3 Tips to Know Before Starting Your Own Business.

What could be more American than starting your own business?

The Small Business Administration has these statistics.

  • Small business is BIG!
  • The 23 million small businesses in America account for 54% of all U.S. sales.
  • Small businesses provide 55% of all jobs and 66% of all net new jobs since the 1970s.
  • The 600,000 plus franchised small businesses in the U.S. account for 40% of all retail sales and provide jobs for some 8 million people.
  • The small business sector in America occupies 30-50% of all commercial space, an estimated 20-34 billion square feet.

Furthermore, the small business sector is growing rapidly. While corporate America has been “downsizing”, the rate of small business “startups” has grown, and the rate for small business failures has declined.

  • The number of small businesses in the United States has increased 49% since 1982.
  • Since 1990, as big business eliminated 4 million jobs, small businesses added 8 million new jobs.

That’s the romantic side. The more interesting small business statistics are

According to Dun & Bradstreet reports, “Businesses with fewer than 20 employees have only a 37% chance of surviving four years (of business) and only a 9% chance of surviving 10 years.” Restaurants only have a 20% chance of surviving 2 years. Of these failed businesses, only 10% of them close involuntarily due to bankruptcy and the remaining 90% close because the business was not successful, did not provide the level of income desired or was too much work for their efforts. The old adage, “People don’t plan to fail, they fail to plan” certainly holds true when it comes to small business success. The failure rate for new businesses seems to be around 70% to 80% in the first year and only about half of those who survive the first year will remain in business the next five years.

So what do you do to succeed when starting a small business?

First – Ask yourself if the kind of business you want to open has a record of succeeding. Business like restaurants are among the most risky to start and to stay in business, Are you starting a business that will have appeal to baby boomers who have  started entering retirement age . Jobs in healthcare for instance will enjoy success in the coming years.

Second – Do you have the skills or education to start the kind of business you want to open? Believe it not, people open up business all the time with no real experience to run that type of business. Maybe you have a friend who decided he was going to open a restaurant, hair salon etc. with no idea how to manage that type of business. Learning on the job is not a good plan for success.

Third – Do you really have the patience and resources to run a business? Running a business is not a 9 to 5 endeavor. You will work late. You will work weekends and you will take little vacation.  You will have to pay someone to keep your books, clean your space and pay your taxes. Of course you can do these things yourself, but you went into business to provide a particular service. You may be better off putting your energy into what you are good at.

If you can answer those 3 questions to your satisfaction than you are off to better start than most.

  • Now you must create a business plan.
  • Know and market to your target customer.
  • Perfect your pricing

Having a small business is one of the greatest things you can do for country, your family and yourself. Having a successful business depends on the foundation you build, before you hang your “shingle.”

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