Small Business Opportunities | 101 Tips to Avoid Start Up Pitfalls

Starscapes home-based business opportunity

Each week thousands of Americans make the decision to start their own business. By choosing to launch your empire from home, you eliminate costly overhead for the outside space and you can test the waters of having a business on a part-time basis, before taking the full-time plunge. Consider these 101 questions and answers to help avoid some of the pitfalls associated with new business startups.

1. How do I know if I have a good idea for a business?
The Small Business Administration (SBA) has put together 3 criteria for a successful business. You should be able to answer "yes" to at least one of the following: Does the product/service business serve a presently unserved need? Does the product/service serve an existing market in which demand exceeds supply? Can the product/service successfully compete with existing businesses catering to the same market niche?

2. Should I write a business plan?
A business plan helps one to organize all aspects of running the venture. It will help you answer all of the questions you need to in order to start your business with confidence.

The business plan should contain: a summary of what your business is; a brief outline on how you plan to sell this product or service; an overview on who your customer is; a budget; a financing plan; a strategy for getting publicity and generating interest in your product or service.

3. Will I need a lot of money?
The start-up capital you'll need will vary depending on what type of business you are starting. However, you should: figure out what it costs to make your product or offer your service, and then set a price. Once a price is set, determine how many units/clients you'll need each month to survive. Your monthly income should, of course, be greater than your expenses.

If your business is seasonal--firewood delivery, for example--figure out how much you need to make during your high season to sustain you through the dry months.

4. How will I know if my business is successful?
Success is rated in many ways. Picasso said that if one could see no line of demarcation between work and play, they had achieved success. Some measure success in terms of money, others in freedom and flexibility. It's up to you.

5. Do I have to dress for work even if no one will see me?
Many home-based entrepreneurs tell us that it helps to get dressed in the morning as though you are going to an office job, just so you feel more disciplined. We, however, go for the home-based blue jeans and t-shirt look, preferring to dress only for meetings with clients. After all, haven't you worked all your life "dressed" for work?

6. Should I work normal 9 to 5 hours?
The beauty of being your own boss is that you can now work from 9 p.m. to 5 a.m. if you so desire. Obviously, you will need to be in operational mode when your customers are working so you can contact them. If you work on an engraving business, however, you can work on your projects at any hour of the day or night.

7. I'm easily distracted. Can I still work at home?
You'll have to muster up discipline to stay away from the refrigerator, the television, the pool or the nearby, the television, Court TV or the nearby shopping mall. If you have children, try and find someone who can watch them for a few hours a day so you can get some work done.

8. How can I achieve this level of discipline?
Focus. Focus. Focus. You must be disciplined enough to create your business and follow-through. This is the ultimate test for an entrepreneur. If you can't get focused and carry through, then you might be better off working for the other guy, and leaving it all behind you when the 5 o'clock whistle blows.

9. How should I pick a business?
Choose something you enjoy and then figure out how you can get paid for doing it. Pick a business you'll like, be cause you could be at it 24 hours a day. Make a list of your hobbies. Is there anything there that could be turned into a business?

10. Are there types of businesses that I can't run from home?
Yes, you'll have to get into a discussion with your local zoning commission, but you can't run a restaurant from most homes. There are many businesses, such as used car lot, quick lube service, that can't be run from home.

11. How do I find out about zoning?
Go to your local town hall, zoning office or even the local library. Ask for a copy of the zoning laws. In many areas, the communities have not yet updated their zoning laws. If you read that you can't do something in particular that you have in mind, don't worry--make a few calls to the zoning committee and find out if they have expanded their interpretation of the law.

12. What if I don't meet zoning regulations?
Call an attorney (specifically, one who deals with zoning) and inquire about the specifics of the law. He or she might have a way you can get around the regulation. You can also contact the zoning board in your community and ask them to make an exception by applying for a "variance." A variance waives the law. Another option is to conform to the law by changing your operation. For example, if you want to open a cafe and serve coffee and gourmet treats, and it's not permitted, could you alter your focus and open up a catering operation?

13. What about licenses and other regulations?
Many people start businesses without investigating what local, state or Federal laws exist concerning their home-based venture. It seems that many coast by for years without being discovered by the Internal Revenue Service (IRS) or other government offices, but once they do, they can levy heavy fines and penalties. It's best to get it right from the start. Make a call to your county clerk's office. That will clue you in as to the various licenses and forms you need to acquire or to file.

14. Do I need to open a separate bank account?
Whether or no you operate the business under your own name, you should consider opening a separate bank account for your venture. If you are planning on conducting business under a name other than your own, you will need a bank account in the name of the business so that you can cash checks that are made out to "Best Bet Catering" or "Quick & Easy Mobile Detailing."

To do this, check with your county clerk. You'll need to pick up three "Doing Business As" forms from a local stationery store. The forms cost about $1. Fill them out, have them notarized, then take them down to the county clerk's office. The county clerk will keep one copy, you keep another and take the third to the bank where you want your bank account set-up. You will also need to obtain and Employer Identification Number from the IRS. This is sort of like a social security number for your new business. Different businesses need different types of licenses. Catering requires, at the minimum, a food handler's license. The county clerk or the local SBA office can help point you in the right direction. Make a call to the IRS office in your region and ask them to send you an information package on tax filing for your small business. You might want to secure the services of an accountant who will help you do your taxes. It's a great investment for any small business owner.

15. Do I have to incorporate?
No, you do not. There are other, easier, options. Sole-proprietorship is one method, and if you have a partner, then you might want to consider forming a partnership as your legal structure. For specifics, consult an attorney or call your local SBA office for more info.

16. What are the advantages of incorporating?
The main advantage is that you will have limited liability.

17. What are the disadvantages?
You will have to figure on spending more time and money filing licenses, taxes, etc. as a "corporation." There are other forms of the corporation, such as a Sub-S Corporation that you might also want to consider.

18. How do I set up a corporation or a Sub-S Corporation?
This offers you the limited liability option of a corporation along with permitting all of the income from the business to go to you directly as an individual as though you were running either a "sole proprietorship" or a "partnership."

19. How do I set up a corporation or a Sub-S Corporation?
Early on in your new business venture, it's alwasy a good idea to spend a few cnsulting hours with an attorney who specializes in small business. He or she can spell out all of the legalities and point out plenty of other helpful advice. You do not need an attorney to set up a corporation, but they can help you cut through a lot of the red tape--for a fee, of course.

20. What is a sole proprietorship?
This is the easiest way to get your business venture rolling--and the cheapest. Basically, this form of doing business can be organized very quickly. You just begin. You should call the local county clerk and determine whether or not you need certain business licenses and/or permits to proceed.

21. What are the disadvantages of a sole proprietorship?
In setting up this type of business, you will be liable for everything in respect to financial and legal obligations. For example, if you can't pay the bills, the creditors can go after your car or house or van. If a customer falls on your front porch, he or she can sue you and you could lose everything. It is still the most popular business form chosen by entrepreneurs.

22. What is a partnership?
A partnership is a group of more than one individual. It costs more to set up than a sole proprietorship but costs less money than it does to set up a corporation.

23. What are the disadvantages of a partnership?
Make sure you like working with all of your partners because it won't be easy to alter the agreement. All partners are responsible for honoring debts of the partnership, so if one partner slacks off, the others must come up with the money for his or her share. If one partner goes under, he or she could drag down the others.

24. Are there any advantages to a partnership?
In many cases, entrepreneurs enjoy the camraderie of dealing with a group of people. They are used to dealing with a group from their working days, and find it bolsters confidence to go after a goal with a small group of individuals.

25. What do I do about taxes?
The IRS is getting tough and is really cracking down on home offices. You must use your home-based business space exclusively and regularly for your business venture. It can be a separate structure or a room in your home but it must be the principal place of business, and it must be where you regularly meet clients.

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