OK. You’ve made up your mind. You’re going to be your own boss. You’re going to live the dream. You’re going to start your own business and work for yourself. No more corporate politics. No more long commutes. You’ll work out of your house and maybe get a small office somewhere close by. Or perhaps you’ll open that restaurant you’ve always wanted to try. Now is the time. You’re ready to take the risk.
If this is you, then you’re joining nearly 28 million fellow Americans who own a small business (defined by the SBA as 500 or fewer employees). You’ll be one of the 543,000 new businesses that start each month and the life expectancy of your business is less than 10 years. Only a third survive past 10 years with only 25% staying in business 15 or more years. Roughly 10% of these businesses have gross receipts of more than $100,000, so if you’re planning to earn your bread-winning income out of this business, then you’ll need to target that six-figure income for your business. You’re personal income will be less because the business itself will incur costs that will need to be paid before you are paid.
Call of God
So, what do you need to do now to make sure your business lasts more than 10 years? In other words, what do you need to do now to make sure your business is successful? If you’re a Christian Business Owner, then you need to ensure that you’re called by God to venture out into your own business. You need to be sure that you’re following the Lord on this, because there will be times when you’ll wonder why you did this and if you should shut down and go back to working for someone else. Believe us when we say that you’ll need the rock solid foundation of knowing God has called you to small business ownership. Without that calling, you’ll lack a significant mooring when the waves get rough and you get tossed about.
You Must Be Competent
Next, you must be good at something. And that something must be valuable enough for others to pay for. And you’ll need to convince them that you are the right person to deliver that something to them at a price point they are willing to pay and you are willing to work for. If you can’t get alignment on this, then you’re doomed from the start. This is why franchising is so popular – they will teach you how to be good at what they do. They will give you the processes, marketing and such to get started. But you’ll need upfront cash – in some cases, over $100,000 just to get started.
You Must Be Willing to Risk
Starting a business will have upfront costs. You will pay them or your business will never get off the ground. The costs will include incorporating (we highly recommend), getting a web site, business cards and so forth. But there is another cost – and it’s huge: time. You will spend inordinate amounts of time working on the initial structure of your business. If you choose to do everything yourself, then you’ll be working overtime to not only do your day job that earns income, but you’ll also be working evening and weekend hours working on the business.
For example, you’ll need to choose a name for your business. Your personal name might be fine if you’re in professional services such as accounting or the law. But if you’re starting a dog-sitting business or a training business or a consulting business, chances are you’ll need a name for that business. Aligning your business name that can be trademarked with an internet domain name that is available can be a very frustrating experience. Word of advice: make it easier by not trying to find a .com domain name. Go with one of the new 96 domains, such as .company or .fund and so forth. You’ll find these domain names in use more and more as time passes.
Jack of All Trades
In starting your new business, you’re signing up to work in a number of areas: accounting, marketing, human resources, the law, product development, sales, product and/or service delivery, customer service, business development, leadership, supply chain and so forth. The size of your business will not necessarily preclude you from having to spend time in each of these areas to get started and keep your business going. Please don’t minimize this point. Don’t say, for example, “well, I won’t have to do sales since this and that will do it for me” or something like “I don’t need to worry about leadership since I won’t have employees”. Not taking seriously the many hats that you will wear will only cost you in the long run and probably will be one of the core reasons you’re business doesn’t last as long as it could.
Start with the End in Mind
Plan for how you want to wrap up your business. How you plan to end your business will directly impact how you maximize the value of your business for yourself personally. For example, if you plan to grow your business and then realize the value out of it when you sell it, then you’ll make certain choices along the way to maximize the value of your business at the time of sale. But if you plan to work for yourself over the next X number of years and you don’t plan to grow your business, then there will be nothing to sell at the end, so you’ll need to pull out additional value from your business incrementally and consistently. For example, many CPAs who work for themselves pay into their retirement funds on a monthly basis and over a twenty or thirty year time period, they are able to comfortably retire because they pulled additional value out of their business on a monthly basis and tucked it away into a saving instrument of some type.
Don’t run a business where all you have at the end is the memory of some good income years. You’ll enjoy the ride, but you won’t enjoy the landing. Recognize that your business must support you now and in the future, even if the business doesn’t exist in the future.
Running your own business will be the toughest job you’ll ever love. We offer this advice out of experience, not some book. We’ve made every mistake in this post. If you’d like help getting your business off the ground, just contact us. We’d love to help.
CEO and Founder, Elevate
Founder, Bible and Business