5 Myths About Starting A Business

woman raising her handAre you tired of trying to survive on a one income household? Starting a business can solve that.

Given the rising cost of living and the lack of job security, a lot of us will really benefit from a dual earning household. But how is that possible when one of you cannot find a job or is simply required to stay at home to care for the kids?

When you start your own company, you can control the time and effort that is needed to make it work. The great thing about this is, you get to define the rules. Of course, it is much more complicated than that but the it gives you more flexibility as compared to being employed traditionally.

Small businesses are thriving in the country!

According to the statistics compiled through the Entrepreneur.com, the majority of businesses in the country are run by small business owners. In fact, they represent 99.7% of all the employers combined. Technically, a small business that is run from the house is not really considered but you can find that the almost the same principles apply.

If you are doubting the strength of a small business enterprise, here are some helpful statistics for you.

  • An estimate of 130 million employees work for small businesses. (SBA.gov, 2004)

  • Half of private sector workers are employed by small businesses. (SBA.gov, 2004)

  • 44.3% of the private payroll comes from small businesses. (SBA.gov, 2004)

  • 60% to 80% of new jobs are generated by small businesses every year. (SBA.gov, 2004)

  • Small businesses are responsible for: 52.6% of retail sales, 46.8% of wholesale sales, 24.8% of manufacturing sales. (SBA.gov, 2004)

  • Average yearly revenues of a small business amounts to $3.6 million . (SBA.gov, 2004)

Despite the individual value of small businesses, when grouped together, they make up a formidable force that can affect the nation’s economic conditions. Joining this group will bring you a lot of opportunities – you just have to muster the courage to push through with it.

5 misconceptions about starting your own company

Some people are well equipped to succeed in starting a business but they are just too scared to grab it. If you have no choice because you have been a jobless graduate  for months or you had been laid off from work, you need to seriously consider putting up your own business.

If you are feeling scared to take this financial step, check if your fears stem from any of these 5 misconceptions about starting a business.

  • You think you need to have a huge capital to set up your business. While a capital is needed, it does not mean you always need a huge amount. There are people who started their business by utilizing their own homes as their office to keep the overhead costs low while they are just starting. Some started with a small capital and kept on investing their profits to the company for the first few months. That helped them purchase the materials and equipments needed to grow their business. It is all a matter of stretching the limited resources that you have and working your way up slowly.

  • You do not have the knowledge to run your own business. Well this may be true but so did all those successful entrepreneurs that are billionaires now. They started with no knowledge but guess what? They tried to learn what they can about the industry they wanted to join. You can do the same! There are many resources online that you can use to educate yourself. You can start with the Small Business Administration (SBA.gov). Also, if you know how to create the product or provide the service that you want to sell, then you do not need much education. This is why most are encouraged to concentrate on starting a business about something that they love to do. A hobby or a skill that they are good at is a good place to start. Mrs. Fields started her business empire by simply doing what she loved to do – which is baking.

  • You think it is more important to look for work first than to waste time starting a business. On the contrary, if you have a winning business idea, you need to prioritize that over job hunting. But even if that is true, you can always look for a job while putting up a company. By working on your business, you can earn some profit as you look for work.

  • You need to be physically fit to start your company. Being physically fit is a plus but it is not a necessity. You can be bedridden and still be able to work on an online business. You can manage an online store as you are recuperating from an illness.

  • You think the economy is not ideal to start your business. In truth, you can start your business anytime. A good entrepreneur knows how to turn situations to be profit generating no matter how bleak they may seem. In fact, some of the greatest companies were started during the recession. You have FedEx, GE, Burger King and Microsoft – all of these were born out of the most tumultuous economic times. The reason they succeeded is because the owners had no other choice. It was a bleak time to get a job. Not only that, they took advantage of the low prices because of the poor economic conditions. It helped lower their start up funding needs.

If you think about it, these myths are just your excuse to not plunge into the business that could make you a millionaire. Try to be open minded about it and explore your opportunities.

How to apply for a business loan

While you may think that you do not have the capital to help in starting a business, you do not have to worry about that. There are times when you need to get a business loan to get the funds needed to jumpstart your company

There are many tips to guarantee a loan approval and for business loans, here are 4 of the things you need to do.

  • Work on your credit report. All loans will benefit from a high credit score. Lenders look at this to gauge your behavior when it comes to credit – if you pay back your dues on time, if you carry too much debt, etc. You might want to get a copy of your credit report to see if the data is accurate and if there are entries there that can endanger your creditworthiness.

  • Create a business plan. If you are specifically applying for a business loan, one of the requirements is to submit a business plan. This is to help compensate for your lack of stable income. The lender will see if your business idea is feasible and will give you some income – at least, enough for you to afford paying them back. This plan will contain how you intend to use the loan and your projected profits because of it.

  • Have your portion of investment ready. In most cases, lenders will require that you put down your own capital – even if it is only a percentage of what is really needed. You can take from your savings or even the equity of your home. Some will recommend your 401(k) but do not opt for this unless you have no other option left.

  • Look for the right lender. Lastly, you need to look for the right lender that can finance your needs and will understand the value of the business you want to start. While you want to go for the traditional lending institutions like banks, you may want to look at your other options too. For instance, there are people called angel investors that represent entrepreneurs who specifically invest in new ventures. You can also look into the loan provided by the SBA. It is important to look for a lender who will understand the potential of your business idea. Otherwise, they might not give you the funding that you expected.

Starting a business may seem daunting to you but the rewards are truly phenomenal if you manage it correctly. You need to understand that the potential to earn is there. If you are passionate enough for the idea that you have, then you can pursue it regardless of the obstacles that you will encounter. You might even have to forego your day job to concentrate on this business. At least, you now get to be your own boss.