Is starting a business on your list of 2017 new year resolutions? Great! You’ll be joining over 28 million risk-takers, job creators, and independent professionals who are working hard to chart their own course.
To give you the best possible chances for success, we’ve culled 6 tips from Susan Wilson Solovic’s terrific book, It’s Your Biz: The Complete Guide to Becoming Your Own Boss.
Make sure you have the right motivation.
You need to be running toward something you’re passionate about, instead of running away from something you don’t like (a bad job, or a lack of one). “People who start their business as ‘Plan B’ are quick to throw in the towel, to close up shop,” she writes. Desire alone won’t be enough. In her book she offers an Entrepreneurial Personality Assessment that will help you determine whether the entrepreneurial track may be right for you.
Are you financially ready?
While some businesses are born of financial desperation, it’s not the best place to start. “Jumping into self-employment without first understanding the effect it will have on your personal financial situation is a serious mistake,” Solovic writes.
You’ll need to take into account such factors as how much you can afford to lose, how long you can survive without a paycheck, and even your personal credit rating, since it is difficult for young businesses to obtain small business financing.
Don’t jump in blindly
Solovic recommends you either start a business in a field or industry you know (ideally where you can do better than your competition), or that you test drive your target business. What may seem fun, glamorous or lucrative may turn out to be anything but. She devotes an entire chapter on how to “beat the odds” (after all, most businesses fail) and encourages would-be entrepreneurs to make sure they do their homework before diving in, adding, “…it is better to spend this time now than to waste months or years pursuing a business idea that was doomed from the start.”
Plan for success
Create a business plan, and plan to revisit it periodically. In Chapter Four, she explains what will go into this plan and how to create it yourself. Some small business owners love the research and thought that can go into business planning. Others, not so much. But don’t skip it. “As painful as it may seem, the planning process will teach you more about your new business venture than you can possibly imagine,” she writes. “I guarantee it. So hang in there.”
Avoid hiring friends and family
Solovic is blunt about the danger in hiring family and friends, writing, “I’d say that 90 percent of the time (it) ends in disaster.” While it may seem like an easy or helpful solution if you’re feeling overwhelmed, it may turn out to be a critical mistake. (Really, could you fire your spouse/niece/sibling/child?)
Hiring people you know is only one sensitive topic she addresses in a whole chapter on hiring, mentors and partnerships, and she speaks from experience. When Solovic ran her PR firm, one client nearly took her business down when they went under.
Set it up right from the start
In addition to her experiences as a journalist and public relations professional, Solovic is also an attorney, and she shares a story of friends whose business failed when they were sued personally by a creditor. They thought they had protected themselves by registering a fictitious name for their corporation, but they had done it incorrectly, and the attorney was able to pierce the corporate veil.
She walks readers through options for setting up the proper corporate structure and the pros and cons of each. She also offers suggestions for minimizing personal liability by incorporating. “The structure you choose for your business will have long-term implications, so it’s important to choose wisely,” she says.
Tip: Setting up a corporate structure can also be helpful in establishing strong business credit ratings, and getting away from risky personal guarantees. With a free account from Nav you’ll get step-by-step instructions for building business credit.
Of course, there are many more ways you can get your business off to a solid start in 2016, which is why we recommend you also pick up a copy of It’s Your Biz and read it cover to cover. As Solovic says, “It’s important to love what you do, whether you are an employee or the owner, but loving the work isn’t enough to build a successful business.”