{"id":458,"date":"2012-03-26T17:12:34","date_gmt":"2012-03-26T17:12:34","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=458"},"modified":"2012-04-29T21:19:20","modified_gmt":"2012-04-29T21:19:20","slug":"be-your-own-boss-a-step-by-step-guide","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=458","title":{"rendered":"BE YOUR OWN BOSS: A STEP-BY-STEP GUIDE"},"content":{"rendered":"

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As a child, Belinda Stubblefield loved playing the banker in Monopoly. She resold the gum her mother bought for her to classmates for a nickel a piece. Then she stashed the cash in her “rainy day” piggy bank, which was shaped like a little girl with an umbrella over her head. “I made a good profit,” Stubblefield says with a laugh.<\/p>\n

\"ClickIt’s little wonder that today Stubblefield, 46, is satisfying her entrepreneurial drive after decades of working for large corporations. Three years ago, Stubblefield left the relative safety of her job at Delta Air Lines with a generous buyout package in hand. Six months later, she opened a wine shop. “I wanted to be an entrepreneur for a long time,” she says. “My biggest question was what I wanted to do.”<\/p>\n

She’s not alone. In this strained economy, more and more workers are exiting the once secure realm of corporate jobs\u2014many because of layoffs\u2014and starting their own businesses. Last year, more than 600,000 small firms were started in the United States, according to the Small Business Administration. Trouble is, only half will survive beyond five years.<\/p>\n

It takes far more than a brilliant idea to succeed. Here are some steps to help you land among the winners:<\/p>\n

[See the\u00a050 Best Careers of 2010<\/span><\/a>.]<\/p>\n

1. Find a mentor.<\/strong>\u00a0Connect with someone in the field you’re entering for guidance. Check out StartupNation.com, a site dedicated to small-business groups, or SCORE\u00a0(www.score.org)<\/em>, a nonprofit that provides education to entrepreneurs. At SCORE, working and retired executives and business owners donate their time and expertise free of charge in person or online. The Association of Small Business Development Centers, a joint effort of the Small Business Administration, universities, colleges, and local governments, provides no-cost consulting and low-cost training at about 1,000 locations.<\/p>\n

[See\u00a05 Networking Tips for People Who Can’t Network<\/span><\/a>.]<\/p>\n

2. Do the prep work.<\/strong>\u00a0You may have to study marketing, finance, and employment law. Sign up for a community college or certification program to get the necessary skills. You can begin by contacting your town’s or county’s Small Business Development Center. A three-hour course in the essentials of starting a business or E-mail marketing might cost as little as $15 to $30.<\/p>\n

Stubblefield’s move into the wine trade was a combination of inspiration and market research. “I love fine wines, although I’m not a connoisseur, but there wasn’t an upscale wine shop near where I live\u2014an upscale, predominantly \u00adAfrican-American section of Atlanta,” she says. With an M.B.A. from Harvard and executive marketing jobs at Procter & Gamble and Nestl\u00e9 under her belt, Stubblefield had the chops to enter the consumer retail trade. After painstaking research, she went the franchise route with WineStyles, a national wine retail boutique with more than 100 independently owned locations. Her total cost: $250,000.<\/p>\n

3. Write a business plan.\u00a0<\/strong>There’s no strict model to follow, but in general, a simple plan\u2014which you’ll have to submit to get a loan or other financing\u2014should be about 20 pages. Here’s what you’ll need:<\/p>\n

\u2022An executive summary that explains what your company will do, who the customers will be, why you are qualified to run it, how you’ll sell your goods and services, and your financial outlook.<\/p>\n

\u2022A detailed description of the business, its location, who your management team is, and what your staffing requirements are. You’ll also need to include information about your industry and competition.<\/p>\n

\u2022A market analysis that targets your customers more specifically, including age, gender, and where they live. The analysis also will describe your sales and promotional strategy to reach them.<\/p>\n

\u2022A realistic forecast of start-up outlays\u2014cost of raw materials, equipment, employee salaries, marketing materials, insurance, utilities, and fees for attorneys and accountants\u2014and how much you expect to sell and to earn.<\/p>\n

4. Line up sources of\u00a0funding<\/span><\/a>.<\/strong>\u00a0Here are some ways to find the money to get started:<\/p>\n

\u2022Savings<\/strong>: Most start-ups are funded with personal savings. (This is where a severance package comes in handy.) It’s advisable to set aside at least six months of fixed living expenses. Try not to dip into your retirement savings: You’ll be subject to withdrawal penalties and income taxes and lose the tax-deferred compounding that could serve you well in retirement.<\/p>\n

\u2022Credit cards<\/strong>: Use plastic with care. It’s fairly easy to tap into, but this should be a last option. Most cards have double-digit interest rates, a very high cost of capital to carry on your new company’s books.<\/p>\n

\u2022Home equity loans<\/strong>: This is an appealing option because the funds are usually taken as a lump sum that you can pay off over time. In this housing market, though, qualifying for such a loan can be tough. If you have equity in your home and a credit score above 700, it’s worth exploring. You may also qualify for a tax deduction on the interest on a loan up to $100,000.<\/p>\n

\u2022Friends and relatives<\/strong>:\u00a0Money<\/span><\/a>\u00a0is often lent interest free or at a low rate. Be sure to put the terms in writing so that there are no misunderstandings about interest and repayment. Be forewarned: Money can wreak havoc on relationships should things not work out as planned.<\/p>\n

\u2022Banks and credit unions<\/strong>: A tight lending environment has made borrowing a struggle. A solid business plan and a shiny credit record are prerequisites. You might try a bank that’s familiar with you or your industry, or one that is active in small-business lending. To find a bank that offers SBA-guaranteed loans, check the “Local Resources” section of the agency’s website (www.sba.gov).<\/em>\u00a0Keep in mind that a lender will still want you to put up collateral, usually in the form of a real estate asset. Plan to have some capital or equity that you personally put into the business. Lenders want you to have some skin in the game, so to speak.<\/p>\n

\u2022Angel investors and venture capital firms<\/strong>: These individuals and firms invest in exchange for equity or partial ownership. But they are typically overwhelmed by requests for financing and are exceedingly cautious with their funding. Some have a mission. San Franciso-based Investors Circle, for example, favors small companies that address social issues and environmental concerns. One source of venture capital is the SBA’s Small Business Investment Company Program.<\/p>\n

5. Purchase health\u00a0insurance<\/span><\/a>.\u00a0<\/strong>Some sources to check for availability are eHealthInsurance.com, Coverageforall.org, and the National Association of Health Underwriters website\u00a0(www.nahu.org)<\/em>, which can direct you to a local agent. Sole proprietors can deduct the premiums for medical, dental, and\u00a0long-term-careinsurance<\/span><\/a>. Consider a health savings account that permits you to contribute pretax money that you can use tax free for future medical expenses. For individual coverage, you can contribute up to $3,050 to an HSA in 2010. For families, the maximum is $6,150. And you can contribute an extra $1,000 if you’re 55 or older. For a list of insurers that offer these plans, see HSAInsider.com.<\/p>\n

6. Hire an accountant.\u00a0<\/strong>It’s critical to know which business expenses are deductible. Careful record keeping is essential, and having a pro to guide you will come in handy. Go to the source to find what’s deductible: IRS Publication 334, “Tax Guide for Small Businesses.” Useful information is available at the IRS Small Business and Self-Employed Tax Center on the agency’s site.<\/p>\n

7. Don’t neglect retirement savings.<\/strong>\u00a0You have two basic ways to set aside pretax savings: a simplified employee pension, or SEP IRA, and an individual 401(k). With a SEP IRA, you can contribute up to 25 percent of your net self-employment income, up to a maximum of $49,000 in 2010. With a solo 401(k), you can contribute up to $16,500. In addition to the 25 percent contribution, self-employed business owners can contribute $16,500, plus $5,500 more if they’re 50 or older.<\/p>\n

8. Accept what you can’t have.\u00a0<\/strong>“For my birthday, I’m going to ask my husband for an assistant,” Stubblefield says. “The business is constantly on my mind. There are no days off.” In truth, that’s fine with her. Since she opened the wine shop, Stubblefield and her husband have become co-owners of a restaurant, and she’s a joint venture partner in Paradies-Atlanta LLC, an affiliate company of the Paradies Shops, an airport and specialty retailer. That’s a long way from a little girl’s rainy-day piggy bank brimming with nickels.<\/p>\n

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