Have you always wanted to be a business owner? You’re not alone! Research shows that two-thirds of Americans want to open a small business. Launching a local business is a fantastic way to realize your entrepreneurial dreams and support your community at the same time. Unfortunately, fear of failure is one of the biggest obstacles holding people back from becoming their own boss. And this is justified. Launching, running, and growing a business is a major undertaking—and one that does not come without its share of risks.
That said, you shouldn’t let fear deter you from chasing your dreams! There are a number of steps you can take to ensure you enjoy success as a local business owner. To help you get your bearings, VR Business Sales presents the following guide packed with great tips and resources for prospective local business owners like you!
Small Businesses Benefit Local Economies
Did you know that small businesses make up 99.9 percent of all businesses in the United States? These small businesses create over a million jobs every year! Unlike major corporations that funnel money out of local economies, small businesses contribute to local communities by keeping money close to home. Small businesses also better understand the needs of their community because they are incredibly customer-oriented. As a result, local customers are more likely to remain loyal during tough times, like the current coronavirus pandemic.
Investing in Business Training
So, you’re ready to launch a local business. But where do you start? Pursuing an education in business is a great way to get the ball rolling on your new venture. While a degree isn’t required to launch and run your own business, it can certainly help you get ahead. The skills you learn in school will help you run your business efficiently—and legally—so you can minimize financial hurdles and time-wasting roadblocks. As Home Business Magazine explains, continued education will enable you to create valuable professional connections, inspire your employees, avoid burnout, apply your knowledge, and stay up-to-date with industry trends and innovations.
If you want to sharpen your business skills, consider attending university and enrolling in an MBA program. Online schools make it easy for business owners to pursue an education on the side, so you don’t have to postpone your business launch to get the training you need. A great MBA program will teach you everything you need to know to become an impactful and effective business leader.
Accessing Small Business Resources
Funding issues are some of the biggest obstacles facing new business owners. Luckily for you, small business owners have access to a wealth of funding and educational resources through government programs and nonprofit organizations. Start by joining your local Small Business Administration (SBA) for loan and grant information, free classes, and local resources that can help you navigate the launch of your business and keep things running smoothly as you explore new growth avenues.
When to Hire Help
As you get your business up and running, it can be tempting to try to do everything yourself. While you can save a lot of money with the DIY approach, you can also waste a lot of precious time this way. Sometimes it’s worth it to pay a professional to help you out! This is especially true for tasks that fall beyond the limits of your skillset, whether it’s website development, graphic design, writing, marketing, or social media management. Hire freelancers or employees who can help shore up your weaknesses and give your business a competitive advantage.
When it comes to the actual logistics of running a business, most first-time business owners struggle with effective employee management. Running a team is a skill that takes time to master. Be prepared to make mistakes and learn from your experiences on the job. With that in mind, there are a few ways to simplify things. For example, you can easily streamline your payroll process with the help of specialized payroll software. You can also find software to help you track employee performance, onboard new hires, schedule shifts, and keep your workforce engaged. Your employees are your most valuable asset, and you want to do everything you can to keep them happy.
Building Your Community Presence
Running a local business is all about building and maintaining a local presence. Many small business owners hold onto a “build it and they will come” mentality. But the truth is that if you don’t get out there and market your business to your community, you won’t be able to compete with the established businesses already offering similar products and services to your target audience.
To run a successful local business, you must focus on your local presence. Attend meetings and trade fairs to build relationships with others in your industry, nurture connections with people in your local SBA, and participate in local festivals to promote your business and engage consumers. You could even sponsor a local event or pitch an idea for a cross-promotion with another local business. There are so many ways to get involved in your community, so don’t sit back and wait for customers to find you via word-of-mouth. Get out there!
If you’ve always wanted to become an entrepreneur, launching a local business is the best way to go about it. Building a local business will benefit you and your neighbors by creating jobs and keeping money in your economy. The best part? You get to be your own boss and make the calls! Increase your chances of enjoying success with your small business by taking the time to do everything right, from meeting legal requirements to managing your employees.Read More
As the federal government and the state governments look for more ways to bring in money, the independent contractor status is a likely place for them to look. After all, by using independent contractors rather than employees, employers don’t have to withhold taxes, provide workers’ compensation, contribute to unemployment compensation, or provide any benefits such as 401-k programs, health insurance or other benefits. Plus you can use and discontinue independent contractors as needed.
Certainly, in this age of home-based businesses, the use of outside sources makes a lot of sense. Outsourcing a lot of business needs has been done for years and will only increase with growth of small business. Most one-person and small businesses don’t need full-time employees. Many requirements can be outsourced to independent contractors who in turn outsource many of their requirements.
It is the use of workers who are classified as independent contractors, but are really employees that can cause legal issues. FedEx Ground has been in the middle of this type of legal dispute for several years. FedEx claimed that their drivers were franchisees and therefore independent contractors; several drivers (and later the IRS) challenged that status, claiming that the drivers were really employees.
Here are some basic distinctions between independent contractors and employees:
Lack of employers’ direction is one major difference. In other words, the worker is left to his or her devices and does what the particular job requires without direction from the employer.
Is the worker working primarily for one employer or working for several employers on an as needed basis?
The worker is not in the same general business as the employer. A full-time consultant in the same line of business as the employer might be considered an employee. If the employee has his or her own business and also works for other companies, he probably would be considered an independent contractor.
Just because the worker creates an LLC or even an S-corporation doesn’t necessarily protect both sides from being classified as an independent contractor.
The federal government and the states are narrowing the definition of an independent contractor. One must definitely be truly independent to be considered an independent contractor. FedEx franchises (for lack of another term) wear FedEx garb, have FedEx logos on their trucks, and deliver FedEx packages on defined routes. However, we understand that they buy their own trucks and can sell their FedEx routes. But, consider the old saying: If it looks like a duck, acts like a duck and makes duck-like noises, there is a very good chance it is a duck. The battle goes on, but the penalties for violating the status of your people can be very expensive.
A recent article in the Boston Globe reported that although more attention is on the large, primarily publicly held companies, more and more people are making their living by operating their own businesses. In fact, nationally, over 500,000 new businesses are started every year. What this means is that over 10 percent of workers are “either starting a business or working at one that is less than 3 1/2 years old.” And, as indicated by frequent reports, new businesses create new jobs.
Those people who start businesses generally do not have their own funds available for start-up expenses. This is due in part to the fact that bank and SBA funding is not available to them. In addition, fewer than seven percent of new or prospective business owners will receive actual venture capital funds. So, where does the money come from? Second mortgages, credit cards, and family loans are the most common sources of start-up funds. The Globe added that “over the past few years, more than 80 percent of Inc. Magazine’s Fast 1000 companies have been started with about $50,000 or less.”
The article concluded with a plea for “seed” capital and funding from both public and private sources. Perhaps this article and similar ones will lead the way towards the recognition that those who own and operate their own businesses deserve a less arduous journey toward making the right start.
Small companies are the innovators. The need for large companies to acquire small companies is necessary in order for the former to capture new products and services. According to Fortune magazine, “Big companies almost never innovate. This is unfortunate because innovation is one of the few ways to gain proprietary advantage and stay profitable. It’s not that innovation itself is rare – it’s occurring everywhere. Which means, mostly, elsewhere. And as engineers and inventiveness continue to flourish in China and India, elsewhere moves farther and farther from here. A healthy business must therefore not only innovate more within its walls but leverage innovation elsewhere too.
“So why is innovation so hard for big companies? The main reason is that innovative people tend to prefer working in smaller organizations that have more focus and less bureaucracy. Even in small companies, adopting a large-company style can frustrate the innovators.
“The problem with large companies isn’t that they fail to do large and seemingly ambitious projects; it’s that they fail to do small, quirky, controversial projects – that have the potential to grow. (If everyone thinks an idea is okay, how can it be innovative?) A large organization – its missions threatened by new ideas – is often incredibly hostile to its own innovators; the antibodies to change are strong.”
The median sales of a company going public has gone from an average $15 million in 1999 and 2000 to $164 million in 2004. Smaller companies have decided not to go public as often as in years past, and they reap the quick – and cheap – money as a result of that decision. The question is “why?”
A company with only $15 million in annual revenues would most likely not want to have an IPO and absorb all of the attendant costs and the on-going fees related to going public. They also would not want to have to spend the money necessary to comply with the Sarbanes-Oxley regulations. Smaller companies have to pay a hefty price to go public – and remain public. In fact, a recent Business Week article reported that “Bankers expect a record number of U.S. companies to go private this year, topping last year’s 86.”
Many CEOs, in order to rapidly grow their businesses, merge or acquire other companies. However, many of these do not work out and the acquired entities eventually get sold off. But as long as mergers and acquisitions are in vogue, large companies will acquire smaller ones in an effort to grow as rapidly as possible. Therefore, many smaller companies that won’t go public because of the costs and subsequent compliance issues will be absorbed by larger companies.
The trend today, at least in manufacturing, is to provide complementary services. For example, General Electric manufactures aircraft engines and medical equipment, but they also provide financing and maintenance services for the things that they manufacture. These ancillary, but complementary, services are big profit makers. Small service companies that provide these services may be excellent acquisition targets for manufacturers. If smaller companies want to grow, adding complementary services such as GE does may be the best way.
On the flip side, many large companies are divesting themselves of companies that don’t fit into their core strategy. For example, McDonald’s purchased Boston Market and several other food franchises in an effort to continue their growth. McDonald’s discovered that they were much better off focusing on their core business than they were trying to grow new concepts. It is believed that these other franchises will be sold or they may already have been. Smaller companies may want to divest themselves of products or services that aren’t complementary to their core business.
Some companies have almost reinvented themselves by adding new, more profitable, and “sexier” services or products. This can increase the value of the company. Smaller companies, because of their size and the fact that they usually have one manager, can shift quickly. They can get rid of products or services that don’t generate commensurate profits, or add new products or services that can add to profits, much more quickly and efficiently than their larger counterparts.
Small companies, at least for the short term, will not be likely to go public, will be able to shift gears quickly to improve profits, but may also become acquisition targets by larger companies.