In the aftermath of the 2008 global economic crisis which saw millions of employees laid off from work, there has been a drastic rise in the number of start up small businesses worldwide. According to the International Labor Organization’s 2009 Global Unemployment Trend, approximately 190 million were unemployed in 2008 and up to 230 million in 2009. However, during this same period, according to the 2008 Kauffman Index of Entrepreneurial Activity written by Dr. Robert Fairlie, in the United States alone, there were approximately 530 thousand new businesses every month, mostly in construction-related industries.
While losing a job is a terribly traumatic experience, especially if there are mortgages to worry about, getting fired is not the end of the world. In fact, there are a defiant few who refuse to give up and instead look at getting fired not as a tragedy but a beginning of an entirely new phase in life. An exciting new world filled with new challenges and new opportunities. These defiant few will use whatever knowledge and skill they have gained on the job and utilize these skills in starting their very own small business.
The most important factor to consider when starting a small business is to determine what business to go into. Preferably, it should be a business where the entrepreneur has experience and proficiency in. Going into a totally unfamiliar line of business may prove risky and unwise. As soon as a new business starts operation, there is no time to “learn the ropes”.
Equally important in starting any small business is capitalization. Aware of the high mortality rate among start up businesses, how much capital is the entrepreneur willing to gamble? Will the potential rewards far outweigh the risk? And although getting a small business loan is an option, assuming the bank extends a small business line of credit, this only “ups the ante” and may also prove to be risky.
The small business entrepreneur also needs to determine if the new business will be registered as a single proprietorship, a partnership, or a limited liability company. As each have their particular advantages and disadvantages, getting expert legal advice on which business type fits best is highly recommended. Taxes, too, are issues that if not handled properly can create problems later and should, therefore, require professional advice.
Starting a small business, or at least knowing how to start one, should be part of every employee’s career planning. Every employee should take the opportunity to learn new skills and enrolling in business courses that will definitely prove beneficial later on. Knowing how to start a small business while still gainfully employed somehow takes away the uncertainties of an economy gone haywire.