Being a successful business owner can be one of the most rewarding things you'll ever do. And while you'll likely have to put in some long hours and be prepared to make sacrifices, most find being your own boss is well worth it. To help you test the waters before taking the plunge, have a look at some of the many personality traits common among business owners. They include:
Your business plan is your roadmap for success, detailing your initial requirements and long-term goals, taking into account as many factors as possible. If you plan on securing financing, your business plan represents your credentials - without one, you may not be taken seriously by a financial institution or third party investor. Creating a business plan isn't difficult. In fact, there are plenty of resources out there to help you.
Every sound business plan should:
A good business plan:
Committing your plans to paper helps you clearly identify your customers, market, pricing strategy and the competitive landscape. It will also help you identify and head off potential concerns before it's too late, often enabling you to discover opportunities you may not have considered previously.
Planning simply makes good sense at any stage of the game - consider making it an integral part of your management approach.
The legal structure you choose for your business determines, to a large extent, how your company is organized, cash flows, taxes and more.
Choosing the best legal structure carries many advantages:
There are three basic legal structures:
Which is the right business structure for you?
While your lawyer and accountant can help you make the final decision, this quick quiz can help determine which way to go. Keep in mind that a business can evolve from a sole proprietorship or partnership to an incorporated company if circumstances change.
Sole proprietorship or partnership
|Will you be the sole owner, or own the business with just a few partners or family members?|
|Do you plan to start the business using only personal savings or investments from friends and family?|
|Do you expect business revenues to support only you and your partners or family members?|
|Do you plan to do most of the work yourself and not use many subcontractors?|
|Will you borrow personally on behalf of the business?|
|Are you in a low personal income tax bracket?|
|Is your business highly unlikely to face a lawsuit or get into debt?|
|Do you have limited net worth (personal assets)?|
If you answered "yes" to most of these questions, you should operate your business as a sole proprietorship or partnership.
|Will ownership be divided among several shareholders?|
|Do you expect significant startup costs?|
|Will you be hiring employees and paying out wages and salaries?|
|Will you require additional financing beyond savings and investments from family and friends?|
|Do you expect increasing revenues and a rising asset base?|
|Will you probably need to raise equity or issue debt, either now or later?|
|Will you put a full management and organizational structure in place?|
|Do you expect to look into income-splitting and tax-deferral options?|
|Do you want to protect your existing substantial net worth?|
If you answered "yes" to most of these questions, you may want to consider operating your business as a corporation.