6 min read
Disclosure: Our goal is to feature products and services that we think you’ll find interesting and useful. If you purchase them, Entrepreneur may get a small share of the revenue from the sale from our commerce partners.
It might come as a surprise but 2020 saw a 24 percent increase in the number of new business applications submitted in the US, according to US Business Formation Statistics (BFS). Despite the pandemic, entrepreneurial people have found ways to pursue ideas and start their own businesses.
While the entrepreneurial spirit is great, starting a business is no simple endeavor, and not one to be taken lightly. You’re responsible for everything when you start a business. It’s like having another child — a level of responsibility that can impact your personal life. That’s why it’s crucial to get your personal ducks in a row before launching your business. If you feel you’re ready to start a business, consider these things before submitting your articles of incorporation.
1. Do your research.
First and foremost, is your business idea even viable? How well do you understand the industry you’re entering? If you’re a lifelong financial analyst who wants to break into the renewable energy business, it’s a compelling idea, but what do you really know about the industry, your competitors, or the challenges your product or service might face?
Many new businesses are dead on arrival because founders didn’t fully understand the business before launching. Nobody wants to fail, but if you gave up a steady salary to pursue a business you didn’t do your due diligence on, your family will hurt.
2. Determine where your funding will come from.
Thirty-six percent of new business owners get startup capital from their own personal savings or from family and friends. Of course, banks are always options, too, but without any established business credit, you will likely have to draw from a personal line of credit. That means if your business goes belly up, so does your personal credit.
Before putting money into a business, it’s important to discuss the financial implications with your family. Know where your capital will come from and set up your finances so you know you’ll be able to pay for everyday needs. Your kid’s college savings should probably be off-limits.
Many businesses don’t turn a profit right away, which means you might have to lean on a partner or family members for a bit. Having those conversations before the money problems arise is far preferable than being caught blind-sided.
3. Plan for the best, prepare for the worst.
When you leave a job to start a business, you also leave the security of a salary and benefits like health and life insurance. It’s important to keep you and your family protected in the event of a tragedy.
Fortunately, applying for quality, affordable life insurance is easier than ever today, thanks to companies like Bestow. Bestow’s quick and seamless process is 100 percent online and requires no medical exams at all. Answer a few questions, determine the best policy for you, and get yourself set up with term life insurance in no time. You’re probably going to be fine, but without the security of a traditional job, it’s a good idea to try and find ways to help protect your family while you’re investing in your business.
4. Time it right.
Timing is important for business reasons, of course, but it’s also crucial to find the right timing in your life to start a business. If your kid just left for college or you just bought a house, it’s unwise to launch your business with so many new monthly expenses.
The “right time” is different for every person and every family. Maybe you just lost your job but have a little money saved. Maybe the kids have all finally become financially independent and you have a little more disposable income. Maybe your partner is prepared to go all-in on your business and help you grow it. The right time is different for everyone and you won’t know it unless you discuss it openly.
5. Consult the experts.
Starting a business is not, and should not be an independent adventure. Of course, your family is front and center of the journey but you should also seek out as much expert help as possible. People who have started businesses in your industry can be invaluable resources to help you avoid common mistakes and run your business as efficiently as possible.
Go to networking events, reach out to people on LinkedIn, and try to connect with thought leaders in the industry to gain as much mentorship as you can. The experience of seasoned professionals will help you start off on the right foot and give you a leg up on the competition.
Likewise, businesses are significant legal and financial ventures. There are rules and regulations you’ll have to follow, so consulting a lawyer and accountant is absolutely essential to ensure your business remains compliant. It’s not hard to start a business in the United States, but it is trickier than you might think, which is why it’s important to get as many experienced experts in your corner as possible.
Life insurance quotes provided by Bestow Agency, LLC dba Bestow Insurance Services in CA, who is the licensed agent. Term Life Insurance Policies offered by Bestow are issued on policy form LS181 and LS182, or state version including all applicable endorsements and riders, by North American Company for Life and Health Insurance , Administrative Office, One Sammons Plaza, Sioux Falls, SD 57193. Products or issues ages may not be available in all jurisdictions. Limitations or restrictions may apply. Not available in New York. North American is rated A+ (Superior) by A.M. Best. A+ (Superior), the second highest rating out of 15 categories, was affirmed by A.M. Best for North American Company for Life and Health Insurance as part of Sammons Financial Group on August 19, 2020. A.M. Best is a large third party independent reporting and rating company that rates an insurance company on the basis of the company’s financial strength, operating performance and ability to meet its ongoing obligations to policyholders. Our application asks about your lifestyle and health to avoid requiring a medical exam.