In today’s tough economic times, many people are considering self-employment as an alternative to the uncertainties that come with working for someone else.
Being an entrepreneur is not for everyone. There are downsides to self-employment. To be successful, requires total commitment and hard work. You never leave the problems at the office, they are with you 24 hours a day, 7 days a week and this can have a disastrous affect on the entire family. Starting your own business should be a family decision, with everyone committed to its success.
Many individuals require the regimentation of going to work. As most small business start at home, one must have the ability to “go to work”, and still stay in the same surroundings. For some people, this is not a problem. Others can easily be way laid from working on their new enterprise because the grass needs cutting, the car needs to be washed, a baseball game is on TV, your next door neighbor has invited you over for a morning coffee or hundred’s of other items that should be taken care of. If you are prone to procrastination, self-employment is probably not for you.
How does the current recession affect self-employment? While the media presents a doom and gloom scenario of the economy, for many small businesses, a global economic recession has little effect. High end, high value products, and services are always hit the worst during a recession, but many service businesses actually grow. As an example, to reduce costs, businesses are looking to outsource functions that they used to do in-house. Accounting services, such as bookkeeping and payroll are excellent examples. Marketing, communications and webmasters are other areas where fulltime positions are often replaced with consultants. Many homeowners are remodeling rather than selling and this expands the need for home handymen. Vending cart and mobile catering businesses can increase sales as people cutback on expensive restaurants, reduce the time taken for lunch and in many cases have had expense accounts cutback. As families look for inexpensive outings, food concession operators can thrive at local community events. Food vending can also increase due to corporate budget cuts, as lavish employee functions become parking lot barbeques.
If you feel that you have what it takes to start your own business, there are two items that must be undertaken in order to start-off in the right direction.
The first is timing. The wrong time to start your own business is when you believe you have no other choice! You need to be enthusiastic about this opportunity. Starting a small business should be the best alternative, not the only alternative.
It takes time for any business to generate revenue and even longer to generate profit. In the case of the mobile food service industry, you will be involved with obtaining the appropriate permits – you are dealing with food and hence you will fall under the rules and regulations of the local health protection authorities. If you operate a vending cart or mobile food truck, you will most likely need a vendors permit, you will also need to find a location or route, as the case may be. If you are considering fairs and festivals, you must apply for space allocation from the organizers. None of the aforementioned can be undertaken until you obtain the appropriate equipment and you cannot obtain the equipment before you decide what food you will sell and how you will operate.
If you are concerned about the longevity of your current employment, then now is the time to consider starting your own business, while you are still employed. Have a plan that can be pulled out the instant employment disaster strikes.
This, of course leads us to the second item, a business plan. While many individuals believe that a business plan is what one must produce in order to borrow money from the bank, they are sadly mistaken. A business plan defines the businesses path to success. If you cannot define how your newfound business will become successful, odds are it won’t! The excuse, “I know what I need to do, but I can’t put it on paper”, indicates that you might have a vague picture in your mind, but you do not have a handle on the details. Taking care of the details is what makes a business successful.
Write a business plan! It doesn’t have to be fancy. It can have grammar errors and spelling mistakes. As you write it, you will see what details you have not considered. It will allow you to create a budget. Show it to other family members and friends, ask them to poke holes in the plan, to be the devils advocate. Then re-write the plan, covering those issues that were identified by others. If your new enterprise does not progress in the manner you expected, your business plan will help you to understand where you might have lost direction or provide you with some insight into what you must do to get back on the road to success. A business plan is always a work in progress and must be adjusted to internal and external forces.
Most businesses, no matter how small, require some capital, even if it is no more than having enough funds available to financially support yourself until the business becomes profitable. Borrowing funds from financial institutions for a start-up during a recession is next to impossible, unless you have a previous track record of success.
If you do need funds, consider family members and relatives. Be very careful when incurring additional debt unless you are sure that your new business venture will cover the monthly payments.
If you are considering buying a small business, always perform detailed due diligence. Almost any business can be “set-up” to look good on paper. That being said, there are many good small businesses that are for sale, business are sold for many other reasons than they are not doing well.
Be wary of franchises, current studies indicate that the success rate of franchises is no better than starting an independent business. The purchase of a franchise does not guarantee success!