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If the thought of being your own boss excites you, you might want to explore starting your own business. The path is not easy, however, so if you're intrigued by the idea, read on to learn how to become an entrepreneur.
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Introduction
- In tough economic times, many people fantasize about being their own boss. While it can be incredibly rewarding, the path to becoming an entrepreneur is not easy. You need to determine if you are suited to the job, identify a product or service, brush up on your business skills, and get funding for your project.
Step 1: Decide if it's Right for You
- Starting a new business takes a single minded focus, where most of your time and energy is put into the company. As it will be a huge life commitment, you should be sure that it's right for you before beginning the process.
- Are you at a time in your life when the business can come first?
- Does your family support you in your endeavor?
- Are you comfortable with risk?
- Do you have the energy to work long hours?
- Are you highly motivated to succeed?
Step 2: Find Your Passion
- You can't become an entrepreneur without a product or service to sell. You'll be putting most of your waking hours into this venture for the next several years, so make sure it's something you care deeply about. If you don't have an original product or service to offer, you may find a franchise that suits you. After you've selected a business, you should get a reality check on whether its viable.
- The Small Business Association (SBA) provides free counseling services to help you get started.
- Attend local Chamber of Commerce meetings and discuss your business plans with the contacts you make.
- Talk to potential customers to gauge whether or not there is a market for your idea.
Step 3: Brush up on Business Skills
- Although you'll be hiring experts to advise you on specific business areas, your business will be better served if you have a good grounding in the fundamentals. You can take courses at a local community college or vocational school, or find an overview of various topics through your local community education department. At a minimum you should be familiar with the basics of accounting and business law.
Step 4: Get Funding
- Initial funding may be personal, coming from your own assets, or from friends and family. Make sure all investments are backed by the appropriate paperwork, and reviewed by your attorney before money changes hands. This includes your own money that you put into the business. When approaching investors other than close friends and family, you'll usually need to present a formal business plan which outlines your product and services, a market analysis, and a financial budget and forecast. Some sources of funding you may want to consider are:
- Cash generated from personal assets, either by selling them (as in the case of investments) or using them as collateral for a loan (such as a home equity loan), can be used as start-up capital.
- Friends and family may be willing to become angel investors if they believe in you and your product and service.
- SBA loans, which may also require personal assets or collateral, may be an option.
- Some entrepreneurs have started their business using credit card debt, which generally has a high interest rate.
- Venture capitalists are always looking for the next big thing.
- Investigate government grants and loans, particularly in "hot" areas such as green technology.
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