Namastè!
Ah, entrepreneurship is everyone's dream, it seems. No one likes the idea of slaving away at another person's company, eking out a living wage for themselves while the business owner lives high off the hog.
It seems as easy as develop a service or product, sell it at a fair price to you and your consumers, and live that good life, right?
Well...
No. It isn't just that easy. Don't let that scare you, for I am here to help, and I'll share most of what I know. (Hey, a girl's gotta keep something for herself! If I know two things, I can only divulge one--you gotta earn and learn the other through your own hard knocks.)
You need to first and foremost establish some good or at least improving credit (explained here) and you need to have a plan besides quick money and vacations.
AVOID The Traps
The quickest trap I see in business is the multi-level marketing (MLM) companies. You've seen them before--Primerica, ItWorks, YouNique, et al. They're all about the same: Your recruiter will first try to gain your friendly acquaintance (hard sells don't typically work for MLM). They'll ask you about your goals and share their story. They'll show you photos of people just like you who have joined and gone on to make six figures or more. They'll entice you further with promises of the same outcome for you if you only work hard. They assure you there are no ceilings. You can make as much as you want! They'll drill this and other positive affirmations into your head and inbox as often as it takes to hook you. They're not selling you a product, they're introducing you to a better path to wealth!
Just work hard...at either selling astronomical amounts of their products and services OR at recruiting "just 5 people" to your "team." Pay the fee or purchase the classes and/or starter materials, and watch that wealth build, right?
No.
Now...before y'all attack my stance, hear me out.
If there existed a job that could guarantee I'd be my own boss in six months or less, and could make six figures my first year, do you think I'd be doing anything but?! Wouldn't everyone in America work for those precise companies?
You won't be getting your own business through MLM. You'll be a contractor to an already-established company. You'll receive a 1099 tax form, as you are not even an employee of said company but an independent contractor. You don't own a business...a business just employs you--and very conditionally at that.
Don't believe me? Ask any of these "business owners" about their EIN or DUNS number (which you'll know about if you but read a bit further), or if they are registered with Dun and Bradstreet. They don't have them and they aren't--but the company they work for does and is.
Don't fall into the pyramid trap. It's fine if that's what you truly want, but please do your homework. No one will just hand you a business for 99 bucks and a starter kit.
So...How Do I Begin?
You begin by deciding what exactly it is you would like to offer. Do you provide a service or product, or are you a skilled laborer? Once you figure out what it is you want to do, then you can begin laying the ground work.
First, you need to draw up your business plan. The standard business plan has just a few components.
Executive Summary: a snapshot of your business plan; it encompasses your company's profile. It also touches on your goals.
Company Description: a synopsis of what your company is about, what services or products you provide, and who those services and products are geared toward.
Market Analysis: the process of determining factors, conditions, and characteristics of a particular market.
Organization and Management: details your company's hierarchy.
Service or Product Line: what are you providing; the description of what your business offers.
Marketing and Sales: how is the product/service being promoted to prospective customers; how are your actual and/or projected sales lining up?
Funding Request: how much money do you need to make this plan, an actuality?
Financial Projections: taking all factors into account, the financial projection is a data-backed estimate outlining how much money you are expecting spend as well as how much you are expecting to make, in any time period.
When your business plan is laid out...
Get Legalized
And by "get legalized," I mean, secure all required licensure. Register your business name (I recommend a corporation or an LLC [limited liability corporation], and keep reading so I can tell you why!) with your state. There may be different licenses required at different levels--city, county, state. Do your due diligence to avoid problems later, because the powers that be are very generous with licensure fines!
Example: In all my years as a hairstylist, I maintained a shampoo license although I was only a braider. Why? Because while natural stylists (those who do only braids, locs, or twists without any use of chemicals--no relaxers, texturizers, or chemical dyes) don't have to have a license, they do if they will shampoo hair. Why? Shampoo is considered a chemical. This is also why some shops insist you come in already shampooed.
What Are You?
Your business type is very important. Are you sole proprietorship (owned and operated only by you)? Are you a partnership (owned and operated by you and others)? Or are you a corporation (a company or group legally allowed to act as one person) or a limited liability corporation (a hybrid company with the characteristics of both sole proprietorships and corporations--in which the members of the company cannot be held personally liable for the company's debts or liabilities)?
Personally I recommend being either a corporation or an LLC. I have two LLCs myself. While I certainly don't plan for either venture to tank, the protection afforded to my personal assets by being a limited liability corporation is beyond appealing.
The Numbers Game
The numbers I mentioned earlier--EIN (employer identification number) and DUNS number!
Your EIN is your business's social security number, which you can get right from (and ONLY from) the IRS. NO OTHER SOURCES OF EINs are legal, legitimate, or valid. It is crucial for establishing a separate credit file for your business. Business credit scores range from 0 to 100, whereas personal credit scores range from 300 to to 850. In either case, the higher the better. But with business scores, the only factor is payment history. If you pay your invoices early, you'll range in the upper echelon in no time.
One caveat regarding EIN--don't try to use an EIN as a quick fix to bad personal credit. The moment you misrepresent your social, you are committing fraud. The EIN is for your business, not your shoe fetish or late car payments. It is used to secure funding (loans) and/or lines of credit to allay expenses related to your legitimate, registered, licensed business ONLY. Don't abuse it, because it will be detected and you will face the consequences.
The DUNS number is generated by Dun and Bradstreet, the premier credit rating source for businesses. Any business owner who plans for true success will secure this DUNS number. They are what helps you establish a good business credit rating, as they track your payment history and financial behavior to generate a credit file for your business.
The EIN and DUNS together practically guarantee you can secure at least some funding or credit, although you will still have to prove creditworthiness in the form of timely or early payments.
And then...?
Now that you are registered, licensed, and have secured your EIN and DUNS numbers, you are a LEGIT business owner. (See, you didn't need "just 5 people" after all!)
Keep your taxes paid. Invest in some good accounting software so you are never out of the loop with regard to taxes. Make sure your licenses are always current.
Lastly, best wishes! While entrepreneurship can be daunting at times, it is almost always worth it. You will create not only income, but possibly lay the foundation for generational wealth as well--and who doesn't want to be set in life to the tune of having enough that their kids have a safety net in the form of not only a nest egg but a guaranteed job later in life?!
Do your homework--and if it's for you, dive right in. I gave you the basics, but if it's truly your calling, I won't even have to tell you to dig deeper. Your work ethic and desire to carve out your own path will make you do the remaining grunt work.
...and as always, feel free to fact-check anything I tell you in these informative posts. I've done my desearch, and I heavily encourage you to do the same. I would never intentionally mislead you BUT I also don't want you to blindly follow me. Keep your eyes open and follow me, so you can see where I'm taking you. *wink*
Namastè!
-- Tayè K. ♡
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