Succeeding in your own business definitely relies not just on luck, but on preparation, money and time.

(ARA) – If you’ve been sending lots of resumes and getting the runaround, you’re not alone. According to the U.S. Labor Department, unemployment is the highest level in 25 years.

Is it any wonder that many unemployed, underemployed and workers fearing the loss of their jobs are now considering going into business for themselves? After all, if you’re self-employed you’ll never be laid off, right? And entrepreneurs are truly the backbone of the American economy; they create 80 percent of all the jobs in America, without the benefit of bailouts or handouts.

But is self-employment right for you? The prospect of being your own boss may look appealing, but what are the real benefits — and risks — of going it alone?

While preparing to write her book “The Accidental Startup, Business Basics for the Chance Entrepreneur,” author, Fox Business, CNBC and CNN media personality and financial expert Dani Babb surveyed 200 entrepreneurs and discovered that just 10 percent were unemployed when they started their own business. Another 26 percent were working part time and wanted full-time work, and 63 percent were already employed.

Yet with unemployment figures continuing to increase, Babb predicts so will the ranks of “chance entrepreneurs,” those who find themselves suddenly out of work and unable to find another job. If you’re among those ranks, it would be wise to weigh all the risks and benefits of becoming self-employed.

In the first chapter of “The Accidental Startup,” Babb explores the benefits of working for yourself, including:

* A stable income
* No more fear of losing your job
* Additional income
* Freedom to make decisions
* Flexible hours
* The chance to do something you’re passionate about
* Pride of ownership
* Earning potential

You should also consider the risks and downsides of self-employment, including:

* Feeling of instability as your business struggles to grow
* Potential for failure
* Unforeseen costs
* Potential for long hours
* Lack of vacations
* Difficulty in building your business
* Blurring (or disappearance) of work/life boundaries

You also need to consider financial aspects of being an entrepreneur, Babb advises. You’ll need to insure your business and learn the tax basics of being self-employed, payroll taxes, corporate taxes, etc. You’ll likely have to pick up your own healthcare costs, and provide coverage to employees. You have to consider if self-employment really will make you better off financially than just getting another job, or if you will be content just breaking even.

Once you’ve decided if self-employment is the right move for you, you’ll need to develop a business plan, raise capital and manage finances, learn about your customer, know what to expect during the first year and develop a strategy for growth.

“You may become an entrepreneur by chance, but succeeding in your own business definitely relies not just on luck, but on planning, preparation, money and time,” Babb says.

Published by Alpha Books, “The Accidental Startup” examines the reasons and motivations that lead to entrepreneurship, and helps new business owners plot a step-by-step guide to starting and running a business. The book is available in major book retailers across the country and from online merchants.

Courtesy of ARAcontent

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Cost

Typically, people who are self-employed will pay up to 18% more on their health insurance. The National Association for the Self-Employed has considers any business with less than 10 employees to be under the self-employment category. Health insurance rates are continuing to rise for self-employed and regular businesses as well.

Convenience

Most self-employed individuals do not have a human resource person to help sort out the claims, settle on rates, or even answer simple questions.

Inequitable Tax Treatment

When receiving health insurance through your employer, you do not have to pay income tax on that amount used for insurance. With self-employment you have to pay the taxes associated with your insurance amount and must pay your own premium amounts. The difference in the amount of money you have to pay out is substantial. If you are a family with an income of $30,000 you could pay an average of $725 more in taxes. The other problem to consider is that when you income rises, your health premium will as well. Self-employment businesses normally have to pay about 15% more in other taxes. In addition, you will not be able to deduct your health insurance payments as part as your self-employment tax. Being self-employed is the only business entity that does not allow for deduction of health insurance costs. As mentioned before, make sure to do your homework to make sure you are getting the best deal. Here are some tips that are very useful.

• There are different types of policies available

• Check out the companies that are offering insurance

• If you found the company through the Internet, check to see if there is a local company you can go to.

• Make sure you know what the policy covers and doesn’t cover

• You may be able to get reimbursed for your doctor’s visits and prescriptions

Some of these tips suggested might seem like common sense to some, but to others they may forget to ask or they don’t know the answers. If you take the time to do the research, it could help you save a lot of money on health insurance costs. Researching the policies before you really need it is the best way to go, since most people cannot think clearly when they are sick or injured.

To save more money, check into if you can pay your premiums yearly. Check with your insurance carrier to see how much of a saving you would be getting. By paying in a lump sum, it gives you the chance to save during the rest of the year either for your next payment or what is needed at the time. If you change to a higher deductible, you should see a decrease in your premiums as well. You can change to $500 up to $1,000. Read the policy over and make sure it says nothing about pre-existing conditions. It is possible you just have to research it thoroughly. There are also policies that have waiting periods be careful that it does not state for more than six months.

Supplemental insurance sounds like a great thing to have, but you have to make sure that your current insurance does not already cover what you are paying for in addition. There may also be limits to hospitalization or even doctor’s visits. Another way to save money is to get more people who are self-employed together as a group. You can apply for group health insurance to help everyone save. A suggestion is Communicating for Agriculture and The Self-Employed, but there are many others out there as well. The best way to save money is to review your policy every year. Make sure to read the fine print of every page. Your family needs may have changed or there may be other changes as well.

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Usually the rule of thumb is to divide your cash flow into three parts. You can take one third of your earnings and place it into a savings account for the future. Another third of your business revenue can be placed in an account that you use for business expenses, and the final third can be used for personal expenses and living.

If you want to be successful in business and yet you are not very good at keeping track of your money you may want to hire an accountant. The accountant that you hire should be one that you can trust not to embezzle your money, and to help you make wise business decisions.

Another person that can help you with cash flow management is a business consultant. This person is one who would help you devise a successful plan of action for business expansion. This person may not necessarily be your accountant, but since this person is responsible for giving you sound business advice that person can help you come time to make major financial decisions.

Consultants not only help you with major financial decisions but they also will help you devise new employee incentive programs, expansion projects, or management teams. They will be training you all that you need to know to help advance you and your company. They will help you with nearly any aspect of your operation if you let them. The most important aspect, however, is with managing cash flow and spending.

Another way that you can find help for your business is by joining various non-profit business organizations. Many of these groups offer volunteer business counseling and even sometimes give out grants to those serious about establishing a solid company. They will also help you put together a business plan as well. These people can usually be found within your community, such as at a local job center or university.

If you are looking for help managing your business cash flow and other operations you will also want to become a member of you local chamber of commerce. It is a good idea to become a member of the Better Business Bureau as well, and perhaps an e-commerce Bureau. The more well known you are and the better reputation you have the more customers will trust you, especially when ordering online.

Business plans usually will have goals in them to help you with projecting future cash flow and how to spend it if it did come. You can also read other informative articles such as this one, and join online forums that discuss various aspects of running a business. Each and every form of networking you participate in will help you learn more ways to manage every aspect of business, including finances.

If you are a person who needs extra income while you are running your business you can also find quite a bit of part-time or temporary work during the start-up phase. Be creative in your quest for more work, because you may need the money during the first few years to keep going. You can find jobs in places you would not consider looking normally.

For instance, if you are a graphic artist looking for more jobs to do, you don’t have to wait until your local newspaper calls you. You can go to job bidding sites online and find work with them. Not only that, but if you are a writer you can also earn income writing resumes.

Whatever you do to manage your cash flow, and to create more cash flow is all the better for you. As long as you find part time work-or even sometimes full time work-that will not take away from your business production you will be on your way to a successful future. You will be able to have an income no matter what.

Some other money saving ideas that you may want to consider when running a business is cutting down on personal luxuries, such as going a few months without cable (unless you need it for your internet service). You also may be able to save money while pioneering your business if you stop spending money on twelve packs of beer every weekend, or buying expensive video consoles.

During the first few years that you start a business the income fluctuates quite a bit. This will happen until your business is fully established. You will need extra discipline during this time to control your spending. Not only that, but even after you have been in business for awhile you will need discipline to save even more money in case you need it for operating costs or emergency business expenses.

If you cannot do this on your own you can often find professionals who can help you with this aspect of business. If you cannot afford to hire on a person full time for your accounting or consulting needs then you can usually find them for certain times of the year, such as tax season.

If you need help running your business and managing your cash flow, there is never a shortage of it for you. You just need to know where to find it. The Internet is one place that can help make this search even faster and easier than ever before.

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You can join a number of organizations that serve the needs of the self-employed. For instance, in the United States, many states have a local chamber of commerce that works to advance new businesses. Your business could become a member of this group. What this group does is connect you with a variety of expertise in various areas so you can receive education and counsel about every aspect of your business.

You can find groups that meet together for seminars and classes to teach you what you need to know about your business as well. A college or university accredits some of these types of classes, and some are for the benefit and growth of your business.

Other networking opportunities may also be available in your area through your local government job center. For example, the Wisconsin Job Center in Green Bay, WI has people within it that fund a program called Urban Hope. This is a program that is run for a small fee, which has a schedule of classes that aspiring businessmen and women can take. This class is geared for those who are of low income.

One benefit of a program such as Urban Hope is that it gives you access to a variety of opportunities. For instance, at one time they gave out two grants to the best business plans developed within the course of this program. If you are interested in a program such as this, you may want to find out if one exists in your area. There may be, but by a different name.

Other ways to network to improve your business is to contact your local library. They may have information regarding events that take place at the library dedicated to help local business owners. These classes are usually offered in the evenings for free on occasion. Sometimes for high school students, entrepreneur classes are offered after school.

If you are in college, you may have many resources available to you if you want to start your own business. Usually you can network with a campus business association or similar program, and they can offer you advice and support while starting a business. Along with that, they may have knowledge of grants available to those who want to start a business.

Other aspects of starting a business include the necessity to create a business plan or budget. You can team up with a financial advisor who either works for profit, or a budget manager who works for a non-profit organization that offers free budget help. They can help you with projecting profits and losing and also help you control your operating expenses.

If you are in business, you never have to do it alone. In fact, you can also join online business groups as well. When you join these online groups you can discuss aspects of business with other members by way of a forum. Some topics discussed at online business sites include effective ways to advertise, feedback on choosing a business slogan, and critiques on existing products or services.

Those who join online business groups may also receive free information, such as articles like this one. You can visit sites such as this one to find all the information you need, including contact numbers to business professionals who can help you.

Other types of networking that you can do for small businesses include creating a circle of support to connect you with new customers. Sometimes, for instance, one business may not have all that a customer is asking for, so they will refer that person to someone else who can offer the services the customer is looking for. In turn, the person who you have done that referring favor for will do the same for you.

Also, in order to make peace in the business world, many businesses will even unite together. When they team up they avoid the over competitiveness that can happen between businesses, and they are able to reach more clientele. Many large corporations are known for this. They will merge with another corporation, which offers similar services as them but perhaps to a different demographic. If the companies work together, they will both reach the other’s groups.

Networking is one of the most important aspects of business. It is essential, because if you are not a people person you will not be able to run a business, no matter how talented you are. There are very few exceptions to this rule, so take advantage of all the opportunities available to you.

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You can talk to any one person about being self-employed and quickly you will find out how many challenges there are. If you do your homework, self-employment can work for you. Determination is one of the best skills you should have, so you can get your business running properly. Here are some tips that you should consider:

• Real Work Experience in your chosen field. It helps if you are already working in the field when you start your own business. This helps you have a full understanding of the business and what type of need is out there. It also adds credibility to your service.

• Adequate training and experience. Knowing what skills you need for your own business is a necessity. You cannot have a company troubleshooting computers if you have no credible background. You need to prove to your customers that you provide the service requested.

• Strong network of contacts. The more people that you tell about your business will be the more people that know. Word of mouth with existing business workers or even friends will help your business grow further.

• Start-up Resources. There are many things to consider when starting your own business. Money is probably the first thing to think of, not just for start up fees but for any type of travel you may do as well. You may need to purchase equipment, office space, supplies and other things that may come up.

• A business plan and a backup plan. Everyone that is considering self-employment should have a business plan. This will help you to know where to start, how your business is running and what you see in the future of your business. A backup plan is a must because if your business does not work out, you will need another source of income.

Why would I want to be Self-employed?

There are many reasons one would want to be self-employed, but it is up to the individual as to why. Some reasons are working from home, spending more time with your family, and not having a boss to turn to. There are also generic reasons to start your own business some examples are as follows:

• The ability to fill a need. There must be a need for the service you are offering or your business will not succeed as well as you wish.

• Lack of Restraints. With the corporate world, the boss or owner makes the rules, not you. With being self-employed, the sky is the limit as to what you can do with rules and regulations.

• Greater control.  Since you are in control of the business, you can set your own hours and get the daily balance you are looking for.

• The potential for unrestricted income.  You determine how much of an income you take or don’t take. In the corporate world, the boss or owner determines how much you make and there is a limit put on that.

There are drawbacks in self-employment.

Even though there are many benefits to being your own boss, there are also drawbacks to consider.

• Times aren’t always good. Since your business is based upon some type of sales, when the sales aren’t happening neither is the money. By having a good business plan and a backup monetary plan, you can make the slow days a little bit more bearable.

• Clients don’t always pay. This happens more than anyone will imagine when starting his or her business. It will be a significant amount to you as a business owner, but not significant enough to bring the client to court to pay. Sometimes these unpaid amounts will get written off as a cost of business.

• Demands can outweigh the worst corporate scenarios. You may have a great plan for your business, but sometimes the demand can be more than you can handle. You are also the person to do everything like managing the accounts and delivering the service.

• All that money doesn’t come for free. Since you are solely responsible for your money don’t forget that you must pay income tax as well as all social security taxes. Self-employed individuals are in a higher tax bracket with the government.

• No employer, no benefits. Mostly because of the costs, medical and life insurance are something that the self-employed will go without. A retirement plan is normally not an option either.

The best thing to remember is to do your homework thoroughly. Consider all aspects of owning your own business, the pros and cons of every detail. Ask other self-employed individuals about there business and get as many facts as you can before jumping in.

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However, remember, tthere is much more to it than just handing over some money and saying it is for the purpose of payment. You do still have to fill out all of the necessary payroll forms in order to bring on the family member as an employee. Everything else must be kept on the up and up also. For example the wages need to be fair, both to the employee and the other employees, make sure the relative is getting paid what is reasonable for the task they are performing. Make sure to also keep careful track of hours and what duties were performed as with any other employee. Of course, the money must actually be paid to the relative and no one else.

Another benefit can be gained by hiring your children to be employed in your business, especially if they are under the age of eighteen. The most benefits come to those living in Ohio, where if the child makes less than $3500 a year, they are not only exempt from Federal income taxes or state income taxes. Many Ohio cities also allow children under eighteen to be exempt from city taxes. One more benefit to hiring your children in Ohio is the absence of Ohio Bureau of Employment Services taxes. However, what about those outside of Ohio you ask? Well, they can enjoy benefits of hiring their children as well. Any state allows those who are under age eighteen to be exempt from Social Security/Medicare taxes being withheld from their checks. In addition, if they are under age eighteen and make less than $3800 a year there is no need for federal income taxes being deducted from their wages.

Business owners themselves can benefit immensely from hiring children under eighteen as well. For one there are no Social Security/Medicare taxes that the business is responsible for paying for that employee. In addition, up to the age of 21 there is no Federal Unemployment tax that the business has to pay for. As far as hiring a spouse you would still have to pay Social Security/Medicare taxes and all other taxes apply but can be an advantage based on the couples income tax return form and how it is submitted. However, two of the above advantages in hiring a child still apply in this situation. One, there will be no Federal Unemployment taxes and two, if living in Ohio, there will be no Ohio Bureau of Employment Services taxes.

There are some very clear and greater benefits to hiring your spouse if you know about them. Once again, in Ohio a couple can earn a tax credit on their Ohio state tax return for joint filing, if the new wage is the only source of earned income and it is at least $500.00. For those in other states they can earn child care credits on their Federal tax return if one spouse hires another. Sometimes it also allows a husband or wife to be eligible for a bigger IRA.

One really great example of a benefit enjoyed by hiring a spouse is the fact that a health insurance plan can be offered to them that is 100% deductible as a business expense. Of course you must be fair and offer this benefit to other employees if applicable. Once again in this situation medical reimbursement plans can be offered and can be up to 100% deductible as a business expense. Also once again this must be available to other employees unless eligibility excludes them. Both hiring of children and spouses can be an advantage for you if you are able to give them awards, as long as they are tangible and not cash or gift certificates and do not exceed $400. Along with this is the fact that school aged children can receive wages for research conducted for the business, as long as the research is proved to be legit and necessary.

In the long run it may be necessary to weigh the pros and the cons of hiring family members. Working constantly with family member can put strain on the relationships. Always make sure you are doing the best thing for the situation and even if they are family make sure they can do a good job. As far as all the tax benefits make sure you consult with a tax accountant in order to keep everything legal. If you’ve decided the benefits are worth it, good luck!

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Those who work with a plan are known to reach their goals more so than those who do not. Coming up with a plan of action creates a focal point for you and those who may get involved with your plan in the future. This plan will help define the purpose of your business, the type of industry that your business will represent, and the future goals of your business. Not only that, but your business plan will act as an analysis of the potential or existing market for the type of products or services that your company will offer.

You will have quite a few options available to you regarding start-up of your new venture. You can start a new business from scratch, and promote a whole new concept to consumers, or you can promote already successful business ideas. Some ideas for franchise opportunities, for example, include day cares, clinics, restaurants, bookstores, video stores, on line shopping sites, and craft sales. You can also start your own business in which you teach piano to children. All of these are fairly competitive opportunities, but if you use the right marketing strategies, and present these old ideas in new ways you will find new consumers.

If you are starting a business from an original product or service idea, you may have to get your idea protected by use of a patent. This patent will help protect you from others taking all the credit for your idea and making the money that you would make. If you have a patent, you would usually receive royalties from sales that others will generate by using your same idea. If you have an idea that you believe will be feasible for the general public you will want to register it before trying it out on a test market. These plans to register your invention and to promote it should be spelled out in your business plan.

Although your plan may contain the essentials included in most business plans, you can consider it personalized. That means that the plan you write for your business will not be exactly the same as any one plan out their on the market. That is because the target of every business is slightly different, and so are that business’s goals. For example, John Doe may decide to develop what he wants to become a million dollar corporation. The expenses for his business start-up may vary from those who are just starting a home or small office operation.

Be prepared to do a little research into your prospective business. They are more often than not created in order to receive grant or loan funding for start-up and operational costs. Not only that, but it makes no difference what the size of your business is or what your goals are. You need a business plan whether you are just starting or if your company employees millions of people worldwide.

If you need help filling out a business plan you will want to consult an association that helps those who cater to the needs of solo proprietors. Either that or you may want to hire a consultant to organize your information for you. You can also find templates of business plans available for free on various entrepreneur websites or you can purchase professional software to help you create them. Some ways of creating business plans are more economical than others, but some will provide more professional opinion than others. You can also read articles such as this one for free for more information.

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There are many reasons to start your own business. These are just examples:

• Being your own boss

• Enhancement of their current career

• To keep up with personal skills and knowledge

• Learn about new products

• Last but not least the business opportunity

There are many more reasons to start your own business, but the success of that business is in your hands. You determine how much effort you will put into it and how much you expect back from this opportunity. There is not set procedure to making your business successful.

As with most everything, you must do your homework before getting started. You need to create a business plan that you can honestly stick to, nothing out of your limit. You will need to research your ideas, check out marketing resources, and work out the financials.

When considering starting your own business, you need to decide whether your idea is going to work out the way you expect it to. Once you are satisfied that your business will succeed, you can look at financing and starting your business plan.

If you have put research and lots of planning into your business, then decide it is not for you that is okay, you can always look at other ideas. However, try to figure this out before you spend more money than needed so to not waste your time or money for that matter.

Know Yourself

You need to know what you are capable of first before getting into your own business. Look at your work history, strengths and weaknesses. A couple of things to consider is that you have the proper resources for financial, marketing, and even bookkeeping.

Ask yourself these questions when considering your own business?

• What do you want to achieve from this business?

• Do you have the necessary skills?

• Do you have the commitment to finish what it takes?

• Have you thought of every possible step so it is not a surprise later?

Here are some other things to consider:

1. Enjoy what you do – Make sure this business is something you like doing so you will want to work every day without being forced to.

2. Commitment, resourcefulness and motivation – First off you must be committed to making this business work, since it relies solely on you. If you get easily discouraged or frustrated, then this might not work for you. If you enjoy making decisions, that is a great trait. You also have to know how to ask for help and where to look. Your business will require constant attention to keep it running smoothly.

3. Risk Tolerance – There are risks and advantages to your business, but you must willing to accept risks for they are more common then you think. Sure they may be a chance for a higher income, but with that brings a chance for financial loss. To lower your chance of risk, you can start your business while still working your other full time position. This will ensure you will still receive some sort of income if the business fails. Alternatively, if you have a business partner that works the business until it gets going really well.

4. Time and Patience – A business needs time to grow to your desire. You need to be patient with the fact it will not happen over night. You may even have to work more hours in the beginning to keep your business steady.

5. Flexibility – There are always business highs and lows and anything can change that. Sometimes the income can be very unpredictable and that can get frustrating when you depend on it most.

6. Personal and Family considerations – Starting your own business take a lot more of your time than one might imagine. It takes awhile before you start making a profit on your business and you may need to still support yourself and your family if you have one. It takes a lot of sacrifice but can be worth it in the end for you and your family.

7. Skills and Proficiency – Having the right skills is best for running this new business. Do you have what it takes? You should fully understand what your product or service will provide your customers. This will help in efficiency of your business. When you are self-employed you are the sole provider for this business and that may mean you need to be like a juggler handling many things at one time.

8. Health – Working as the boss of your own company can cause a lot of undue stress. You can easily get worn out if you are not careful in your planning phase. If you plan properly, you can alleviate some of the stress associated with self-employment.

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In addition, if you have a business that has been around for a few years or even longer you will be able to project more clearly how much money you will make in a year. However, if you want to expand your operation projecting your income could become a bit of a challenge. Expansion is another aspect of business a professional can help you with.

One useful tool in projecting business profits and losses is the business plan. These are very easy to create and you can find formats to follow, sometimes for free through local volunteer business development centers. Included in your business plan will be your income goals and what you would have to do to reach those goals.

This document would also include any plans for expansion, as well as a list of working capital, and ways to obtain more. Your business plan will also help lay out your plan for creating revenue by the products or services you plan to promote, and will contain an effective advertising campaign as well.

Not only will having a business plan constructed to outline your business goals but you can hire a financial advisor. Sometimes these advisors are also called consultants. That person’s job would be to help you control your spending, and they will help you keep in line with your projected budget for the up coming year.

Financial advisors will also help you make wise investments for future business expansion and increased profit. The key is to find an advisor that you would trust and one who will not steal your profits. Along with that, you will need to be able to afford to hire them. However, usually that is no worry, because you can usually hire them on demand, such as for tax season or end-of-the-month cost analysis.

The more professional help you find to help you start up your business the better. These professionals will help you project and plan for future profit and loss and help you make the best financial decisions for your business.

Usually businesses that want to prepare for the future will create annual reports of the previous years’ income records. These are usually indicated by charts and grafts within a document and an analysis of each source of revenue.

Businesses who want to project a higher amount of income and less loss in coming years will also cut their losses on ineffective advertising methods. For instance, if they have no record of having any hits on a certain website ads they may consider changing or removing that ad. Also, in order to increase sales for the following year they may want to analyze the content of their ads and one that reaches their customers more.

Businesses who want to succeed with less loss and higher profit can also consider the services that they sell and brainstorm ways to improve them. They can also consider new services or products that they can sell which will increase revenue for them as well. Not only that, but they can consider discontinuing products and services, and even employees that are considered more of a liability than an asset.

Analyzing projected income and losses will help you plan better for the future. If you need help with cost and revenue analysis you can find professionals who can assist you in this matter. Most of these professionals even have websites that you can visit which offer help.

Many sole proprietorships and small companies have become successful large corporations. That is because they have carefully analyzed their budgets and planned for the following years. Those that carefully analyze their business year after year are the ones who are in business for thirty, fifty, or hundreds of years.

Another aspect of projecting profits and losses is to keep up with changing times. Many times a business will end up folding, even after decades of serving millions of satisfied customers, is because they are unable to compete with other advanced operations.

If you are in business you can never be too sure about the security of your income. New inventions are being processed daily, and some of these could affect the profit margin of your business. You need to make sure you have adequate staffing and equipment in order to continue to create the best of the best.

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