Home businesses are blooming because many laid-off workers are starting new businesses instead of standing in line for hard to get jobs.
Millions of Americans have lost their jobs during the Great Recession. Many people try to replace lost paychecks by starting home-based businesses and small businesses.
Before the recession, nearly 1 in 3 American workers was working for himself.
"Everyone knows the facts: Small businesses create about 2 of every 3 new jobs in America each year," said Karen G. Mills, administrator of the U.S. Small Business Administration. "More than half of working Americans own or work for a small business. And small businesses drive American innovation and competitiveness."
{sidebar id=8}As labor markets adjust to lean times, self-employment is an increasingly popular way to make a living. The slow economy have pushed even more people to start businesses in a field that is familiar to them.
It's a legion of store fronts, shopkeepers, service providers and craftsmen.
The odds are against start-ups.
More than half of new businesses will disappear in the first five years, the SBA said. Other sources claim 9 out of 10 businesses fail during the first year.
The SBA blames failures on lack of experience, not enough funds, poor location, poor inventory management, over investment in fixed assets, poor arrangements for lines of credit, personal use of business funds, business knowledge, awareness of market, lack of experience, insufficient money, poor location, poor inventory management and poor credit arrangements.
The key to success includes business knowledge, awareness of market, hands on management, sufficient funds, personal motivation and hard work.
The SBA recommends 11 steps when starting a business. When completing one step, you may learn of additional requirements for other steps. The practice may prompt you to plan for other obstacles in the quest to be self-employed.
The steps are:
01Write a business plan. There are plenty of templates to get you started. Some banks and investors require business plans.
02Find a mentor. Many executives are willing to share their experience. Check the local Service Corps of Retired Executives.
03Find training to fill gaps in experience. The training can be free and available online.
04Choose a location. Check the requirements on zoning and find a customer-friendly location.
05Find small business friendly business financing. For starters, there are government backed loans, venture capital and research grants to give you a boost.
06Build the legal structure of your business. Talk to an accountant to learn the difference between sole proprietorships, limited liability companies, corporations, S corporations and non-profits.
07Register the business name with the city and state.
08Learn which tax identification number is needed for the IRS and state revenue department.
09Register for state and local taxes. If you have a staff, you may be required to pay worker's compensation, unemployment and disability insurance.
10Obtain business licenses.
11Understand employer responsibilities. Learn the steps to take to hire employees.
