There are approximately 22 million small businesses in the United States. And there are 543,000 new businesses that get started every single month, but unfortunately, the life expectancy of those 543,000 businesses is not very long. According to The Bureau of Labor Statistics only 44% of those businesses make it past the 4th. year of operations. And by making it past the 4th. year, these small business owners are under a lot of financial hardship just to keep the business going.
If your new year’s resolution is to start a new business, or have an idea you want to explore, the statistics about starting a new business are not pretty. Failure and financial hardship are ever present for a new business, but being prepared and researching every single aspect of starting a business can be beneficial for you and your new enterprise.
How to Research a Business Opportunity
Protect yourself by learning what a business opportunity really is, how the government regulates them, and the steps you should take to ensure you’ve found the best opportunity available.
Just what is a business opportunity? That question has plagued a great many people trying to decide whether to buy a current independent business, a franchise, or what we’ll refer to in this text as a business opportunity. To allay the confusion, we offer a simple analogy. Think back to elementary school when your teacher was explaining the difference between a rectangle and a square. A square is also a rectangle, but a rectangle isn’t necessarily a square. The same relationship exists between business opportunities, independent businesses for sale and franchises. All franchises and independent businesses for sale are business opportunities, but not all business opportunities meet the requirement of being a franchise nor are they in the strictest sense of the word independent businesses for sale.
Making matters even more confusing is the fact that 26 states have passed laws defining business opportunities and regulating their sales. Often these statutes are drafted so comprehensively that they include franchises as well.
The Basics of Startup Financing
So you’ve come up with an idea for a business? Congratulations! Now you need startup financing – that initial infusion of money needed to turn the idea into something tangible. And that’s where it becomes tricky.
When you are just starting out, you’re not at the point yet where a traditional lender or investor would be interested in you. So that leaves you with selling cherished assets, borrowing against your home, maxing out credit cards, dipping into a 401(k), and asking loved ones for loans. There is a lot of risk involved, including the risk of bankruptcy with your personal finances and soured relationships with friends and family.
This is the hard part behind starting a business — putting so much at risk. But doing so is the rite of passage to both success and failure. It’s what sets entrepreneurs apart from people who collect paychecks.
A major key is to ramp up initial operations as quickly as possible to get to the point where outside investors can see and feel the venture, as well as understand that you took some risk getting it to that point.
Some businesses can also be bootstrapped. They can be built up quickly enough to make money without aid from investors who might otherwise come in and start calling the shots.
With so much at risk, it is important to have a strong business plan in place, and to seek out advice from experienced entrepreneurs and experts — people who might also invest in your business someday.
Learn How An App Helps Small Business Owners Focus On Growth
As owners of the online stationery and gift boutique The Paper Cottage, entrepreneurs Beth Kneebone and Michelle Lease handle everything from operating their website to managing social media and corresponding with customers.
But for small-business owners, details like tracking expenses and filing receipts can be overwhelming — “all those little things [that] used to put small businesses out of business,” as Lease puts it. Watch this video to see how Kneebone and Lease use the App from Ink, a mobile expense-management app, to simplify their lives and grow their business.
