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Considering Starting A Business

Starting a business and being your own boss is a dream for most of us, but many of us are not willing or able to actually take the leap. For those who do, it can be an opportunity to put innovative ideas to work, to fill a needed niche in a market and potentially to build personal wealth.  It can also be an overwhelming venture…millions have been successful at it and millions more have failed.  There are no guarantees, but if you are thinking about it, below are some of the issues you should consider. 

Do you have what it takes? 

The process of starting, building, growing, and managing a business is hard work.  It can also be somewhat frightening.  There are always unexpected issues and concerns that arise.  Most successful entrepreneurs have an innate ability to accept and manage risks.  They also usually exhibit a passion that provides the incentive to go that extra mile that may be needed. 

You should also consider the effect that starting a business may have on your lifestyle and your family.  Long hours, constant distractions, and sacrifices can put strains on your mind, body, and finances, as well as on those around you. 

What type of business makes sense? 

Hundreds of thousands of ventures are started each year in all lines of business.  Starting a business from scratch, buying an existing business, or entering into a franchise arrangement all present opportunities and potential pitfalls.  Be sure to do your homework.  Consider the current and potential markets for whatever business you are considering.  Examine the strengths and weaknesses of competitors.  The Internet and trade associations can be great sources of valuable information, as is your local Chamber of Commerce and organizations such as SCORE (www.score.org) which are dedicated to helping mentor small business owners.  You may be surprised what you can find readily available. 

Find a line of business that matches your skills, experience, and interests.  If you are considering starting a personal service business, it can be nice to start off with at least one existing customer.  Whatever type of business you pursue be sure you like it.  If you are successful, you may spend many years or several decades in that business. 

If you are considering buying into an existing business or franchise, investigate it thoroughly.  Have a trusted financial and legal professional look at the financial statements and any contracts you may be signing. 

Are you going alone or should you have a partner?

This can be one of the most challenging issues you face.  Running the business yourself gives you the opportunity to make all the decisions, but you must live with the results.  A partner can bring skills, experience, and much-needed capital; however, you should be confident that you can work with that person closely, and for an extended period of time. 

If you do elect to have a partner, you may also want to discuss how your partnership can be ended.  While everyone has good intentions at the beginning, things can and often do change, so having a buy/sell agreement or a contractual agreement which outlines a dissolution of the partnership may help avoid difficulties and hard feelings later. 

Where will you get the financing you need? 

Starting and growing a business takes money.  Consider the funds you may need for office space, equipment, inventory, staffing, marketing, and working capital.  You should also remember that not all customers pay quickly.  One of the most common causes of business failures is inadequate capital. 

Arranging needed capital should be undertaken early in the start-up process.  Once the business is operational, you will want to focus on running it and not have to constantly be looking for funds.  Be sure to speak with your financial institution and if you do not have one already, develop a relationship with an experienced business banker who can help you understand what is needed to secure the financing you need. 

The final observation on needed capital is to consider setting a limit on how much you are willing to risk or lose. While this may be difficult to consider when starting out, having a realistic contingency plan is prudent to help you respond if and when it becomes necessary to seek help or even sell or close the business. 

What are some of the other legal, financial, and tax issues to be considered? 

There are many of these types of issues that will arise not only during the development and start-up phase of your business, but also throughout the life of your business. This is why one of the keys to both your business and personal success is to assemble a team of trusted, professional advisors. Your core team should ideally include an attorney, accountant, business banker, and investment advisor. While it can be tempting to rely on the advice of family and friends, there is no substitution for the expertise and objectivity experienced advisors can provide. 

After addressing all the other aspects, you will need to choose a business form (sole proprietorship, partnership, corporation, sub-chapter S corporation, Limited Liability Company).  While this may sound complicated, it is much easier to decide upon than many of the initial issues discussed above.  Each business form has attractions and drawbacks, and your attorney can be very helpful in evaluating the options and drafting any documents you need. 

In addition to capital, your business will also have cash flow needs. Your business banker will be able to help you make sure you have the right financial accounts and services to accept and process payments from your customers, quickly and easily pay your vendors and employees, and manage your day-to-day banking needs. 

Your personal financial and tax situations may also change when you become a business owner.  You may lose the predictability of a regular paycheck and other benefits from an employer. For example, you will have to pay for your medical insurance and find ways to fund your retirement account.  This is where your tax and investment advisors will be helpful. 


The entrepreneurial spirit is alive and well in America. However, a great idea isn’t enough to make your business a success. By taking key steps early in the process, being willing to make sacrifices and put in the hard work, accepting the risks as well as the rewards, and using sound business practices, you just might be on your way to achieving the American Dream!