Smart Business

(ARA) - Given the state of the U.S. economy, you might assume that turning your hobby into a small business right now isn't the best idea. On the contrary, launching your own small business in a down economy can be a very smart move -- if you plan in advance and set yourself up for success from the start.

Here are 10 tips that all budding entrepreneurs can follow to make their dreams of owning a small business a reality in 2010:

1. Develop a business plan

While preparing a business plan is a requirement for any small business owner seeking to raise start-up funding through a traditional loan or venture capital, every business can benefit from this practice. Your business plan should define your business, its products and services, while outlining your business goals, operating procedures and competition.

2. Consider incorporating your business or forming an LLC

While many small businesses choose never to incorporate, there are many benefits to doing so. "Incorporating your business or forming a limited liability corporation (LLC) is important because it helps protect your personal assets from business debts and liabilities," says Karen Kobelski, general manager of BizFilings, a full-service online incorporation service provider offering small business owners fast, easy and economical ways to form a corporation or other business structure online or by phone. "However, incorporating isn't just about protecting your personal assets; other benefits of incorporation include tax advantages and greater credibility with customers and business partners, which can give incorporated businesses a much-needed advantage over non-incorporated operations."

3. Select an accountant and attorney

Many small business owners seek advice from accountants and attorneys. As you research your options, get referrals from friends and family and turn to professionals who have worked with other small business owners or companies in your specific industry.

4. Get necessary tax identification numbers, business licenses and permits

If your small business will rely on employees, a federal tax identification number or employer identification number (EIN) is required. Most businesses will also require licenses and/or permits to operate in your city, municipality, county and/or state.

5. Insure your business and investigate other requirements

Some industries have specific insurance requirements -- do your homework. It's also important to research additional government tax and insurance requirements that might apply to your business, particularly if you plan on having employees.

6. Open a business bank account

When you own your own business, it's crucial to separate business finances from personal ones, so opening a business account is key. If your business is not incorporated, most banks will require a DBA (doing business as); contact your bank about requirements prior to opening an account.

7. Arrange your business accounting and apply for loans

It is critical to properly account for all business disbursements, payments received, invoices, etc., whether you use an accountant or handle the finances yourself. If you don't have enough capital to start a business, seek funding from banks or through Small Business Administration (SBA) loan programs.

8. Establish a business line of credit

Establishing business credit will help reduce the number of times your company prepays for purchased products/services and helps establish a strong credit history, a beneficial practice when negotiating vendor and supplier relationships.

9. Ready your workspace

For home-based small businesses, make sure that you are meeting the zoning requirements for your area. Non-home-based businesses will likely require office space, which could lead to the purchase/lease of furniture and office equipment. Planning for this in advance will ensure that you have enough money to cover these costs.

10. Create a brand identity and start marketing your business

To diversify your business from the competition, you should establish your company's identity and start publicizing your products and services. Consider developing a unique business logo to include on business cards and letterhead, advertising your business in the local telephone directory, and developing customer leads -- from friends, family, and business associates. These activities will help potential customers find and remember your business and should reflect the personality of your organization.

Don't put your dreams of financial independence and doing what you love on hold until the world starts turning in your favor; start planning for your future today.

Courtesy of ARAcontent

 

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Revised: March 01, 2010.