Required Preliminary Steps for Aspiring Entrepreneurs
When you start a business, you need a business plan. You should understand what it actually takes to become an entrepreneur. If you want to run your own business, what might your journey look like? You should also understand of what type of business you will be. For example, will you be starting a sole proprietorship, partnership, corporation, LLC, or S Corporation?
Today, we’re going to talk about many of the moving parts you need to be aware of that will take place as you start a business plan up to launching and maintaining your business. This article will cover a few basics and possible scenarios that aspiring entrepreneurs should consider before getting started.
What Could My Career as an Entrepreneur Look Like?
The daily ins and outs of starting, maintaining, and growing your own business will fluctuate from time to time. Being your own boss means that you have to be willing to be flexible with your daily tasks. For example, as you get started, you’re going to want to spend a lot of your time researching your idea and checking to see what kind of competitors might also occupy your market. After you’ve decided on a profitable idea, you’re probably going to have to raise money to fund your venture. This means you might be looking at applying for some loans or talking to potential investors.
From there, you’re likely going to be thinking about potential growth. As such, you might have already thought about potential partners or collaborators that will be beneficial for your growth. Some entrepreneurs flourish as a one-person business. However, if you haven’t yet at this point, you might decide that you need some help obtaining a certain level of success. Although, many others evolve their ideas into something much larger that involves many other employees in the process. So, you’ll want to consider your long-term goals early on.
After you have an outline of how you’ll pay for your idea and who will be working it, you’ll need to focus on things like an office space and what kinds of materials you might need to make your day-to-day projects successful. Before your launch you’ll also want to think about potential marketing tactics as well as networking opportunities. You’ll want to gain interest to your brand as early as possible.
Once you’ve launched and have some loyal clients/customers, you’ll shift your day-to-day practices more toward maintaining and managing your business. Then after some time, you might want to start some of this process over and repeat it in order to prepare for potential growth. Every situation will look different depending on the type of business you’re running, but all of these are relevant points for anyone who wants to switch to a entrepreneurial career.
Understanding the Different Types of Business
Another crucial part of becoming an entrepreneur has to do with how you want to run your business. There are several different categories of businesses, and depending on which one you choose, you could envision your daily tasks changing a bit. For example, there are about five main types of business categories that you can choose to file your business under — sole proprietorship, partnership, corporation, S corporation, and limited liability company (LLC). Knowing the difference between these types of businesses will help you to form more accurate plans about how you will launch your business and how it might grow in the future.
A sole proprietorship and partnership are both inexpensive to file as, but they don’t offer much protection if things happen to go wrong. Either you’ll find yourself having complete liability over the business or you might split it with a partner or two. With a partnership, you might find that you’d prefer to be your own boss, and/or partnerships can shift and change over time. So, you might find that you’d like to be the only one in charge of making big decisions for your company.
Corporations and S corporations are both a bit more expensive to form, but they offer less liability for the owner(s) and may be easier to work with if you decide to hire a lot of employees down the line. Filing as a corporation allows you to pay taxes as a corporation, which often is quite less than you would pay as a proprietorship. (Speaking of, here are some important tax dates to remember for small businesses.)
The only difference between an S corporation and a regular one is that S corporations are exempt from double taxation that some corporations may find themselves dealing with. Corporations are run by the starters of the company, but technically the entity is actually owned by shareholders — that’s what keeps the taxes fairly low and the liability low as well. As such, corporations can be complicated to start and require more time, effort, money, and paperwork from business owners.
Lastly, you can choose to start an LLC. LLCs are often a favorite choice among entrepreneurs because you have a nice blend of key elements from a corporation as well as a proprietorship. For example, an LLC is fairly cheap to start; it offers low liability for the owner(s); and the taxes are quite low as well. Of course, every business is different, but this is a great middle-of-the-road choice that best accommodates a small to medium amount of employees and isn’t so demanding to maintain.
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As you can see, there are a lot of moving parts and different aspects of an entrepreneurial career that you must consider before you commit. However, starting your own business can be quite lucrative if you’re willing to put in the time and consideration necessary to run your operation smoothly. You can get excited about the idea of being your own boss if you plan ahead, know what kind of business you want to file as, and what type of growth you can expect in the future.