In over 14 years of practicing as a CPA in Oklahoma City I have worked with a lot of new business start-ups. Let's discuss the four factors to consider when starting a new business.
Q1: Is it the right time to start the business?
There will always be a reason why now is not the time to start a business and there will always be reason why it is the perfect time.
The truth of the matter is there isn't the perfect time to start a business.
Q2: How much capital will be required to start the business and where will it come from?
You will need to determine the amount of capital it will take to start the business. Seek out any industry groups that might exist in the field you are trying to get into and see if they have any data.
Reach out to business owners in other areas of the country that have started a similar business and see if they will share information with you.Hey someone probably helped them when they started out and they will return the favor. Find a CPA that specializes in business start-ups they have a wealth of experience since they work with a lot of business owners they will have a lot of data at their finger tips.
One option is to Have you been able to save money and build-up a little nest egg to start the business? You can start out your new business on a shoe string budget a lot of businesses can be started at home to save overhead costs of rent and utitlities, etc.
Q3: How will you pay your personal bills?
If you quite your job do you have other streams of income you can depend on each month? If you have other income producing assets that you can rely on for monthly income it sure does make the decision to start a business a lot easier, however, more times than not that won't be the case.
Another option is do you have a spouse or significant other that works and can support you while the business is just starting out? If you do then that would be ideal as the monthly bills continue to get paid while you are getting the new business off of the ground.
The most likely scenario is going to be that you not in either of the before mentioned scenarios so that means it is time to make some personal financial sacrifices. You may need to consider downsizing to enable you to save up enough off a nest egg to support you while you get your business off the ground.
Look for ways to reduce your monthly cash outflow by selling your house and purcahsing a less expensive home to reduce your mortgage payment or find a smaller less expensive apartment. Also, start eating out less and bring your lunch to work at this point we are just trying to save up every dollar we can to provide us a cushion to start the business.
Evaluate every dollar you spend each month to determine if the expenditure is necessary and if it is necssary look for ways it could it be reduced.
Q4: Is there a market for the service or product?
You will need to determine if there is a market for the service or product your new business will sell. Also, is the product you sell going to have repeat customers or is it more off a one-time purchase. If the later is the case you are going to have to spen a lot more in customer acqusitions costs.
Web Site Development
It takes a while to get your web site to show-up on the first page of google on searches. Before you give your two weeks notice it wouldn't be a bad idea to have the web site developed and try and start getting traffic to your web site. This not only applies to e-commerce businesses but also service companies as well.
I love the old saying "Jack of all trades and master of none" it is hard to do everything well. Everybody has strengths and weaknesses you need to focus on your strengths and be sure they are the core competency of your business and outsource everything else.
Q5: Can you start your business on the side and work on it after hours?
You may have a great job and rely on the steady income the job provides so you are scared to quite your job and jump with both feet in and start your new business. Moonlighting is an option that would allow you to start your business and see if you can get some traction and generate revenue.
Where people get into trouble with moonlighting is if you are starting a business that competes with your current employer. You don't want to burn any bridges with your current employer.
Please contact us to learn more about getting started on your business.