising budget. Without the right experience, you can make irreparable mistakes in the course of starting your business.
Avoid these pitfalls by working with one of our high-quality business plan vendors.
Costs of Starting a Business
The cost of starting a business depends on the type of business you are going for – a manufacturing business, for example, may have much higher start-up costs than a freelance web designer. However, there are certain expenses that are associated with most business startups.
Other expenses for starting a business include inventory, telecommunications, computers, copiers, insurance and professional fees.
Understanding how the benefits and pitfalls of starting a business come into play during your journey into entrepreneurship is a key first step. Ultimately, you will need to weigh the pros of being your own boss and establishing your own bottom line against the cons of potentially making a bad decision due to incompetence or lack of experience.
The good news is that many first-time business owners do succeed in their ventures and turn a profit, even in bad economic times. The success of your business lies in preparation and execution, so thorough planning is the first and most important step in the process
Starting a business can be challenging in the best of circumstances, but when you add an unreliable economy to the mix, it can be even more difficult. When you're ready to start a business, however, there are several things you can do to help increase your odds of success.
One of the first items to consider, of course, is money. Capital investment can come from many sources, including banks, credit unions, and state, local or federal government grants. In addition to these sources for funds, you may want to consider adding your personal finances if you can.
Once you have established your set-up budget, you will probably want to divide the funds into various aspects. One of the most important is advertising. If you invest your capital into a fabulous location and lots of equipment or product, but nobody knows who you are or where you are, it won't do much good.
You may also want to consider your hiring procedures. Utilizing the Internet for hiring can save you a lot of time when it comes to screening applicants. For instance, the use of quizzes can eliminate many applicants whose personalities are not conducive to your line of work.
To find out more about starting a business, please feel free to visit any of the resources on the left side of this page, compiled for your success by Business.com.