I Want to Start a Small Business

Dave's four basic tips to know before you get started

from daveramsey.com on 03 Aug 2009

Doesn't it sound like a great idea to start your own business, maybe from home, so you can be in control of your destiny, have flexible hours and not have to worry about a control-freak boss?

Unfortunately, it's not as simple as that. Small-business owners work unbelievably hard, and even hard work doesn't guarantee success. According to the Small Business Association, only two-thirds of small businesses survive two years.

There's no magic formula to making a business work, but here are a few tips to get you thinking in the right direction:

Love what you do!

What would you do if money and time were not factors? What do you have a passion for? According to Success magazine, the entrepreneur is the only one who can go from sheer terror to sheer exhilaration and back every 24 hours. It's a roller coaster ride, so you better love what you're doing in order to survive it. That doesn't mean you won't have bad days if you're doing work you love. Everyone has days when they want to throw up their hands even though they love what they do. But if you don't love it and are just doing it for money, it won't last long.

Save up. Don't borrow.

Start your business debt free with an emergency fund in place. It's easier if you can start part-time and get the kinks worked out while you still have other income. If you're going to quit your job and walk out, you definitely need substantial savings. You have to think about how long it will take from starting your business to the time money will start rolling in and plan accordingly. Never use credit cards for a business loan or to float you through hard times. It's a good way to cause your business to fail. Saving up for purchases is key. Pay with cash. Make sure your business can pay its own way. Don't go out and purchase a bunch of new equipment and supplies in hopes that the business will succeed. Start off small.

Do your homework.

If you want to be skinny, talk to skinny people and see what they do. If you want to open an eBay store, talk to people who have successful eBay stores. Talk to people who have started similar businesses, read about the industry, and do some research.

Next Step

If you're a small-business owner or you want to start your own business, EntreLeadership 1-Day may be just the thing for you. Get the details of Dave's business event.

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I have found alot of helpful free advice from the local Small Business Development Center office, I would encourage any small business owner to take advantage of this FREE resource!
Lynnette Guess January 17 2010 12:44 PM

One principle my wife and I base all of our business decisions on is, "if it doesn't make us money, or save us money, we don't need it." It helps us focus on what we really need to run our farm. We are just starting out, and are pretty small. Most of our income is made in custom work for other farmers, so spending our money wisely on the peice of equipment that won't just pay for itself, but generate income is very important. I share this principle alot, a few take it to heart, a few think it sounds nice, and a few even think it is a silly idea. You can guess who is the the more successful group. What advice would you give to a room full of farmers?
David Golladay December 30 2009 12:45 AM

I heard you say that some % of small business fail because they do not do a good job of accounting. where can I get that quote? Did you put it in one of your books?
Tim Crowe December 15 2009 1:38 PM

As a small business owner/partner...its good to know, "you can always work half of the day, you just need to know which half-of-the-day you want to work!!!" Kim Shea, MSgt, USAF Ret.
Kim Shea November 30 2009 9:56 AM