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Open for business: Expert says nows the time to start your own firm
So you've always wanted to be your own boss. Or you're just plain tired of being laid off by large corporations every time the economy dips. You want to be in control of your life, ranging from how you spend your time to how much money you make.
That's how Claudia Barrington of Deerfield Beach felt. Barrington is a registered nurse who had worked for hospitals and other medical offices for 27 years. "I got so tired of someone telling me when I had to be to work, how much I was worth, and dealing with the over-egotistical personalities of doctors and surgeons."
Barrington also found a medical technique she thought was unique and needed to be out in the market. For almost three years, she has been operating South Florida Thermography, traveling to doctors' offices, spas and clinics to do a type of breast screening that uses heat imagery instead of radiation.
But is this unstable economy the best time to start or buy a business?
Francisco "Pancho" Marrero, South Florida district director of the U.S. Small Business Administration, says there are good reasons to start a business in this economy. "The scenario is there for the entrepreneur to bring ideas to market. Interest rates are low. There are reductions in lease costs for space. You see corporate downsizing."
Suzanne Mulvehill, business counselor and author of Employee to Entrepreneur, maintains there is no "right time" to start a business. Usually, entrepreneurs are born when the idea for a product or service simply won't let go. "People usually know they're entrepreneurial if they have something nagging at them. It's a calling," Mulvehill says.
But starting a business is not for everyone. Successful businesses take intensive planning and research, identification of a market niche and a strategy to pursue it, a team of people from accountants to staff members who round out the entrepreneur's knowledge, and enough money to cover expenses while building revenue.
"Listen to yourself," recommends Mulvehill. "Are you willing to go to any lengths for the business, including changing yourself? People will change for their business, whether it's learning how to be more comfortable speaking or meeting new people."
To keep from making drastic mistakes, startup businesses need to seek help. There is plenty of information and expertise available, from counselors at the U.S. Small Business Administration's Small Business Development Centers and SCORE, as well as private organizations such as MicroBusiness USA.
The belief has been that about half of business ventures fail in the first three years. But new research by the SBA's Office of Advocacy shows that two-thirds of new businesses are successful after four years.
To set you on the right path, here are some guidelines to starting a business:
"A great way to start a business is on a part-time basis," says Martin Zients, certified business analyst for the Small Business Development Center at Florida Atlantic University in Boca Raton.
If still working at another company, you may have to keep your work low profile. But working on your business on nights or weekends while keeping your day job can give you a needed transition from employee to entrepreneur.
As a new business owner you will be putting money in the business, not in your pocket -- often for a few years. While planning your business, also review your personal finances: How are you going to pay the mortgage? Do you have an emergency fund? What about health benefits and insurance for which your employer now pays?
If you are going into business with your spouse or a partner, one of you might continue working while the other starts the business. This strategy worked well for Apricot Office Supplies and Furniture, a South Florida business founded in 1986 by two married couples, the Silveras and the Bernards.
The principals all had previously worked at large companies including Dun & Bradstreet, Xerox, AT&T and Chemical Bank. Basil and Marlene Bernard began operating the business while Greg and Stacey Silvera continued working in their corporate jobs. "It eased us into the business," Greg Silvera says. "If all four of us had started it would have been too great a financial strain."
In recent years, Apricot has relocated from Miami to Davie and expanded into office furniture. The small business is doing more than $12 million a year in revenues, holding its own against giants like Office Depot.
Try out the business.
Work for someone already in the kind of business you want to enter. Remember you are going to be laboring at this business for most of your waking hours, until you get to the point you can hire others to run it. You should enjoy what you're doing or you're not going to last long.
Phil Scruton, who helps clients polish business plans at FAU's Small Business Development Center, says people should ask themselves: "Do I enjoy the day-to-day activity in this business or do I dread it?"
Also, working for a potential competitor can give you valuable insight. Be careful about signing anything that includes a non-compete clause that would prohibit you from starting a similar business.
Draw on your experience.
"A business should come from experience, skills or hobbies," Zients says. But be careful about the hobbies. An avid golfer, for example, might decide to open a golf store. Suddenly, the golfer is spending 10 hours a day in the shop and has no time to play golf.
Ideally you want to base your business on industry experience. But make sure there's a niche for what you want to do.
After 15 years with Levitt Homes, Janis Ehlers in 1994 found the job she had as director of marketing had been eliminated. "I was literally shocked, went to work thinking I had a job one day and I didn't." She realized she needed to specialize if she were going to make any headway in the public-relations business in South Florida.
Today, the Fort Lauderdale-based Ehlers Group is nine years old, specializing in the marketing of luxury real estate and senior housing. "It's important to understand where your company will be positioned. Who do you want to be?"
Sometimes there are too many people in a field to start a certain business. Scruton says he has counseled countless people who lost information technology jobs and want to start their own businesses or do consulting. "I ask them what they can bring to the knowledge base that others can't," he says. Perhaps the person has a unique vision or a turnkey product.
If not, Scruton says he urges people to consider their skills. "They tend to be analytical. Folks who genuinely find solutions are not all that common. Think what made you successful in that occupation."
Cover your bases.
Obtain any required licenses for your business or occupation. Register your business with the state and obtain a federal identification number. Consider zoning regulations before operating your business. Some municipalities don't allow home businesses.
Also, comply with state and federal regulations for safety and health of employees. Verify the eligibility of new employees with the Immigration and Naturalization Service. Purchase necessary business insurance to protect contents of your business in case of fire, theft or other loss. Think about buying business interruption insurance.
Consider working from home. Don't feel that you have to lease a fancy office right off the bat. Think about a home office to keep overhead low. Explore incubators for start-up businesses or suites that give access to needed business services as part of your rent.
If you do decide office space is needed, proceed with caution. Wanda Gozdz, owner of library management firm W. Gozdz Enterprises Inc., moved her business back home after leasing space in a new building to expand her business. The office building was supposed to get a certificate of occupancy in three months; instead, it took 11.
She finally had to let go of her newly hired workers, sublet the office, and move back to her Fort Lauderdale home where her business recently celebrated its 20th anniversary. If Gozdz had it to do over, she would have moved into an established building. "I had no control over the office space," she says.
Get out and sell.
Start-up business owners often forget they have to sell their idea or product. "They stand back and wait for people to come to them," Scruton says.
Every business owner should have the so-called "elevator speech," in 10-second, 30-second, and one-minute versions, to communicate quickly and simply what your business is and does.
If you're not comfortable or practiced in marketing, find someone who is. Technology has made marketing easier for small-business owners. While most people hate spam, "opt-in" e-mail marketing can be welcomed. Online newsletters can be an inexpensive and effective marketing method.
Internet-based marketing has been the basis of an etiquette business founded by Jacqueline Whitmore, who launched The Protocol School of Palm Beach after more than five years in public relations at The Breakers resort. Whitmore uses her Web site and e-newsletters to inform clients of her seminars. "It's extremely effective. The Internet is my biggest marketing tool. Being an entrepreneur, I have to work much harder to get my name out."
Whitmore says 2002 has been the most profitable of her five years in business. "I attribute it to my marketing skills. My business is etiquette, but my profession is marketing. When I'm not teaching, I'm writing an article or press release or working on my Web site to get the word out that I exist."
Identify money sources.
Start-up business owners typically use their own savings and resources, such as tapping credit cards and asking family and friends to invest. Clarify whether the investment is a gift or loan with a return expected. It's only fair to make them understand their money is at risk.
While interest rates are low, home-equity loans can be an inexpensive way to raise money to start a business. The time to take out a home-equity loan is while you still have a job; banks won't look at you if you don't have a stable source of income.
Develop an entrepreneurial mentality.
The common thread Mulvehill has seen in successful entrepreneurs is "a passion and belief in what they were doing. The passion will carry them through when they're not making money."
Be careful about the negativity you're bound to encounter. It's easy to become discouraged when you're not getting a paycheck. But if you believe in what you're doing, you can't listen to those who tell you "it will never work."
People who make the leap from corporate executive to business owner usually don't have the budget, resources or staff they once had in a large corporation. Entrepreneurs find themselves doing jobs they used to delegate and working around the clock. "It's a lifestyle change, it's not just a job change," Mulvehill says.
Establish a vision and code of ethics. A number of large corporations have gotten into trouble in recent years because they haven't adhered to ethical standards. What you do and how you do it will resonate throughout your company and with the public. Employees will follow your example. Suppliers will respect you and continue to do business with you based on your reputation.
"It pays to have vision and values," says Nancy Young, director of the Small Business Development Center at FAU. "There are so many pressures on small businesses. It would be easy to cut corners, but I don't think in the long run it would pay off.
"Don't worry about what happens in the immediate future, but look to the legacy you want to leave and the reputation you want to build."