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It may come as a surprise, but in 2020 the number of new business applications filed in the US rose 24%, according to the US Business Formation Statistics (BFS). Despite the pandemic, entrepreneurial people have found ways to pursue ideas and start their own businesses.
While entrepreneurship is great, starting a business is not an easy endeavor and should not be taken lightly. When you start a business, you are responsible for everything. It's like another child – a level of responsibility that can affect your personal life. Because of this, it is important that you have your personal ducks in a row before starting your business. If you think you are ready to start a business, these things should be considered before submitting your articles of association.
1. Do your research.
First and foremost, is your business idea even viable? How well do you understand the industry you are entering? If you're a lifelong financial analyst looking to get into the renewable energy business, this is a compelling idea, but what do you really know about the industry, your competitors, or the challenges your product or service might face?
Many new companies are dead when they arrive because founders did not fully understand the company before starting it. Nobody wants to fail, but if you forego a fixed salary to do business that you failed to do due diligence, your family will be hurt.
2. Determine where your funding is coming from.
36 percent of business start-ups receive start-up capital from their personal savings or from family and friends. Of course, banks are always an option too, but without an established business loan, you will likely need to use a private line of credit. That said, if your business collapses, your personal credit will be lost too.
Before investing money in a business, it is important to discuss the financial implications with your family. Know where your capital comes from and set up your finances so that you can cover your daily needs. Your child's college savings should probably be off-limits.
Many companies don't make instant profits, which means you may have to rely on a partner or family member for a while. Having these conversations before the money problems emerge is far preferable to getting caught blindly.
3. Plan for the best, prepare for the worst.
When you quit a job to start a business, you also leave the security of a salary and benefits like health and life insurance. It is important to protect you and your family in the event of tragedy.
Fortunately, applying for quality, affordable life insurance is easier than ever today thanks to companies like Bestow. Bestow's fast and smooth process is 100% online and does not require any medical examinations. Answer a few questions, determine the best policy for you and set up with term life insurance in no time at all. You will likely be fine, but without the security of a traditional job, finding ways to keep your family safe while investing in your business is a good idea.
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4. Set it up properly.
Timing is important for business reasons, of course, but getting the timing right in your life is also important in order to start a business. If your child has just gone to college or you just bought a house, it is unwise to start your business with so many new monthly expenses.
The “right time” is different for every person and every family. Maybe you just lost your job but saved some money. Perhaps the children have finally all become financially independent and you have a little more disposable income. Perhaps your partner is ready to go into your business and help you grow it. The right time is different for everyone, and you won't know it if you don't discuss it openly.
5. Consult the experts.
Starting a business is and should not be an adventure in itself. Of course, your family is the focus of the trip, but you should also get as much expert help as possible. People who have started businesses in your industry can be invaluable resources in helping you avoid common mistakes and running your business as efficiently as possible.
Go to networking events, connect with people on LinkedIn, and try to connect with industry thought leaders for as much mentoring as possible. The experience of experienced professionals will help you start on the right foot and assert yourself against the competition.
Corporations are also significant legal and financial ventures. There are rules and regulations that you need to follow, so consulting a lawyer and accountant is absolutely essential to ensure your company stays compliant. It's not difficult to start a business in the US, but it's harder than you might think. That is why it is important to bring as many experienced experts as possible into your corner.
Life insurance quotes from Bestow Agency, LLC dba Bestow Insurance Services in CA, the licensed agent. Term life policies offered by Stow are issued by the North American Company for Life and Health Insurance, Administrative Office, One Sammons Plaza, Sioux Falls, SD 57193 on Policy Forms LS181 and LS182 or the state version, including all applicable notes and transcripts, or issue ages may not be available in all jurisdictions. Limitations or restrictions may apply. Not available in New York. North American is owned by A.M. rated A + (Superior). Preferably. A + (Superior), the second highest rating out of 15 categories, was awarded by A.M. Best for North American Company for Life and Health Insurance as part of Sammons Financial Group on August 19, 2020. A.M. Best is a large independent reporting and rating company that rates an insurance company based on the company's financial strength, operational performance and ability to meet its ongoing obligations to policyholders. Our application asks about your lifestyle and health in order to avoid a medical examination.