One of the common questions I receive when a visitor first lands on this blog and reads my ‘About Me‘ page is, “How did you start your own computer business?”  Whether they are interested in the IT field or just wanting to know how to start a small business, I try to help as much as I can.  I’m passionate about being a small business owner and feel that everyone should have the means and opportunity to pursue this dream if they have it.  With a recent request about how to start a small business, I decided it was time to go ahead and right a post, detailing the process.  I plan on covering both the practical AND mental aspects as well as touching on the technical details that make it legal and legit.

I apologize if it’s a bit lengthy, but it’s necessary to cover all the bases if I want to make it truly a useful resource.  I’ll try and break it up in chunks that are easily digestible.  If nothing else, just bookmark the post and use it as a reference as you start making the changes necessary to start a small business.

The Entrepreneur Mindset

Before I begin with the ‘how to’ part of this post I want to talk about what I feel it means to be an entrepreneur.  The word entrepreneur does not represent the actions taken by a person, but the natural mindset of that particular individual.  Anyone can try to open a lemonade stand, but an entrepreneur is someone who can do nothing BUT open that stand.  You see, the mindset of an entrepreneur is that of independence and perseverance.  We work for ourselves because we could never fathom the idea of working for someone else.  Maybe we have done just that, but if so, it was probably a brief, painful experience.  You could almost say it’s a kind of sickness or obsession, but we know it’s just part of our DNA.

So if you’re trying to figure out how to start a small business, first ask yourself this question; “Would I be just as happy doing the same thing, but for someone else?“  In other words, is the idea of starting a small business just something you want to try on, like a new pair of pants?  Or are you pursuing something that you just can’t get away from?  Don’t get me wrong, there are many great advantages to working for an employer and I sometimes day dream about these work characteristics.  But as an entrepreneur, it only takes a short second to think of losing my freedom to snap me out of my stupor.  If you’re content with the idea of working for someone else, then maybe this is not for you.  But if you just can’t seem to get this dream out of your head, you’ve come to the right place.

Question #1: Is Starting A Small Business For Everyone?

The simple answer is ABSOLUTELY NOT!  There are many people out there who are either just not cut out for the unique stresses of being a small business owner or who require that common co-worker camaraderie that can only be obtained through work for another.  If you are reading this right now with baited breath to find out exactly how to start a small business, than I think it’s safe to say you are not in this group.  Not to say that you won’t struggle in this new endeavor, but the fact that you are enticed by its independent nature and obtuse opportunity, shows me that you are ready to move on to the next question.

Question #2: How Do You Know What Kind of Business To Start?

Many of you will already know EXACTLY what business you want to start.  But for those who are still pondering this question, here are some tips to help you make the right decision.

• Hobbies don’t always make the best business. We’re often told that we should turn a current hobby into a business.  This can work well and become a smooth transition from play to professional, but for many of us it can be a disaster.  For one, our hobbies are often sacred activities that allow us reprieve from the stresses of life.  Once you add the expectations of a client base, you may quickly corrupt this.  In addition, our hobbies are not always best for monetization.  You may enjoy knitting, but making a living off of that skill might be a burden not worth baring.  The flip side of this argument is that many times it’s our hobbies that represent our greatest skill.  For me, working on computers was certainly  a hobby, so this particular situation worked quite well.  Also, I had other hobbies that allowed me to escape from the daily grind of work.  Just be careful when considering taking your free time activities and putting a price tag on them.
• Money DOES matter. When deciding on what business to start, it’s important that you consider the key factor of making money.  One of the huge benefits of starting a computer business is that your expected fees are much higher than most.  Even if you pick a business that is a bit less enjoyable than another, if you can make more money from it, you can afford to work less and play more.  The worst position to put yourself into is a business you enjoy, but pays so little that you have to work around the clock to make ends meet.  I’ve seen this happen many times before.  The idea of a starving artist may seem romantic, but the starving part gets old FAST. I’m not encouraging you to do what you hate, but to just keep money at the forefront of the decision making process.
• Just like money, personality DOES matter. In a recent post called ‘What Career Is Right For Me‘ I talked about the importance of finding a position that plays nice with your personality.  My computer businesses was an example of a half-match.  I loved working with the people and my ADHD did quite well with the sporadic nature of the business, but the lack of creativity involved and the fact that I was always under the gun to get it done RIGHT NOW, made me less than satisfied with my position.  By making a few adjustments, but keeping the parts that worked best with my personality, I was able to find a better balance for my brain.
• Be careful not to jump the gun. I talk to a lot of people who have little experience in an area of interest and are considering turning that lack of skill into a business.  It usually sounds something like, “Yeah, I recently started playing around with such and such and really like it.  I’m not that good at it yet, but I’m catching on.  Do you think there’s a market out there for those who can do such and such?”  My thought is always, “Well sure, for those who have EXPERIENCE doing such and such.”  Pick out your greatest skills and determine what you have the most experience with and try to leverage that as your next opportunity.  I had been working with computers for many years and knew that the transition to my own business would be doable.  I was also interested in digital photography, but I certainly wasn’t skilled enough to start doing weddings.  Don’t get me wrong, if you’re passionate about something and want to turn it into a business, don’t let lack of experience stop you.  Just be prepared to take the time to learn what you need to know.  It’s easy to let our eagerness push us to start sprinting before we’ve had a chance to warm up.
• Know that there is NO perfect business. Finally, when deciding on what business to start, don’t look for the perfect match.  There just isn’t one out there.  There are some that you will hate and others you will love, but all businesses are work, at least some of the time.  Be prepared to work and you won’t be disappointed.

Question #3: What are the first steps in starting a small business?

So you know what kind of business you want to start, now it’s time to take the first steps in making that dream a reality.

Practical:

• Get a business license. The kind of license you need will depend on the business, but you can find out more by going HERE.  When I started my local computer consulting business, I found that I only need to have a county license that was registered with my trade name.  That’s about as simple as it gets.  Some other businesses may be a bit more complicated, but either way, you need a business license to be legal.
• You may or may not want/need liability insurance. If something bad were to happen while you were on the job or someone tied you to a mistake that caused injury or monetary loss to your client, you may find yourself on the other end of a costly lawsuit.  With liability insurance, you will be covered up to a specified amount.  Also, many of these policies will cover all your legal fees (up to a certain amount).  This can seriously save you from some life changing loss of finances.  But this all depends on what you’re doing.  If you are a professional organizer, you are much less likely to get sued than if you were an auto mechanic.  If a client feels less organized after you leave a job, you may lose their business, but if a client gets in an accident because you improperly repaired their brakes…well, you get the picture.
• You may or may not want/need to form an LLC or Corporation. I never did this with my computer business, but there are some advantages.  By forming a LLC (limited liability company) or Corporation you are separating yourself from your business.  In theory, if your LLC or Corporation were to go bankrupt, your personal finances would be safe.  With a LLC or Corporation you are legally making the business, the business, as apposed to YOU being the business.  As a Sole Proprietor (not forming an LLC or Corporation), your personal assets are not legally protected.  But from my experience and understanding, the most important thing you can have when trying to protect your personal assets is liability insurance.  Because unless you run your business and coordinate your expenses perfectly, a good lawyer can pierce the Corporate veil in a heart beat.  Then you’re no more than a Sole Proprietor in the eyes of the legal system.
• Strongly consider acquiring an accountant. A lot of people think of having an accountant as some large expense that is only for larger businesses, but many accountants are just one-man-shows who have reasonable rates.  I had an accountant just like this, soon after starting my computer business.  The only fee I paid him was once a year to do my taxes.  During that time he helped answer some of the lingering accounting questions I had and helped point me in the right direction when needed.  Sure, you can use tax software and do it yourself, but for the little extra cost of  human interaction, you gain a LARGE amount of peace of mind.  Also, the tax laws change all the time and doing taxes for a small business is a bit more complicated than your standard set.  Just an opinion, but one with 5 years of experience.
• Acquire the necessary supplies to do your job. As a computer tech I needed certain items to properly service my clients computers.  From a decked out computer bag to the required tools to meet any IT situation head on, I was sure to have what I needed.  Depending on the business in question, you may or may not have trouble doing this.  If you’re not sure what you need, search for someone who already does what you plan on doing and pick their brain.  Find out what they use on a regular basis and what they couldn’t live without.  I found that it took a good 6 to 9 months before I had all the essentials.  If I could have done it all over again I would have sought the advise of another, more seasoned tech.
• Build a financial buffer before you take the plunge. I personally just took the plunge.  It worked out and I was able to hit the ground running, but this is rare.  Many will say, “Don’t worry about it.  If you wait for your finances to build a buffer, you’ll never start the business.”  This may be true for some, but I can say for sure that a common business killer is one that had no chance to begin with.  If the first little dry spell is enough to wipe out your reserves, you’ll not only become discouraged, but possibly bankrupt.  So give your business a chance and build a financial foundation before you begin to break new ground.

Mental:

• Be prepared for the 6 month hump. I find that it takes a good 6 months of doing anything new, to get used to it.  Whether you are starting a position at a coffee shop or starting your own coffee shop, it will take some time to feel comfortable.  It’s a kind of culture shock for work.  All the little details that will become second nature, start out as constant reminders that you are new at this.  Just push through it and know it will pass.  One of the great things about sticking with a job or business is the feeling your get when you first cross that hump.  Suddenly you can do the job in your sleep and are now able to focus on moving forward and growing the business to new heights.
• Connect with others in your field. Nothing helps dull the pain of a bad business day better than the supportive shoulder of a common colleague.  A few years after starting my computer business I connected with Chad.  As a fellow geek and business owner, Chad totally understood my frustrations on my bad days.  We kept each other encouraged and motivated one another to try and reach new heights with our businesses.  Still friends today, Chad and I have been a valuable asset to each others success (both in business and in life).
• Make sure you have your family behind you. If you are married and/or have kids, it’s crucial that you have their support.  Try and explain exactly what you do, how you will need to do it and what struggles you’ll be going throuh.  The more clear they are on your day to day work, the more supportive they’ll be when you’re having a bad day.  Also, if they are blind sided by some aspect of this new position (maybe you’re coming home late or working on weekends), they will not only have trouble supporting your, but may be a detriment to the success of your business.  Think of your family as an important part of your team.  Let them be apart of your business life, even if just through understanding.
• Be prepared to work more up front. When you first start a new business you will find that you’re required to put in the time and effort to make things happen.  Just like pushing a stalled car, momentum begins with brute force, but follows with smooth sailing. Look forward to the enjoyment of an established business, while you’re first fighting the current of the fledgling vessel you’ve chosen for this new journey.
• Learn to clock out from the VERY BEGINNING. A common mistake we make when starting a small business is to never clock out.  We quickly form this unhealthy habit of non stop work.  Not only does this not allow for personal time with your family, but you never give yourself a break.  Over time you will begin to burn out and unintentionally harm your business.  So just pick a time to clock out that seems right for both your business and your family and stick to it.  Know that it will be waiting for you in the morning and enjoy yourself.

Question #4: How should I advertise my business?

One of the most important things you do to help your business succeed is properly advertise.  I say properly because there are definitely some improper ways of going about this.

The main goal when getting the word out is to target your preferred client base and properly communicate what you have to offer.  Determine what your potential client would desire most about your product or service and make sure to clearly convey this aspect of your offering in your ads.

• Yellow Pages. Kind of the old school way of advertising, the yellow pages can still be a valuable asset to some forms of business.  It really all depends, though.  As a computer service tech I found my yellow ads to be very helpful in not only bringing in consistent business, but helping me grow my client base much more quickly.  But this may not be the case for you.  I would strongly encourage you to seek out others in your area of interest and see what they do.  If they have a yellow page ad, ask them how much they pay for it and what kind of return they’re receiving.  Considering you will be signing a one year contract, you want to be absolutely certain it will aid in the growth of your new business.  (Be careful not to get caught up in the hype of ‘Bigger is always better’.  Those yellow page reps can be sharks and will talk you into something WAY over your budget if you let them.)
• Word of mouth. This is the best kind of advertising out there.  It’s free, highly effective and can go viral.  The only requirement is that you do great work or have an amazing product, treat the client better than most and go the extra mile whenever you can.  The yellow pages may grow your business quickly (depending of the business), but word of mouth will always give you the strongest foundation for future growth.
• Flyers and mailers. This was one of the first forms of advertising I did to get the word out.  I did mailers and handed out flyers and tried to let people know I existed.  I would have to say that this is one of the least effective ways to advertise a new business.  For one, the return is weak.  You may send out 500 mailers and only receive 2 responses.  Also, I find that a mailer or flyer can give a kind of rookie feel.  You almost know from the start that this is a new business, desperate for attention.  Like I said, I did it myself and got a little business from it, but I found it to be lacking.
• Radio and Television. Once again, this totally depends on your business, but I would say this rout is rarely that desirable.  Usually quite expensive and launched with such a wide brush stroke, this form of advertising is hit or miss.
• Internet advertising. Becoming the new yellow pages, the Internet, combined with search engines like Google, makes it easy for the consumer to find the products and services they need.  As time goes by we will see advertising move ever closer to an online only scenario.  So the sooner you share your new business with the web, the better.  I would strongly suggest a search engine optimized website as well as a solid understanding of how Internet advertising works.  Even if you need to pay for a consultation from a professional I would encourage you to do so.  A few changes here or there could make the difference between being highly visible to potential clients and being completely buried among the rubble of lost causes.
• Social Media. The latest craze for Internet Marketing, social media sites like Facebook, Twitter and Linkedin are changing the way we advertise.  Allowing for instant interaction and constant connection, this viral possibility should not be over looked.  What social media allows that other forms of advertising does NOT allow, is the ability to communicate with your potential clients, without coming across as an ‘in your face’ pedlar of a product or service.  Learn the ways of this new wave and you will be ahead of most that are trying to start a new small business.

Question #5: What next?

Once you get past the very beginnings of starting a new business you will find your stride as you move past your rookie status.  Adjustments will be made and success attained, but this journey is still just starting.

You will quickly find that just like anything in life, there are highs and lows and somethings in between.  Those who succeed in business are ones who master the ability to maneuver through these hills and valleys.  I’ve written a series of posts about this very struggle called, ‘Enduring The Road To Success‘.  In it I chart my path from a fledgling business owner to a successful computer consultant.  My main focus is to draw a map of your road ahead, marking the obstacles and pointing out the path of greatest potential.

I hope I’ve laid out a clear and competent guide to helping you on your way to becoming your own boss.  I’m excited that you’re willing to take a chance in life and pursue your dream of starting your own business.  Please feel free to contact me if you have any questions.  I’d love to help in any way I can.

Finally, if you found this information to be helpful or you believe it may be helpful to someone else, please do me the favor of sharing it with others. Whether through Twitter or Stumbleupon or Digg or just emailing a link to a friend.  The great thing about useful content is that it helps others answer questions and solve problems, but the greatest shame is when that information is buried amongst a mountain of Internet clutter.  Help me push this to the top of the heap, that more people may benefit.  Thanks!

Eric