There are many steps to becoming an entrepreneur. Before starting a business on your own there are several things you should consider. To begin with you should evaluate your business idea. Here are some tips to get you started.
TAKE A SURVEY: DO YOU HAVE THE SKILLS AND PERSONALITY TO SUCCEED?
Successful entrepreneurs tend to share a set of common characteristics with other entrepreneurs. Typically those with the right mindset for starting up a business are hard workers, want financial success, are independent, willing to take risks and are determined. The Women’s Initiative for Self-Employment developed an Entrepreneurial Self-Assessment Survey that can help you decide if your personality melds with those of successful entrepreneurs.
DETERMINE IF YOUR BUSINESS IDEA IS FEASIBLE
Here are a few different ways to help you decide. The Montana SBDC created a Feasibility Analysis to help people decide if their business ideas are feasible. The analysis gives you some questions to explore and some pitfalls to avoid.
WRITE A BUSINESS PLAN
A business plan is essential if you want a loan, are seeking investors, or just want to know whether your business will make money. Creating a business plan is one of the most important steps you will take because the plan serves as your road map for the early years of your business. You can create a business plan online using SBA’s free Business Plan Tool which provides you with a step-by-step guide to help you get started. For additional business plan resources, click here.
LOOK AT HOW CASH FLOW WORKS
Use a cash flow calculator to see how your cash flow will change if you have customers paying on credit, stock inventory, and raise or lower your prices. Why is this important? Monitoring your profit per sale isn’t good enough. Cash is more critical than profit. You need to make sure you collect money quickly and don’t have too much money tied up in unsold inventory. This cash flow calculator was developed by MarketingPlans.com. We like it because this tool contains valuable information that is not available from public or non-profit sources. If you need other financial calculators, click here.
BENCHMARK YOUR PLANS WITH SIZEUP
SizeUp is a free service to help business owners make more informed decisions. Traditionally, only large businesses have been able to afford access to advanced database services with competitive and industry data. SizeUp was developed to even the playing field – so that small businesses could have access to the same information.
You can use SizeUp to:
- See how your financial projections compare to your local competitors’ actual revenues and costs
- Find the best business location by locating your competitors, customers and suppliers
- See whether your industry is growing and how many similar businesses have started and how many have closed in your area
- See where your customers are, so you can target your marketing to specific areas.
SizeUp has 3 short videos showing how to use their service. Click here to go to the demonstration videos.
REMEMBER TO PLAN FOR TAXES
Handling taxes for the self-employed is challenging. When you were an employee, taxes were deducted before you received your paycheck. When you become self-employed, you must regularly calculate your business profits and save 35% to 40% of that for taxes. This is how taxes usually add up: social security self-employment tax, 15.2 %; federal income tax, usually between 15-25 %; and California income tax, 1-12.3%. When you create a business plan, you want to make sure that your projected profits are about 40% more than you need to live on. If you only look at the amount you need for daily living, you won’t have enough to pay taxes.
You can find out more about taxes by going to the Government Requirements topic in the Tools for Business.
For help with starting your business and evaluating your business idea, contact the Economic Development Collaborative-Ventura County. Conveniently located in Camarillo, California, we’re here to help.