Starting a business

Who here has and how did you take the plunge? Any resources I can go to, to learn about loans and the proper way to go about it. I would like to start a home based business for extra money and if it really took off then who knows.

Any advice on business loans would be greatly appreciated as well.

I use to do a ton of sidework with family, and that work is no longer available so I am trying to find a way to generate the income on my own. The catch is I no longer want to be away from home the amount of hours I was before.

I have an idea and I think it will work I guess I am just looking for courage through others and inside information on how they were able to get the funds to start the business.

My wife has a small business, it would not have been possible without my steady income. Most people don't have that luxury. You typically have to work a day job and work on your business in your off time. What kind of business are you thinking about?

cheezydemon said:

You typically have to work a day job and work on your business in your off time. What kind of business are you thinking about?

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I am in that boat plus my wife has a steady income... Been so busy with my real job lately that I havent had much time to devote to the buisness. My plan is to slowly grow it until I can leave my job and sustaine on the buisness.

Well this has a possibility of being a business for my wife. She has been a stay at home mom and now that the kids are in school she is having a tough time getting back into the work force at a wage that makes it worth going. If she doesn't pick it up it is still something I could do evenings and weekends.

Not quite ready to 'let the cat out of the bag' on the type of business just yet. It is something that I would look here for customers and would kick myself if someone was able to get the same business up and running before I could.

GaryA said:

Who here has and how did you take the plunge? Any resources I can go to, to learn about loans and the proper way to go about it. I would like to start a home based business for extra money and if it really took off then who knows.

Any advice on business loans would be greatly appreciated as well.

I use to do a ton of sidework with family, and that work is no longer available so I am trying to find a way to generate the income on my own. The catch is I no longer want to be away from home the amount of hours I was before.

I have an idea and I think it will work I guess I am just looking for courage through others and inside information on how they were able to get the funds to start the business.

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What type of business are you looking at? Internet, contracting, retail, consulting, etc. Depending on the type of business, there's various things you need to register with or not.

For instance if it's retail, is it online or do you have a set location? Do you need inventory or are you selling other people's items.

I'm 24 and have owned my own company for a year. It started as people sending me their lacrosse sticks and I would string them. Then it branched to purchasing sticks on ebay, cleaning them up and restringing, then reselling. It was near impossible to get any contracts with major manufacturers because I 1) didn't have a store front and 2) the amount of volume I sold wouldn't necessarily be cost effective for them.

I've since moved to general sports contracting. I have a gig where I travel with ESPN events providing tech services for their wireless cameras and mics.

Tax wise it gets a little crazy. You need to document everything and keep every receipt to take advantage of the deductions. On top of that, you need to pay both yours and the 'employer' side of social security.

But the minimum you need are a trade name, a business license and an IRS Tax ID number. Look up where to register a trade name in Oregon. The business license for me was done at the State Court House in Maryland and the Tax ID can be filled out at http://www.irs.gov/businesses/small/article/0,,id=102767,00.html

It does need to be in that order however.

As per business loans, it is tough as a small business because it's likely the amount of interest they would collect wouldn't be that much. My best advice would be to start saving as much as you can.

My first year's profit was $7. This year I'm closer to $10,000 after all the deductions.

It's a tough lifestyle but it can obviously be very rewarding. If you tell me what line of business maybe I can help you out some more. My best advice however would be to hire a very good Tax Accountant to handle your first year's taxes.

GaryA said:

Well this has a possibility of being a business for my wife. She has been a stay at home mom and now that the kids are in school she is having a tough time getting back into the work force at a wage that makes it worth going. If she doesn't pick it up it is still something I could do evenings and weekends.

Not quite ready to 'let the cat out of the bag' on the type of business just yet. It is something that I would look here for customers and would kick myself if someone was able to get the same business up and running before I could.

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Nothing personal but chances are the type of business you are trying to do has been done 10, maybe 100 times before. "Not letting the cat out of the bag" just means there's no way we could assist you or guide you in a proper direction. The real difference is how you market yourself or differentiate yourself from those other 10 or 100 similar companies.

just create your own brewpub, your wife couldn't say no

I run a photography business on my "time off"... but I didn't have to take any loans out for it. Kinda hard to give advice if we know nothing about it. I mean if you are going to start a brew supply shop that entails a completely different set of things compared to selling t-shirts from your place or something.

I'm three years and about $400K into a startup, entirely self-funded. Getting money is extremely difficult (approximately impossible) until you have a running business. No one is funding ideas any more. VC's will talk to you once you hit $500,000 in revenue.

Basic rule of thumb, figure out the absolute maximum money you'll need and triple that.

I have had two real, successful businesses in my lifetime. An internet retail store that I still run. I cannot survive off the income alone, but EBIT is about 25% of my annual salary. I also owned a pressure washing company as my sole income for 3 years. I sold it last year in advance of the housing slump and went back into IT. Now that you have my bio, here's my comments:

Ditto all of the above with one note: Forget loans entirely. Debt is the last thing you need starting a new business. And when times get hard, that nagging note can make the difference between survival and collapse.

As for your idea's secrecy: If it's that novel, barriers to entry need to be high or else you'll have 20 competitors in a year. Changes are your idea is not as novel as you think, but new, unique, and low cost of entry do not make for a business plan.

Finally, unless you have written a 3yr biz plan that is both comprehensive and realistic, and you have the cash in hand to actualize that plan, *do not quit your day job*. You'll only end up back there again with a failed business and a pile of debt under your belt. Build your idea slowly until your venture can support you without your day job (and continue to do so for the next 3 years).

It's good to be excited about your new baby, but if you're not also scared at the same time, ask yourself why.

i have been self employed for almost thirty years and am on my third business. well, three that were profitable ans one that wasn't. keep debt to a minimum, with a startup the loan will be secured ie: house. you will likely have to work two jobs for a few years, the business owns YOU not the other way around. some aspect of every business you will find to be unpleasant or uncomfortable, concentrate on those aspects. everyone is willing to take advantage of you. never do business with family. avoid those who offer lots of talk and no action. if it sounds too good to be true, it probably is. follow your interests, too much work if you don't care about the product/service. customers can instantly smell a phony...
at its most base, money=respect. but... it's not about the money. kind of a catch 22 but if you make money the sole object you will burn out. give any business 3 yrs to start growing in any substantial fashion. decide what you want the business to be, a goal is important and it varies wildly from one person to another even in the same line of work. forget the idea that you will be in contol of your time. and one last thing, no benefits, these are sometimes greatly undervalued by an employee. no matching 401K, double the social security/medicare tax( and it will start with the first dollar of profit) decent heath insurance can be as high as $2000/mo for a family, no paid vacation, no sick leave.

if it seems that i am painting a bleak picture i am not. it can be a rewarding method of making a living. just go into it with your eyes wide open. the vast majority of startups fail, i am convinced that it is not due to the lack of good ideas and talent but simply due to not eyeballing the cold hard facts and making a realistic plan of action. one last thing, get a good accountant it will make life much easier. the problem is that they are very difficult to find. i have always used my 20/60/20 rule. 20% are good at what they do, 60% get by in some pedestrian fashion, and the final 20% are just plain dangerously incompetent

good luck! i mean it!

westerntrout said:

with a startup the loan will be secured ie: house.

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This is precisely why I recommend against loans for starting a business. Losing your business sucks, losing your house sucks worse. Also, when times are hard you really need to be at your best. The fear/stress of putting your family out on the street can lead you to make some fatal decisions that you might not have made under different circumstances...

Bankrolling your business will not only leave you in a better state of mind, it will dramatically alter you thinking process about expenditures and cash flow.

Thank you for all your input. A few items to note:
1) I don't plan on quitting my current job, it pays the bills. I am looking for extra funds on top.

2) The reason for the secrecy isn't the fact that it is some new that no one has ever thought of. Quite the opposite its a business anyone could start and someone with more money easily available could start it even easier.

3) The business would be internet based I guess since I don't plan on having a store front at this time.

My questions stem more around good links to research for more information. Who I should contact so if I go through with this it goes as smoothly as possible ie taxes, licensing, and the legal side.

People in my family have had a few construction companies but family isn't always the best to go to for business advice. I know that when you own a business you aren't the boss, every customer is.

Other then that I just have to figure out how to cover the cost of the equipment, and how long I think it will take to cover that. You know the fun stuff.

Look for a small business administration locally. They offer a ton of free help to startups.

+1 on the no loan if possible & always figure on no profit for a year or two. I have started 3 successfull businesses, the first one I saved for almost 5 years and still needed to take out a small loan all while working full time. I nursed that one for over a year till I could quit my full time job and devote all my time (literally) to it. about 5 years later when it was doing very well and I had enough funds and another idea so I started another totally different type of business and nursed that one into a bigger success in less itme, but that is because I had the funds to invest and the time available to grow it much more rapidly.

I am doing some reading through the SBA site and finding a lot of useful information. I had searched for starting a business but didn't see a link to the SBA so thank you for that. I am leary of a loan and you have all backed up that fear. I will have to see what I can do about covering the start up on my own. I agree I would much rather have equipment to sell and just lose some money rather then have a payment I can't make and lose the equipment and damage my credit.

Looking through the SBA I see a lot of programs to assist women in starting businesses. I should be able to utilize that since my wife will be assisting me with the business.