Keys to Owning Your Own Business

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Black clientsOwning a business has its obvious perks (i.e. scheduling flexibility, direct control over profits and loss, ability to pass wealth down to the next generation, etc). African-Americans are opting for these benefits.  In fact, according to the United States Census Bureau, as of January 2010 approximately 1.2 million African-Americans owned their own business. Combined annual revenue generated by these firms exceeds $89 billion.

The numbers can be intoxicating. However, steering a business into continuous success is a process. Before you launch a new business make sure you complete market and organizational due diligence steps. Doing so will help ensure that your start-up company succeeds not only during the current economic climate but for the long term as well.

Follow Your Passion
Select a business that allows you to work in your “passion” field. For example, if your passion involves preparing meals for large groups of people, you could open a restaurant, banquet hall or fast-food stand. Working in your area of passion will motivate you to meet your goals and to “hang in there” when customer support lags or access to capital stalls. Passion will also help you to commit to the success of your firm. 

Writer and mountaineer, W. H. Murray, put it well when he said, “Until one is committed, there is hesitancy, the chance to draw back, always ineffectiveness. Concerning all acts of initiative (and creation) there is one elementary truth, the ignorance of which kills countless ideas and splendid plans: that moment one definitely commits oneself, then Providence moves too. All sorts of things occur to help one that would never otherwise have occurred. A whole stream of events issue from the decision, raising in one’s favor all manner of unforeseen incidents and meetings and material assistance, which no man could have dreamed would have come his way.”

Create a Business Plan
Dedicate one month to writing your business plan. Anne Wenzel, CEO of Econosystems (a consulting firm for small businesses) states that, “To successfully create an effective business plan and strategy document, you should commit to setting aside several hours of uninterrupted time each week for several weeks.” Include the following areas in your business plan: Overall Summary, Mission Statement, Company History and Executive Team, Marketing Plan, Financial Statements and Market Analysis. 

Of the above business plan components, it is market analysis that will help you to measure the public’s appetite for products and/or services that you offer. Market analysis includes demographics about your potential customers (i.e. age, gender, hobbies, marital status). Market analysis also includes market trend studies and the numbers of competitors in your industry.

If you start a company in a saturated market, you could still achieve success by focusing on unique and distinguishing identifiers that your business possesses. For example, you could offer a product or service differently. Amazon.com did this when they offered books at discount prices for sale over the Internet. They recently extended their offerings when they rolled out Kindle, a tool that allows readers to enjoy a story with the click of a button. For more information about business plans, check out the Small Business Administration’s “Small Business Planner” section.

Embrace Change

Change is a part of life. When change impacts your business (i.e. peak sales, lack of capital), get creative.  Find new ways to reach and connect with your customers. Consider getting a mentor or joining a “collective intelligence” group. Brainstorm and talk about challenges that you are facing as a business owner until ideas for improvement surface. Measure the results of your marketing and promotion efforts. When you see that a marketing strategy is not yielding the results that you want, revamp your marketing effort until you notice an increase in sales (direct or residual) or customer contacts (i.e. email, telephone, office visits).

Complete Paperwork

Contact the Internal Revenue Service (much of the tax information that you need to start your business is provided at the Internal Revenue Service Web site). For example, you will need to apply for your business tax identification number. Also, read up on information regarding self-employment taxes (i.e. Medicare, Social Security) so you will not be surprised when you file your taxes at the start of the year. Visit your state’s tax or revenue department Web site to locate necessary state forms that you must complete before you launch your business. Be advised that if you sell products, most state revenue departments will require you to collect, report and pay sales tax once a month or once a quarter.

Understand Fees and Laws

Other taxes and fees that you should be aware of include unemployment insurance (if you hire employees), workers’ compensation and business insurance. Make sure that you have adequate property or/and professional business liability insurance. Several major insurance firms have agents who are skilled at understanding and explaining business insurance. The coverage could help save you hundreds or thousands of dollars should you get sued for defamation, injury or infringement.

Secure Capital
Capital keeps a steady stream of funds entering your company. Absent capital, your business could struggle to survive. As Ola Jackson, CEO of Onyx Woman Network, says, “One of the biggest obstacles facing many black business owners is lack of access to capital. Show me an under-capitalized business, and I will show you a business unlikely to survive the national average period of three years. You need money to do just about anything you want to do, especially to grow a successful business.”

Contact your banker or financial services firm and inquire about business loans. A good credit rating can help you to secure an interest free business loan through the Small Business Administration. Lenders often ask that you submit a completed business plan before they will approve your loan (interest free or not). As your company starts to take off, revenue generated from product and service sales will create streams of cash flow that you can use to continue to grow your business (i.e. purchase equipment, hire staff).

Build a Capable Team

When the time comes for you to branch out and hire staff, take the time to interview clients thoroughly. Look for team members who are reliable, confident and capable. Over time, each contact that a customer or client has with one of your employees will reflect upon you and your entire firm. Hire wisely.

Stay Focused and Encouraged

During challenging times, remember why you started your business. Read “thank you” cards, notes and emails from customers who appreciate your products and/or services. Review your goals and mission statement and commend yourself for staying on track. As Jackson shares, “Growing a successful business is a process.”