Setting Up Shop: Tips for Starting Your own Business

Years ago, I had a nice little comic book business, which I sold in 1984. The 10,000 leftover comics were put into storage -- as a future “Ace in the Hole” source of income should times get tough in the future. When money was tight years later, I took the books out of storage, priced them, and created a website to sell them.

While you may not have a pile of comics in the attic, it is well worth your time and energy to set up a business of your own. With the economy as uncertain as it is, it is safe to assume that, sooner or later, you and your job may part company. If that happens and you’re ready with a small business of your own, you will be better able to provide for your family, and less likely to feel victimized, depressed, or desperate.

One of the Best Investments You Can Make

With virtually no financial risk, you can create a business of your own in less time than most Americans spend watching TV -- 28 hours a week! Pick a reasonable path, take a few well-calculated, low-risk steps, and grow your business slowly. Keep at it, and you’ll have another way to make a living should you get that dreaded pink slip. Plus, you’ll get three important bonuses:

1. Extra income
2. Tax deductions
3. Renewed self-confidence

Set your sights on developing a modest backup source of income, not on creating a corporate empire. Starting with a tiny budget means you won’t need to mortgage the farm or make an immediate profit. You can learn from experience while you benefit from the regular checks and fringe benefits of your “Day Job.” Once you’ve proven your business can work, you can choose to increase the speed of expansion … or not.

By creating a business of your own before you need it, you’ll be much less likely to find yourself in a panic if, all of a sudden, the paychecks stop. Instead, you’ll be ready to pull yourself out of the hole.

Ten Steps to Getting Your Business Off the Ground

1. Start now. You’ve probably daydreamed about being your own boss. Why not commit now and take concrete steps to research your options and test the waters? You can begin by skimming magazines and newspapers (including the classifieds) for business ideas. What would be interesting, exciting, meaningful, etc. -- worth crawling out of bed to do, day after day? Think about the environment you want to work in, the types of people you want to be around, and your ideal work day.

2. Mull over what you do best. Sit down, relax, and make a list of hobbies, interests, and skills that you really enjoy. Do you make the best chocolate chip cookies your church group has ever tasted? Mrs. Fields, move over!

3. Ask friends and colleagues for ideas. What businesses can they see you in? A friend may recognize your knack for fixing computers as a service others would be happy to buy.

4. Seek cybersources. Start at Google, and visit sites left and right -- to get ideas on how others are trying to make a living doing things that interest you. Also visit these three websites for great ideas, inspiration, and hands-on-help in bringing your business to life:

• Working Solo
• Business Owners’ Idea Café
• Score (Service Corps of Retired Executives)

5. Look for inspiration everywhere -- while you stroll through a flea market, down Main Street, at the mall, and in the library. Check out books, such as 101 Best Home Businesses by Dan Ramsey, and ask the librarian about trade associations and journals where you can learn about trends, suppliers, colleagues, and competitors.

6. Narrow down the possibilities by thinking about what you want from your business. Do you want it to stay small, or are you hoping for a full-time enterprise? How much income will be enough to keep you interested and motivated? Do you have the requisite skills? What’s the market outlook? How about the competition?

7. Fine-tune your research. Maybe your hobby is knitting and you’d like to turn it into a business -- but how? That’s what you have to research next. Look in knitting magazines to see how others are making money. Visit yarn, craft, and specialty stores. Then, during quiet times, ask the managers pointed questions: “Could I make a living knitting? If I want to make $50 a week knitting, what would you recommend I do? How about $100?

8. Test the waters. Find out if there’s a market and if you enjoy the work before you spend a fortune or burn yourself out. You could:

• Ask friends to wear your hand-knit sweaters to see what kind of reaction your knitwear gets, and if you can generate some word-of-mouth business.
• Buy classified ads announcing that you’ll make house calls to change oil and do other minor car repairs. How about a special on winterizing?
• Donate your chocolate chunk cookies to a nonprofit’s next fundraiser. Be there to sample the response and hand out brochures on your baked goods.
• Put up a sign at the supermarket saying you repair small appliances. Fixing a few toaster ovens will give you an indication of your future prospects in fixing home appliances.

9. Check your credit. Chances are, as you start setting up shop, your main source of credit will be a piece of plastic -- perhaps a credit card that you already have that you choose to use exclusively for your business expenses. (It makes the record keeping a lot easier.) At the start, your business’s credit is going to be based on your personal credit history. Do you know where you stand? If not, click here to check your credit reports and credit scores. If you look good on paper, you will be much more likely to get a business credit card, which many folks use for their initial financing -- along with personal savings and perhaps a home equity line of credit. Think long and hard before you put your home on the line! For more info on financing small businesses, visit the Small Business Administration.

10. Start out on the right foot. Make a few phone calls to save yourself a lot of grief:

• Call the IRS (800-829-1040) to see if you need a federal tax ID number. If you're a “sole proprietor” (without employees or a business bank account), you probably won't need one. But do be sure to keep expense records -- it’s easy if you always pay with checks and credit cards. Save all other business-related receipts.
• Call your county clerk and state sales tax department to see if you need to deal with things like zoning, licenses, sales tax, and permits.
• Verify that your insurance policy will cover the equipment you’ll use in your business and any additional liability you might face should a client slip in your driveway. If you need special coverage, call around for competitive quotes.
• To save money and reduce the risk of an audit, use a good tax advisor recommended by others who have small businesses of their own. Ask specifically about deductions for: office space, equipment, inventory, supplies, utilities, travel, and publications. Also, visit the IRS for tax tips as well as other information on starting a business.

You Can Do It!

Choose something you want to do, keep costs down, offer low prices, and deliver a high quality product. Always remember that the best advertising is by word of mouth. Satisfied customers are the key to any business’s success.

Nancy Castleman has spent the last twenty-two years teaching people how to save money, get out of debt, and live better on less -- through her home business, Good Advice Press. Her site includes many free articles as well as information about her books and free e-letter.