We’ve covered a lot of information over the last few weeks, but there’s still more to cover when starting your own business. There are two major issues that need to be addressed before you can officially start your business endeavor.
Estimating Potential Start-up Costs
How much money do you think you need for your business? Will you need specific supplies? Will you work out of your home or in an office? Will you have to hire contractors or employees for certain aspects of your business? If you’re not sure what you need for your business, you will need to do research to get an idea of the money you need.
There are many businesses that require low start-up costs and some that require substantially more. It’s important to estimate your start-up costs as accurate as possible so you don’t experience any unpleasant surprises along the way.
There are many things you have to consider when estimating your start-up costs:
- Office space (will you work from home or do you need to rent an office space?) and supplies
- Employees: How many employees will you need to pay?
- Your products and services you will offer- how much do they cost to make or acquire? What supplies do you need for this aspect of your business?
- Marketing materials (website- (a must!), brochures, ads, business cards, etc.)
- Living expenses (this is a big one!) Do you plan on taking time off of your current job to get your business up and running? Or do you plan on quitting your full time job and forging “full steam” ahead on your new business? Factor the aspect of (potential) time away from your current job into your start-up expenses.
- Licensing, credentialing, and certification fees if applicable
- Insurance (Health and liability)
- Fees related to your business structure (more on this in the next section)
- Miscellaneous, incidental costs- (save for this like your personal emergency fund.) I suggest adding at least 10% to your estimated business expense total for incidental costs.
Plan Your Business Structure
This is the final, but most important, step you will need to take care of in order to make your business official. After evaluating your business plan you will need to decide which legal structure is best for your business.
Are you going to be a one man show or do you need a team of employees in order to get the business up and running? You need to decide which business structure lends itself well to your needs and the needs of your business. There are pros and cons of each. Here’s a brief overview of business structures:
- Sole proprietorship: This is the easiest business structure to form. If you are the business' only employee, this may be the structure you want to set up. It is the least expensive of all structures to establish. As a sole proprietorship you have complete control of the business and don’t have to consult with anyone as you will with the other business structures. In addition, the tax burden is lower with a sole proprietorship.
- Corporation: Businesses under corporations are independent legal entities owned by shareholders. The corporation, not the shareholders that own it, is held legally liable for the actions and debts the business incurs. Corporations can offer to sell shares of their business to the general public.
- S Corporation: A S corporation is a special type of corporation that allows avoidance of double taxation (once to the corporation and again to the shareholders). It is intended to limit the financial liability the owner or shareholder is responsible for.
- Partnership: A partnership is a business where two or more people share ownership and they each contribute to all aspects of the business. This includes money, property, labor and skill. In addition, each partner shares in the profits and losses of the business.
- Cooperative: According to sba.gov, a cooperative is managed by an elected board of directors and officers while regular members have voting powers to control the direction of the cooperative. Cooperative business structures are common in health care, retail, agriculture, art, and restaurant industries.
- Limited liability company (LLC): According to sba.gov, a limited liability company is a hybrid business structure bringing together the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. A LLC business structure can consist of one or more members.
As you can see, this list isn’t detailed enough or you to make an informed decision about business structures. Visit www.sba.gov for more information on choosing the right structure for your business.
This concludes the From Nurse to Business Owner: Strategies to Succeed series. By this point you should feel more confident about your journey moving from nurse to business owner. If you have always envisioned starting your own business, start planning for your business venture now. Remember-your current results are a direct reflection of your beliefs, mindset, knowledge, skills and actions.
In addition to working as a RN, Nachole Johnson is a freelance copywriter and an author with her first book, You’re a Nurse and Want to Start Your Own Business? The Complete Guide, to be released later this year. Visit her ReNursing blog at http://renursing.wordpress.com.