Starting Your Own Business Myths Solved

After my last post, I received several emails from young entrepreneurs about starting their own business.

Here are some of the many questions/concerns that were mentioned:

1) I don't have enough experience to start a business

2) I don't have a market to pitch my idea to

3) I need to quit my job to properly run my business

4) I need a business plan that details everything

5) I need a completed product to launch my business

I thought I'd share my response to these "excuses" as I know many of you are thinking about starting your own business.

Myth 1: I don't have enough experience to start a business

Fact: You don't need 10+ years of corporate experience to start a business. There are many young entrepreneurs who have taken their idea and formed it into successful careers. All you need is a successful idea.

What is a successful idea? A successful idea has to be something you are passionate about. What are things that you Google search the most? What activities do you do the most? What products do you buy the most? Answering these questions will give you an idea of what you are passionate about?

For me...

Google search: entrepreneurship, personal finance, course planning, motorcycles, and small cap healthcare stocks the most.

Activities: planning (courses, parties, trips), working out, running, biking, talking, blogging

Products: Blackberry, coffee, jewelry, clothes, books

After you have constructed your list, try to find a pattern. See where things line up. For example, I would love to plan my finances and monitor small cap health care stocks via my Blackberry.

Myth 2: I don't have a market to pitch my idea to.

Fact: Everyone has a market. Pick a small group of people out of your network.

Example:

Family members will make up the 30+ group

College friends will make up the young adult group

Co-workers will make up the blackberry-using, stock-monitoring group

Use resources like Facebook to organize your groups. Set up labels in your Gmail account and send emails straight to these labels. Market your idea through Twitter. Join Forums that talk about similar topics.

Myth 3: I need to quit my job to properly run my business

Fact: Most entrepreneurs start their businesses while still working their full-time jobs. Yes, a business requires A LOT of time and effort. It requires marketing and networking. Use your lunch hour at work to send out a few emails. Send out Facebook messages before you go to bed. Create a blog and monitor it to see when you get the most traffic. Quit your job after you have a successful business!

Myth 4: I need a business plan that details everything

Fact: This is probably the largest (and most frustrating) myth out there. YOU DO NOT NEED A BUSINESS PLAN TO START A BUSINESS. Unless you are trying to get VC funding, you do not need to write out a 10-page business plan. Yes, take the time to figure out what your expenses will be 5, 10, 15 years from now. What is your projected profit? Will your market be the same? Once you have these questions figured out, immediately start marketing your idea. This leads into Myth 5...

Myth 5: I need a completed product to launch my business

Fact: Nope. Imagine how much time and effort would go into making a completed product. And what happens if you start marketing it and no one likes your idea? Time wasted. Instead, come up with the idea, plan it out a little, make a quick drawing/outline, and begin the marketing process. Get a feel for what your customers want. Do they like your idea? Will they buy your product? Once you know this idea is something essential to your market, and then produce the final good.

The key to starting a successful business is efficient time management.

Resources that might help: StartupNation, Small Business Trends, Tim Ferriss, Ben Casnocha, Escape from Cubicle Nation

Good luck! And keep me updated on your progress!

Be Your Own Boss, But Remember This...

Who doesn't want to be their own boss? Every day we fear for the loss of our jobs, the lay off of a friend, or a flickering red minus sign on our Bloomberg screens. So why not save ourselves from the agonizing pain of crazy-gluing ourselves to our 4x4 cubicles and start our own business?

Not a bad idea. The roadblock? The expenses that come with starting your own business. WSJ estimates that "you may need to bring in up to 20% more than before just to break even".

So does that mean you give up that fantastic idea? Absolutely not. Here are a few things you should be aware of though:

1) More freedom = Higher taxes
New Jersey pay taxes of 27% to 59% of their net income

According to the Office of Advocacy of the Small Business Administration, "Sole proprietorships face a 13.3 percent rate, small partnerships face 23.6 percent, and small S corporations face 26.9 percent."

The good news? You pay taxes after you subtract your expenses. So the higher the expenses, the less taxes you'll have to pay.

2) Insurance.
As you go onto open your small business, you'll need to factor in insurance - both for your family and your business itself. Sole-proprietor plans are difficult to get and can be expensive, so remember to factor that in.

3) Hiring
Once your business picks up speed you'll need to bring on employees. This sounds great, no? Having an intern run for your venti latte? You'll also have to deal with the headaches of watching over the employees, telling them what needs to be done, and paying them!

While these are some reasons you need to be aware of when starting a business, they're not reasons why you shouldn't start on.

Go on! Be your own boss!

Changes in 401Ks Near You!

President Obama has taken Washington by storm and is working hard to make some necessary changes. As the Democratic Party controls Congress, they are set on bringing about changes with the 2010 budget. With the downfall of the economy, many workers have lost their hard earned money in their 401Ks. About 60% of Americans use 401Ks as the primary vehicle for savings.

President Obama plans to establish a program in which all workers are automatically enrolled in the employer's retirement plan. While this wouldn't be mandatory, this plan would prove beneficial to many employees. This new plan would also repeal the last president's work that allowed mutual funds to offer advice to 401K participants.

The plan also allows employees to opt-in or opt-out of the plan. The companies that don't offer 401Ks will have to offer a direct deposit into an individual retirement account.

While the benefits of this plan are enormous, there's a big downfall - increasing prices. A plan like this might not be as cost effective and may even reduce the services the consumer receives.

What are your thoughts on this new proposal?

Lessons for the Graduate

And so the countdown to graduation begins. For most colleges around the country it's finals week, but studying all night for an international economics exam doesn't seem to be the only thing worrying students. The economic outlook is uncertain and jobs are hard to come by.

Here are 5 tips that will help you stay ahead of the curve:

1. Save Save Save
As we've been discussing savings matter. Start putting money aside immediately - as little as it may be. You never know when this might come in handy.
Craig, a friend and a co-worker, started saving the minute he graduated college. He took the money he received as graduation gifts and immediately put it aside. He continued to do this with his paychecks. After working for 3 years at a top management firm, he has been laid off. He's providing for his family through these savings! "If I hadn't started when I did, I don't know where I would be now"

2. Read the Fine Print
While in college, we used to sign all the papers we were asked to. I never bothered to read the fine print. As a graduate, this becomes very important. You will be charge early termination fees, late fees, and other unnecessary charges if you don't read the fine print.

3. What's the Total Cost?
A $20,000 car does not mean you'll only be paying $20,000. The same goes with loan consolidation and student loan payments. Repaying your loans over 20 years could increase your total payment by $5000!! Wouldn't you rather pay more every month and save in the long run?

4. My Plastic Friend (as my professor Iraj used to say)
Iraj believed plastics, aka credit cards, are our friends - as long as we treat them properly. If you don't have a credit card, apply for one before you graduate. It's usually easier to get a card as a student than as a graduate. Do not apply for more than 2 (or 3 if necessary) credit cards. I think 2 cards are more than enough when you're first starting out - I still only have 1.

Get the bank to set a low limit, pay the bills on time, and try to pay the full amount

5. Credit Scores Are More Important Than That 4.0
Missed out on making the Dean's List every semester because of that low GPA? Not a problem. We've got a new number you need to keep a track of - your Credit Score. This score reflects how much debt you have and controls how much you can borrow. A higher credit score will provide you with more options in the future.