Small Business FAQ (Frequently Asked Questions)
Here are some commonly asked small business questions:
Q: "I have an idea for a business, but no idea of where to start. What should I do?"
A: Read the online Step-by-Step Guide to Starting A Small Business. I'm biased, but I'd also suggest buying a copy of Thinking Like An Entrepreneur. Or, at least, get it from your local public library (if they don't have it, ask for it via interlibrary loan). There are many other good small business books out there. I like Low Risk, High Reward by Bob Reiss, as one example.
Finally, contact your Local State Government and see what help they offer. Most will send you a small business start up guide. Then start planning your business!
Q: "I have a great business idea, but no money. Where can I get money?"
A: Try your mom, uncle, or brother. Seriously, most small businesses are self-financed. Venture capitalists are only interested in businesses with huge potential. An angel investor is a possibility.
I'm not a big proponent of small business loans for start-up companies. For more information read Financing Your Small Business.
Q: "How can I avoid paying self-employment, Social Security Taxes on money I earn?"
A: You can't. You can consider forming an S-corporation, and pay yourself a reasonable wage, which is taxed as regular employment income. Take the rest out as dividends, which are free of employment taxes (and double-dividend taxation that happens to C-corporations). But, be careful! If you are grossly underpaying yourself, you might run into trouble with the IRS. In general, you should ask such questions of the IRS and the people who administer such things. Don't ask how you can "avoid." Ask how you can legally minimize.
Q: "What are Venture Capitalists looking for in a business plan?"
A: The possibility to take the company public, sell their shares, and make a killing. Plus, if they expect to hold their shares for awhile, they want industry-experienced management, a complete management team, an idea/product with large upswing, and a viable exit strategy. This mentality is starting to affect more and more people who consider themselves angel investors. Many are now looking for 50 to 100 times return on their initial investment, usually in under five years!
Q: "Should I go into business with my brother-in-law?"
A: Probably not. Choose business partners who complement your skills. However, when you start with 3-5 appropriate people, your chance of success in business is higher.
To ask your own small business questions, I highly recommend the message boards at ideacafe.com and inc.com.