Starting Your Own Business
Having a business is a passion that is filled with a tremendous amount of commitment, sacrifice, self discipline, perseverance, and a burning desire to succeed. Before anyone embarks in establishing their own business, it is important to determine if one is willing to assume the risk, operate independently, make all the decisions and shoulder the responsibility. We have read a number of success stories of successful entrepreneurs who have started a small business that later turned into a huge enterprise. However, success does not happen overnight.
Success is a result of hard work and dedication. In one study where entrepreneurs were given a list of attributes and asked to rate their importance for success, the seven most highly ranked qualities were perseverance, the desire and willingness to take the initiative, competitiveness, self-reliance, a strong need to achieve, self-confidence, and good physical health (Jennings, 1985; Ward, 2008). The qualities that the same group of entrepreneurs ranked as least necessary for success are: a strong desire for money, patience, being well organized, and having a need for power (ibid).
Before starting a new business, it is important to consider not only the nature of business but also the rules and procedures needed in establishing
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By having a business plan, one can carefully examine the business, the industry in general, the location, competition, customers, and the owner’s ability to succeed. The four sections in a business plan include the description of the business, marketing, finances and management (US Small Business Administration, n. d. ). Choose the Business Structure The choice of business structure will largely depend on management style, size and nature of the business, financial requirements, and expected profit or loss of the business.
An accountant and/or a lawyer should be consulted prior to the determination on the type of business entity to form. Some business structures are only temporary because when a business expands, there is a need to change the structure. The common forms of business ownership are sole proprietorship, general partnership, limited partnership, regular and subchapter S corporation, and limited liability company (Small Business Development Center of South Carolina, 2002). A sole proprietorship is the easiest and least expensive structure to establish.
This is totally controlled and managed by an individual known as the sole proprietor who owns the assets and receives all the income of the business. Sole proprietors have unlimited liability and their personal assets are at great risk. The owners often use their personal savings or loans and may be at a disadvantage in raising resources. Single proprietorship dissolves upon the death of the owner. Partnership is owned by two or more individuals who shares capital, income and loss, and liabilities of the business.
This business may also attract prospective employees who may become partners due to their skills. In this business since decisions and operations are usually shared among partners, disagreements can occur. The life of the partnership depends upon the withdrawal or death of the partner. The three types of partnership are general partnership, limited partnership and partnership with limited liability and joint venture (Small Business Development Center of South Carolina, 2002).
Partners in the general partnership structure are assumed to have an equal share of obligations, liabilities, profit and loss unless their written agreement states otherwise (ibid. ). In a limited partnership, there must be at least one general partner that acts as the controlling partner with unlimited personal liability for the partnership debts and obligation while the liability of the limited partners is limited to the amount of their investment and their personal assets are not at risk (California Business Portal, n. d. ).
A limited liability partnership is a partnership that engages in the practice of public accountancy, the practice of law, or the practice of architecture or services related to accountancy or law (ibid. ). The joint venture partnership is similar to the general partnership but it is established for a single project within a limited period of time.