How To Start Your Own Business(1)
President Bush says the key to a strong economy is the creation of more small business. But statistics show that most startups are doomed to fail. However, the experts agree that with planning and hard work a new company can beat the odds. This morning and in the coming Mondays, 90.3 WCPN®'s Mike West will cover the basics of what you need to know to start your own small business. In part 1 we look into some tough questions about what it takes for businesses to successfully get off the ground.
Mike West: There are over 25 million small businesses in the United States. They provide about 80% of all new jobs. Another reason they are valued is because they can eventually become major corporations employing thousands and investing in the community. Most small businesses start off the same way, a person with a dream and little else. So what's the next step? There are private consultants, government agencies and educational institutions just waiting to hear from entrepreneurs. The Council Of Smaller Enterprises, or COSE, is one of them. Executive Director Steve Millard says the first thing would-be business owners need to do is ask themselves if they have "the right stuff."
Steve Millard: People don't often think of the fact that running a business is a lot different than working in a business. You have a lot more to consider and deal with, so the first step is, are you somebody who can be an entrepreneur, are you motivated, can you autonomously can you set goals for yourself and actually meet them. Can you afford to be in business for yourself, or if you go into business for yourself are you just going to create a job for yourself that's worse than the situation you're in now.
MW: Those are all questions Alma Alfonzo has asked herself. She owns this bakery near the West Side Market. Alfonzo opened the Lelolai Bakery a year ago, so there is still plenty of uncertainty. It's not like the old days when she had a high level corporate medical position. Alfonzo says running the bakery takes much more time and mental toughness than her old job.
Alma Alfonzo: The reality of a small business is it takes courage, there is a lot of risk involved. Most of the time it's your own personal risk which you don't see when your working in the corporate world. It's somebody else's money so. You know courage takes a lot of your energy. You wake up every morning with a depletion of energy as it relates to not knowing the things your going to face in the day. As a new venture there are obviously surprises, you don't know what are some of the issues your going to deal with.
MW: Despite those feeling her strong desire is enough to overcome some of her doubts.
Steve Presser agrees - he's the owner of Big Fun, a Cleveland Heights novelty and collectable shop that he started 11 years ago. He says if people really knew what they were getting into, there would be fewer startups.
Steve Presser: I think most people that have that knowledge beforehand really don't open up businesses because when you're a sole proprietor, a self-owner your own individual business you tend to spend much more time than you anticipate. When I first opened up with my father and I literally worked every hour the store was open. Now I'm fortunate enough to have good people working for me. And I'm not here as much as I used to be. I'm here often but I have the luxury of trusting my employees.
MW: COSE's Steve Millard says that strong desire to see a product or service come to market is a must.
SM: People need to know this is something they feel like doing for twice as many hours as they are doing now, for probably half as much pay, they have enough passion and desire to sort of do this work in business for themselves.
MW: Another question future business owners need to ask is whether their family can survive the ordeal. Unless your spouse and children don't like you very much, the long hours are bound to take a toll on your marriage and relationship with your kids. Presser advises living close to where you set up shop.
SP: We're fortunate to live two blocks from here, my kids kind of grew up coming here, my wife has helped out it has been a family business and so being part of the neighborhood has helped. If I traveled far I could see when the pressure, and there has been times she knows that's it's going to be from the Christmas holiday season from Thanksgiving and New Year's my hours increase dramatically.
MW: Bakery owner Alma Alfonzo says her husband has helped her from the planning stages forward and has his support. But her two young daughters are still adjusting to the demands of a life centered around selling cakes, cookies and sandwiches.
AA: I think as long as you know how to balance your family life with your work life. This is like having a new baby, that what I tell my daughters. You have to nurture it, take good care of it and so forth, but it doesn't mean that when you get a new baby in the house you ignore everybody else.
MW: It's not just the lack of sleep and family time a new business owner can look forward to. Finances are also strained. COSE officials say most business can expect to lose money for at least the first year for various reasons, including poor planning.
SM: What's their risk tolerance, what do they need to actually make at a minimum to maintain a lifestyle they have to maintain and what kind of financial cushion do they have to fall back upon. If you have a large family and you need to make $50-, $60-, $70,000 a year to support that family and you're the only source of income it probably doesn't make sense to jump off a cliff and start a business right away that your not sure is actually going to work.
MW: But there are ways around an "all or nothing" business start. Millard says some types of ventures allow you to work from your home or on weekends until you test the waters and find out if there is a market for what you want to sell. He says the best tool for starting a new company is a well-written business plan. The document could make or break your company. In Cleveland, Mike West, 90.3 WCPN News.