Out of Work? Consider Self Employment
adapted from an article by Bert Harris, St. Paul MN SCORE
If you are between jobs, you may want to consider an alternative to the tedious grind of sending out resumes and completing applications.
Self employment. A word of caution, however, self employment is not for everyone. But, if you have what it takes to be an entrepreneur, it can be very rewarding. Best of all, when you are self employed, there won’t be some guy or gal on the 42nd story of the building where you work who can arbitrarily terminate your employment. When you are self employed you, and you alone, are responsible for your success or failure.
Is it easy? For most people, the answer is absolutely not. If you choose to solve your employment situation by going into business for yourself, one thing is certain, you will work very hard, possibly harder than you ever worked as an employee to get your enterprise underway.
Is it risky? You bet. The failure rate for a new business is nothing short of scary. Approximately 80% of new businesses are no longer in business five years later. This abysmal statistic includes situations where the owner got a better offer and abandoned the business to do something more rewarding. It also represents the majority of cases where the enterprise didn’t generate enough revenues to succeed. The good news is that these statistics don’t have to apply to your business. Good planning and asking the right questions can save a lot of headaches.
Here are some issues you need to consider if you want to start a small business:
- Do you have a marketable skill or combination of skills? Start by making a list. Everyone has a unique set of skills, knowledge, experience, and personal characteristics that are perfect, given the right business. Remember, being small in stature can be a terrific asset for a racehorse jockey, but it would be a real liability for an NFL lineman.
- Do you have the kind of work ethic and drive to do what it takes, day after day, to make your business succeed? Being in charge of your own enterprise will probably not be fun every single day.
- That is why it is so important to choose the right business. When times get tough, and they most certainly will, doing something you genuinely enjoy and have a passion for doing is what will carry you through. This factor is often over looked. Having made this mistake myself, I can testify that being saddled in a business you hate is even worse than having a job you hate. With a job, at least you can look for another job while the pay checks keep rolling in. It is best if you have worked in the business you wish to enter at least long enough to know you’ll enjoy this new endeavor.
- Even if you inventory all the capabilities necessary to succeed in a given business, the chances are pretty good that you won’t have all the necessary ingredients. Don’t let this discourage you. Face your limitations and then develop a plan to compensate for your shortcomings. For example, if you are not good at bookkeeping and don’t feel comfortable with the financial aspects of the business, be sure you have access to a good accountant.
- When you have identified a suitable business, make sure you prepare a comprehensive Business Plan. A well researched business plan will not only focus your thinking on the most important issues relative to the venture you are contemplating, it will reveal many facets of the business that may not have even occurred to you. Then take an objective long look at the business plan you have compiled. You may decide that this enterprise is not for you and your family after all. Better to learn this sooner rather than later after you have invested heavily in a business that you hate and/or may not be very good at running.
- Establishing or buying your own company is not free. It takes money. In some cases very little, in others, a great deal. If you are going to need to finance your business, this is another case where your business plan is critical.
After all this soul searching, research, and planning, if you’re still turned on about the idea of owning your own business instead of going back to being an employee, the next question to ask yourself is where can you get help. The good news is that you can find plenty of resources, some in surprising places.
Even the government provides help. I am referring to the Small Business Administration (SBA), which has been in existence since 1953. The SBA has helped launch such highly successful companies as: Federal Express, Microsoft, and Sargento Foods. In addition, they have assisted thousands of smaller enterprises. The SBA guarantees loans made by Banks and other lenders. The SBA has several popular lending programs including the 7a program, which can provide very small loans to loans up to $2,000,000. The SBA 504 program is primarily intended to finance real estate purchases of land and/or buildings for amounts totaling well into the millions.
In Lancaster, the Community First Fund is an active SBA lender to small business.
The SBA also has facilities to support businesses that are import-export enterprises. In addition, the SBA sponsors the SCORE Association, which provides counseling to small business owners and would be entrepreneurs at no cost to the individual.
SCORE Lancaster also provides education and training seminars on numerous topics related to starting and operating a business. There is a modest charge for these seminars. Visit the SCORE Lancaster website for more information on seminar topics, dates, and locations.
The Lancaster County CareerLink Center also provides training for would be entrepreneurs; much of it at no cost to participants including: English As A Second Language, Self Employment As A Career Option, Basic Computer Training, and Personality Assessment which can help determine whether or not an individual has the right temperament to be a business owner. In addition, they are aware of training options at various technical institutes, colleges and universities to obtain job specific skills and knowledge.
By far, the biggest obstacle for those wanting to go into business is money. It takes capital to purchase or establish a new business. Many would be entrepreneurs think they can apply for grant money. The hard truth is that there are very few grants out there. Most of the advertising you might see for free money to start businesses are SCAMS.
Pennsylvania has a webpage which details grant program information. Click here to see current programs. There are also Economic Development Associations, like Women Venture, which can provide funds with attractive terms. The VA also offers some help for veterans.
Usually, would be entrepreneurs will need to invest some of their own money to launch their business. How much depends on the particular business. This is especially true if the business owner seeks financing. Would be entrepreneurs often have to tap into their personal savings, investments, home equity, and/or money they borrow from friends and relatives. The latter solution should be approached with caution; people lending to the entrepreneur need to be well aware of the inherent risks of such a venture.
Franchises are one of the better and statistically more successful strategies for starting a successful business. Companies such as McDonalds, or Midas Muffler shops have proven track records and can provide prospective franchisees with exhausting research on key issues like location, pricing, marketing. Franchisors also provide extensive training like McDonald’s Hamburger University because they have a vested interest in the entrepreneur’s success. There are many, many franchises to choose from but all require an investment by the franchisee.
One of the best resources for those who want to start a business is the Duke Street Business Center at the Library in downtown Lancaster. Not only is it a terrific resource, it is free. The center is totally devoted to business topics. Visitors can find information on virtually any business that one can imagine. There is a wealth of information on a huge range of businesses from housekeeping services to something as complex as auto dealerships.
So, if you think self employment is a viable alternative to finding a job, the best place to start is by making an inventory of your skills and attributes. Determine what you are truly passionate about and what you really enjoy doing. Then, make a list of the types of businesses that would allow you to express those desires. You may need to evaluate several businesses before choosing one that you want to start. The next step is to develop your business plan. As you research your business you might discover that it doesn’t fit you after all. Or, it just might have the potential to fulfill your entrepreneurial dreams.
To learn more about starting a business contact SCORE Lancaster by clicking this link to request free face to face counseling. Or call us at 717-397-3092 weekdays between 10am and 2pm.