How to Properly Start Your First Entrepreneur Business?
Let’s say you decide of being an entrepreneur.
You decide after careful evaluations that now is the time to launch your idea as an official business.
Your entrepreneur mindset quickly races with the
- prospect of hiring,
- meeting with venture capitalists,
- making critical business decisions,
- and more.
To get started, you should know the difference between a Sole Proprietorship, Limited Liability Company, and an S Corporation for your new venture.
Thriving entrepreneurs and successful businesses all need to choose the right structure for their company to flourish properly.
A Sole Proprietorship is when someone owns and runs the business as themselves.
Anyone can be a sole proprietor if they sell goods or services to people directly.
An example of a sole proprietor is someone who offers freelance graphic design to people.
He is one without having an office, location, or any registered trademark.
The one con of being a Sole Proprietor is that you as the owner have no protection if any legal issues arise from your business practice.
LLC (Limited Liability Company)
An LLC is a business structure that gives you financial protection from legal trouble that may arise from your services.
There are many pros of being an LLC including
- flow-through income taxation,
- less paperwork compared to a corporation,
- and security with your assets.
One difference between an LLC and a Sole Proprietorship is there may be high membership fees and renewals depending on where you live.
An S Corporation is a business that is federally taxed and can give out stock to its employees.
The owners of an S Corporation company are considered the shareholders.
They have liability protection if something wrong happens.
That essentially means that if the business goes under or gets sued.
Then you as the shareholder won’t have your private bank account touched.
This security is very similar to an LLC, but there are differences between the two.
An S Corp protects your assets, firstly, allows easy to transfer ownership.
Secondly, it gives your business more credibility for angel investors to fund.
Some of the disadvantages include
- stock restrictions,
- and tax obligations that are more closely watched by the IRS.
Being an S Corporation tends to be easier to secure venture capital from outside investors from places like Silicon Valley.
The Pitfalls of Entrepreneurship
According to Inc.com, we can expect that 96 percent of businesses fail within ten years.
If you look at Forbes, they claim a similar percentage by saying that eight out of every ten business fail.
Entreprenur.com also stresses that brands that don’t make their offerings personal see a downfall in today’s market.
The excitement of self-employment without adequately preparing for this adventure ultimately leads to a high failure rate.
There are many reasons why businesses fail, but there are a few common reasons that bring down most companies.
- Not understanding the marketing
- business plan problems
- little to no financing
- inadequate resources
- poor location,
- and expanding too quickly
are all common reasons why something does not work out.
Other reasons why a business may fail include competition, the economy, federal and or state rules, social change, and more.
Ways to Thrive as an Entrepreneur
Successful entrepreneur need to have the skills and determination to see their dream work.
Having the necessary resources at your disposal will keep your business venture alive.
Whether your business is in the startup phase, or in the maturity years, you have to read the market regularly.
Perhaps you should add new products if the market evolves outside your core offering.
Also maybe new ideas are needed to expand your services.
Making money while growing and developing your services is key to staying in business.
Even if your business is an e-commerce website, or a traditional brick, you have to continue to evaluate the market for any external threat.