Does the idea of working for yourself appeal to you? It’s not for everyone. In fact, a good portion of the population wants nothing to do with it. They seek the comfort and economic security of punching the clock for a major corporation or government agency, doing group projects with colleagues, and spending their careers as part of vast entities. But if you are one for whom the concept of going at it alone is the only way to go, then consider starting your own micro business. Also called sole proprietorship’s or one-person shops, these tiny businesses can offer security, financial rewards, a sense of self-worth, and the chance to create something from scratch.
A note of caution is if you want a much higher chance of success as a micro-company CEO, it helps to have a college degree in general business, marketing, accounting, or entrepreneurship. That way, you won’t have to start from square one when you open your doors. Plus, you can do yourself a favor by applying for a private student loan to cover all your education expenses. While working on your degree, you don’t want to be saddled down by having to work full-time just to pay for tuition and related expenses. An added bonus is that private education loans come with no prepayment penalties, competitive interest rates, and other appealing terms. Some of the newer degree programs even offer specialties for budding entrepreneurs. You can test out micro business ideas by doing them as class projects or making them the subject of a graduate thesis. One of the world’s largest pizza delivery companies began this way. Once you decide that the solo route is the way to go, review the following real-world tips for making your first attempt a long-term success.
Research the Competition
Before you take those crucial first steps of building your own company, take the time to do in-depth research on your potential competitors. This does two things. One, it will give you a keen knowledge of what you’re up against. Two, you might learn that the niche is too saturated and it’s best to check out another avenue of endeavor. Don’t spend more than a month at this stage or you’re apt to suffer brain-freeze. Put in the research hours, take notes, learn what’s out there, and then begin in earnest, or switch tracks if the competition is too heavy.
Choose a Niche You Enjoy
The most subtle, but perhaps most important of all ingredients for success is that if you select a product or service you understand and are excited about, your chances of succeeding are astronomically higher than otherwise. If, for example, you are a techie, consider staying in that general field. If you hold a degree in literature or linguistics, a good match might be in the publishing, editing, or writing industry. There’s no exact formula, but most people know what they like to do and don’t like to do. Someone with strong math and business skills might choose to open a tax preparation office or financial consultancy business. Choose your field wisely and success will come.
Cover Your Expenses
There’s a clever saying in the real estate industry that the three most important factors in evaluating the price of a home are location, location, and location. When it comes to opening a solo firm, the three principles for success could be planning, planning, and planning. Make a detailed spreadsheet of your first year’s estimated expenses and income. Estimate on the low side for income and the high side for expenses. Break out expense categories into typical line items like rent, utilities, equipment, transportation, advertising, and others. Then, don’t begin until you have at least the first six months covered. Some people use savings or credit cards to deal with this obstacle, but it’s essentially up to you. The point isn’t how you pay your costs but that you have them taken care of before opening the doors.
Finding customers will come naturally if you do all the preliminary chores. There are dozens of ways to go about attracting clients. For most new owners, online advertising and local print ads are the most cost-effective ways. Of course, it depends what you’re selling. For example, if you run a tech consultancy firm, targeted online ads and local marketing efforts will be your best bets. That’s because IT firms often seek help by searching pertinent websites. But smaller, local tech outfits will be responsive to an in-person visit or direct phone call. It’s best not to rely exclusively on cyber or local marketing techniques. Experiment to see what works best for your own particular field.
Know the Tax Implications
Unless you incorporate, you’ll probably spend your first few years of existence as what the IRS calls a Schedule C operation. That means paying both the employer and employee portion of the Social Security tax. In short, you’re on the hood for 15.3 percent of your net income, and you’ll pay it annually or quarterly in the form of self-employment tax. The good news is that you can take multiple deductions, pretty much any expense related to your business, like rent, advertising expense, a new computer, and even a home office. If you’re never filed a Schedule C before, consider doing your first one with a CPA. After that, you should be able to do the filing on your own because it’s not exceptionally complicated.
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Don’t Quit Your Day Job
Want to avoid 99 percent of all the headaches that come with starting a sole proprietorship? Don’t quit your regular, nine to five job. Nearly every successful one-person company was born on a weekend or during someone’s after-hours free time. There are multiple advantages to having a 40-hour gig, and keeping it until your new venture is earning enough money to live on. For one, you’ll never wonder where your next meal is coming from. But more important than that, you won’t have to seek out a source of financing for your fresh idea. Having a regular paycheck from a normal job, at least in the beginning, is a recipe for success as a solo worker.