For the entrepreneur considering launching a small business, many factors must be taken into consideration. How will the business be financed? Does the small business have a solid business plan? Is the product or service marketable?
The U.S. Department of Labor cites that roughly 50 percent of small businesses fail within the first five years. However, it doesn’t have to be this way. With the proper planning, the small business can thrive for years to come.
Does the Entrepreneur Have the Characteristics for Small Business Success?
The first thing the entrepreneur should do when considering a small business is to perform a brief business compatibility analysis. In other words, does the person have what it takes to start and manage a business? The entrepreneur should sit down and consider the following:
- Is the entrepreneur a motivated self-starter?
- Does the entrepreneur have a high tolerance for risk?
- Is the entrepreneur a follower or a leader?
- Is the entrepreneur adept at planning and organizing?
- Does the entrepreneur make decisions quickly and efficiently?
- Does the entrepreneur have a positive can-do attitude and a strong drive for success?
- Is the entrepreneur energetic and emotionally balanced enough to run a business?
- Will the small business affect the entrepreneur’s family, and if so, how?
- Can the entrepreneur devote himself or herself to the business full-time?
- Does the entrepreneur get along with diverse personality types?
Successful entrepreneurs are creative problem-solvers. They are intelligent, inquisitive, confident, and enjoy tackling challenges on a daily basis. Their small business sells goods and/or services that are in demand and highly marketable.
Financing a Small Business
One of the biggest challenges for the entrepreneur to overcome is finding sources of funding to get the business off the ground.
Among the financing options, the entrepreneur can fund the new business with financial assistance from friends, family, or business partners. Also, the web provides numerous resources for obtaining a small business loan including iBank.com, Go4Funding.com, and the Business Owner’s Toolkit.
The U.S. Small Business Administration provides several types of small business loans. The most common SBA loan is the Basic 7(a) Loan Guaranty. Other SBA Loans include the Microloan (a 7(m) Loan Program) and the Certified Development Company loan (CDC: a 504 Loan Program).
Small Business Planning Option: Franchise
Some entrepreneurs opt for franchise ownership rather than starting a business from scratch. The franchise is a sort of turn-key business where the marketing, branding, business operations, and customer base is already established.
Small businesses fail for a variety of reasons including poor location, poor financing, insufficient demand for products and services, and insufficient capital. But with proper planning in the initial stages of the small business and a solid business plan, the small business can enjoy growth for years to come.
See related articles, "How to Finance a Small Business," "Small Business Ideas," and "How to Finance a Small Business With an SBA Loan."
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