October 13, 2020 Last updated October 13th, 2020 106 Reads share

6 Things to Consider Before Becoming a Small Business Owner

Image Credit: DepositPhotos

Starting a small business is one of the best ways to put your unique combination of skills and knowledge to good use. You’ll be able to work for yourself, set your own hours and decide what’s really important while you serve the needs of customers, your community or people in your industry.

However, being a small business owner is a lot of work — and it takes skills that many new business owners don’t have when they’re starting out. Without the right planning, many new small business owners will be blindsided by some of the challenges and responsibilities they’ll have to manage.

Before anyone sets out to start a business, they should know some of the unique obstacles that they’re almost certain to face.

1. There Will Be Legal Challenges

Small businesses are bound by a number of different laws that regulate how they can operate. For a small business owner, this means paperwork and fees. If you’re not familiar with business law, you may be surprised by how many different licenses you need. For example, if you want to advertise your business with physical signage, you’ll probably need a sign permit from local government officials.

Businesses generally require some kind of business license. Depending on the kind of work you do, you may also need to apply for additional licensing. Sales tax permits allow you to sell physical items that require sales tax. Occupational licenses are a necessity for certain small businesses — like lawyers, accountants or hairdressers.

When you’re planning out your business, be sure to do some research on the potential legal challenges.

2. You’ll Need Time (and Money)

Startup costs are often significant. If you don’t have money to draw on, you may have trouble getting your business off the ground.

Time is also likely to be a problem. While you’ll be able to set your own hours as a small business owner, you may soon find that the business itself dictates your schedule. You may need to work late, respond to issues as they crop up, or spend extra time to close deals and secure sales.

In general, it’s a good idea to make sure you have the capital needed to start a business — or an idea of what loans and support programs you may be eligible for. You should also plan for the business to eat up a lot of your time. If you’re currently working 40 hours a week, you may need to figure out how you will transition away from that job.

3. There Will Be a Lot of Uncertainty

Your schedule and income will be mostly dependent on how well your business is doing. Some of the time, this may mean making more money than you would have ever gotten from your current or previous nine-to-five. At other times, this may mean long hours as you figure out how to balance the books and cover basic business and personal expenses.

In some cases, success may mean more money, but less time outside of work.

Working for yourself will offer some serious freedom, but it will also mean you’ll have to face some serious uncertainty. You may not know how much money you’ll be making this time next quarter or next month — and that can make it harder to feel stable or make long-term financial decisions.

Preparing for uncertainty by investing, growing your savings and limiting spending is a good strategy for anyone, but it’s especially useful for future small business owners.

4. Your Personal Finances May Get Complicated

Self-employment is a big change. One of the most frequently overlooked impacts of self-employment is how working for yourself will change your personal finances.

For example, starting a small business will likely make your taxes more complicated. You may need to file quarterly, depending on how much you make. You’ll also need to keep excellent documentation on the money you make and how you spend it, especially if you want to take advantage of deductions on expenses related to travel, advertising and office space.

If you receive health benefits from your job, you’ll also have to quickly figure out how you’ll get health coverage once you part ways with your current employer.

You may also need to take advantage of alternative financial options. For example, there are certain mortgage options for self-employed home buyers than can be a better fit than conventional loans. You might also need to find ways to furnish proof of income if you need to move into a new apartment or apply for a new loan.

5. You’ll Have to Delegate

As a small business owner, you’ll work for yourself, but you won’t work alone. If your small business is successful, you’ll quickly get to a point where the work of running the business is too much for one person. You may also find that you want someone with a different set of skills to help with some aspect of your business — whether that’s communicating with vendors, marketing your brand or managing finances.

Even if you’re the expert in your field, you’ll have to delegate a significant amount of the hands-on work that may have inspired you to go into business in the first place. Over time, you may find your schedule dominated by management work. You’ll have to learn to work with people you hire, delegate tasks and keep complex projects with many different stakeholders running smoothly.

Unless you have experience with project management, this may be a pretty significant adjustment. Hiring and retaining talent is one of the top small business challenges, and one you may not have much experience with.

Fortunately, this shift doesn’t happen overnight, and many small business owners stay involved in the hands-on work long after founding their business. If you expect growth, however, you should plan to become just as skilled in managing people and resources as you are at everything else.

6. You’ll Need Support

No small business owner does it alone. This support may come from friends and family. You may also find contacts in the business world — vendors,  business partners and others — who can provide you with valuable advice. Support is also likely to come in many different forms. Think anything from a personal loan to knowledge to a valuable meeting with a potential contact. It may even come in the form of some emotional support or counseling when the way forward isn’t clear.

When developing your small business plan, start to identify your support network ahead of time and consider how you’ll grow that network with your business. This way, when things are uncertain, you know who you can turn to for reassurance, advice or material help.

Plan to Overcome These Small Business Obstacles

Small business owners face some serious challenges, but none are impossible to overcome with the right planning. Before you start to figure out how you’ll launch your small business, it’s a good idea to prep for difficulties like limited time, legal issues and working with others. Even a little bit of advanced preparation can help you manage these potential roadblocks much more effectively.

Owner of a cafe and waitress -DepositPhotos

 

Lexie Lu

Lexie Lu

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