For many people, opening a brand new business and no longer answering to a boss are lifelong dreams that may not seem attainable. Fortunately, if you’re a visionary person with self-discipline and a well-laid plan, you can achieve remarkable success in your business endeavors.
If you’ve been wondering how to become self-employed and start your own business, here are a few steps you should follow.
Figure out your passion
When choosing the type of business you want to open, be careful. Don’t make your decision based solely on what seems popular at the moment. Instead, make sure you choose something that stirs your enthusiasm.
While passion and success don’t always go hand-in-hand, you’re much more likely to fight through stressful times with your own business if you’re voracious about the work you do.
Assess your skills
Passion alone isn’t enough to put food on the table. In addition to loving what you do, you need to be good at it. You might get incredibly excited about art, but if you can’t draw or paint, you probably won’t be able to make a living as an artist. Similarly, if you’re passionate about music, but you can’t carry a tune, you’ll probably never become a successful recording artist.
However, there may be less obvious ways to make a good living doing what you love. For example, you could use your love of art to create a successful art shop where they sell high-end paintings. Or, you could use your love of music to become a composer or talent scout.
Before deciding to become an independent contractor, it’s important to assess your skills honestly. Do you have the raw talent and abilities to make your business succeed? If not, consider whether further education can give you the skills you need.
Build a plan
Starting an enterprise without a detailed business plan is like going on a road trip without a destination in mind. You need to know what your long and short-term goals are, followed by a detailed plan that will help you achieve them. Here are a few things you should include in your endeavor:
- General business description (the type of business, what you sell or produce, etc.)
- Business location
- Permits and licenses
- Employees and management structure
- Target market
- Marketing plan
- Financial documents (balance sheet, startup cost info, monthly budget, etc.)
- Operating plan.
Once you have built a detailed plan, you’ll spend less time floundering and more time actively working toward your end goals. Think of your project as your roadmap to success.
Make your business legal
Make sure you go through the proper legal channels when forming a business. There are different requirements based on the type of business you open. Here are a few of the most common types of business formats you can use:
- Sole proprietorship
- Limited liability company (LLC).
LLCs and corporations are preferred for most startup businesses because they shield its members from debt and court judgments. They also provide a protective cushion so you can build your business worry-free. No matter what, you should understand your various options and the many different ways to work for yourself.
Purchase business insurance
Protect your financial resources by purchasing insurance. You may want to consult with an experienced insurance agent to find out what coverage types you need based on your industry.
Some industries are higher-risk and require more insurance coverage options, while lower-risk sectors may not need to as much insurance coverage. Above all, make sure you meet minimum insurance requirements as specified by state and federal laws.
Most startups rely on financing to get started, so don’t think you have to come up with the money on your own. Having a reliable source of flexible funding can help you get off to a great start. Taking out a small business loan is also a great way to build up credit.
Now comes the best part. Setting up shop and formally opening your business is an exciting milestone to becoming self-employed. Here are a few steps you’ll need to take before you can officially set up shop:
- Secure your location
- Negotiate your lease
- Install internet and phone lines
- Market your new business.
If you’re operating a business out of your home, you won’t need to worry about securing a location or negotiating your lease. You will still want to have a separate phone line for your business, though.If you don’t currently have a phone line, you might consider purchasing a second cell phone for your business so you can keep your personal and professional phone calls completely separate.
As long as you have a good plan in place, it is possible to say goodbye to your boss for good. Follow these simple steps, and you’ll maximize your chances of becoming a successful business owner.
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MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.