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Archive for Thursday, April 12, 2007

Make your small business stand out

April 12, 2007

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I like working for a large company, but I understand the many others who dream of owning their own businesses.

Small business ownership certainly has been a popular path to prosperity in this country. Authors Thomas J. Stanley and William D. Danko, in their wonderfully researched book "The Millionaire Next Door," found that two-thirds of millionaires are self-employed.

But even in a country of more than 25 million small businesses, it is important to note that many fail. While two-thirds of new employer firms survive at least two years, only 44 percent last four years, according to the Bureau of Labor Statistics. This holds true pretty much across all industry sectors.

To make sure your small business isn't a failure and a financial drain on your family, consider the following advice from the Small Business Administration (www.sba.gov) and SCORE, formerly the Service Corps of Retired Executives (www.score.org), a nonprofit made up of working or retired business owners, executives and corporate leaders who volunteer to help budding business owners:

¢ Know what you love and love what you do. If you want to own a successful business, start with figuring out what you do best. Don't fall for a cookie-cutter business franchise just because the presentation was impressive. Start a business that has meaning to you. If it's all about the money, there's a good chance you will fail.

¢ Plan to succeed. Yes, that means creating a detailed business plan. It doesn't matter what business you go into; you need to have a business plan. You've heard it before: If you fail to plan, you're essentially planning to fail. A good business plan will, among other things, include an executive summary, market analysis, company description, how the business is to be organized and information about products or services. For details on what should be in your business plan, go to the SBA's Web site. Click on the link for "Small Business Planner."

¢ Get organized. You will have to decide whether you want your business to be a sole proprietorship, partnership, limited liability company or corporation. How you organize your business affects your personal liability.

¢ Do a budget. A business budget is as important as a personal budget. Many people are so eager to become their own bosses that they ignore the essential element - making a profit. Notice I said profit, not revenue. You also may consider keeping your job with a larger employer until you're confident you can earn a living being self-employed. Before you jump into an entrepreneurial venture, try it on the side for a while. Your personal household bills still have to be paid.

¢ Know the competition. Spend some time researching. Spend a few months looking through magazines that cover your business area. Most important, talk to business owners who already are successful in the field that interests you. They've been there and probably made a lot of mistakes that they can help you avoid.

¢ Pay your taxes. It's so tempting to spend your revenues and not set aside money for taxes, especially when times get tough for your business. Don't do it. It's a huge and costly mistake. For information on what's required of a small business, go to www.irs.gov. Click on the link for "Businesses."

¢ Get help. You don't have to do this alone. There are so many resources, many of them free. Take advantage of the vast knowledge of the volunteers who work with SCORE. If you go to SCORE's Web site, you can enter your ZIP code and find an office nearest to you.

The week of April 22, the SBA and SCORE will be recognizing successful small businesses as part of Small Business Week. If one day you have aspirations to be one of those success stories, make sure you are passionate about the small business you start.

- Michelle Singletary is a columnist for The Washington Post.

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