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A quick Google search of the term “starting a business” will turn up nearly 8 million results. You can probably assume that 95% of them are not going to be helpful but that still leaves an incredible 40,000 results full of advice and guidance about how to start a business. If Google is your indicator it would seem that everyone is going into business and it’s easy. Start-up business advice of the “look how fast and easy it is” variety is not limited to fly-by-night get rich quick websites selling entrepreneur kits and Jack in the Beanstalk magic business growing beans. Honest to goodness serious sources like Forbes have articles titled “How to Start a Business with only $100 in the Bank”. Inc Magazine offers advice on “How to Start a Small Business in a Few Hours”.

Find out now: How much house can I afford?

Reality Check


I’m not picking on Forbes or Inc as purveyors of fantasy, they are not. They are also not alone in promoting the idea that starting a down the road to Bill Gates-hood or Steve Job-ism is a breeze. In fairness, technically, I suppose they are correct. If you do it all yourself you can create a business out of thin air for little or no money and throw in business cards to boot.

The fact of the matter is that more than a third of new businesses never make it out of the cradle and die in their first year. Almost half by their second year and almost two thirds are gone by their fourth year, never having turned a profit. Still you think the odds are not that bad but those statistics are for all businesses including spin-offs of Fortune 500 companies and highly capitalized start-ups.

Why Bother

If the deck is so stacked against you why bother? Why indeed? Well the lure of freedom for one is strong. Freedom to be your own boss, call the shots and be the master of your own destiny. Of course there is the promise of all that wealth and becoming the next Donald Trump (inherited a fortune to start with).

The point of all the doom and gloom is so that if you are intent on striking out on your own and starting a business you do so with your eyes wide open and make decisions that reflect the real world. For small businesses that make it the rewards, in financial terms alone are modest, but the rewards of start-up success overall are astronomical.

What Does it Take

money money money

Contrary to the get rich quick school of business start-ups it takes a lot of money to start a business. The paperwork is cheap. Incorporation, partnerships and sole proprietorships can be created on your own for a couple of hundred dollars at the high side and under $1,000 with the help of an accountant or lawyer. The cost of starting a business is not the paperwork, it’s things like inventory and equipment for businesses that are going to sell or make products for resale.

Despite the infomercials and reality shows that have suppliers lining up to provide tens of thousands of dollars in inventory and equipment to every attractive person that walks through the door full of enthusiasm, they want cash. Hard currency upfront, in advance and no a bank is not going to loan you the seed money on the strength of your business plan and graduate degree.

The Rules

While the cash to buy start-up inventory, equipment, secure leases and all the other sundry expenses of starting a business can be done with borrowed money, that borrowed money is going to be based on your personal credit. That means that you will be personally responsible for paying it back regardless of whether or not the business succeeds.

The next rule is that no-one works for free. That includes you. Disabuse yourself the notion that you’ll work for free, you can’t and you won’t. Your landlord, mortgage holder, utilities, the bank that holds your car loan all want your regular payments regardless of the state of your new business, which means you can’t work for free, unless you plan on sleeping in the park.

Your Day Job and Night School

The reality of starting a business almost always means keeping your day job and building your business at the same time. Some are fortunate to have a spouse or partner who can cover the expenses of life while we pursue our dream of entrepreneurship but even that can wear thin in a hurry.

Even if the business you are starting is in the same field that you have worked in for the past 20 years there is still a learning curve that demands your attention and dedication. No matter how high-up the corporate food chain you are, you do not know the ins and outs of every aspect of the business you work for. There are other people for that and remember rule one, no-one works for free. So you will have to educate yourself about the details.

Obsession is a Killer


Obsessing about details like picking the perfect name, you know one that is sassy without being annoying. A name that says please do business with me while not appearing needy. One that says you’re solid and reliable while not being old and stuffy. I could go on and on but that would be obsessing.

Like a zen master you must find a balance between paying attention to details and not sweating the small stuff. This may sound easy but it’s not because when your success is on the line you tend to want to control every detail so the things you can’t control, like the competition and market conditions don’t seem so daunting. Spending too much time and effort controlling the controllable can cost you valuable reaction time when you need to respond to the uncontrollable and that can quickly lead to disaster.

The Bottom Line

I speak from experience as someone who has been there and done that, several times. As someone who still owns and operates a small business with my wife (that is a whole different challenge) I can promise you two things are absolutely true about being in business. It’s the hardest, most difficult, tiring and frightening thing you can possibly do and love.

If you really want to go into business by all means give it a shot, just do it with your eyes wide open.

Photo Credit: ryangphoto1, *** GianniAquaroSenzaC [HiLLBioNe] ***, photosteve101, pointlessxnostalgic

Frank Addessi Born and raised in the center of the known universe, Brooklyn NY, and currently hiding out in the bucolic hills of northeast Pennsylvania writing about personal finance. His expertise includes personal loans, credit cards and retirement. It's not easy living the American Dream but someone has to do it!
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