Being an entrepreneur is not an easy job, and if you ask some people it’s not a job at all. To those folks I say you’re wrong.
As America pulls its self out of a recession, we are finding ourselves changed by the struggles we have faced. When the recession hit it fell like a ton of bricks on some Americans. Some of us lost our jobs and we found our whole world turned upside down. An article titled “High Unemployment among Men Drives More Women into the Workforce” by Alice Gomstynhighlights a shift in the household dynamic. She explains “the phenomenon of stay-at-home mothers being prompted to return to the workforce because their husbands have lost jobs. Adjusting to the new situation has been difficult for many of the couples” (Gomstyn). Of course as a woman I am actually proud to here that women are now being considered the “breadwinners” in their families. Gomstyn is a business reporter with ABC News and her work focuses on consumer issues.
I found it interesting that “this new economic reality is bolstering an already-growing trend: wives taking on roles as primary breadwinners while husbands—these days, often newly-unemployed husbands—stay home to become primary caregivers”(Gomstyn).
So as the wartime home front, confronted a serious recession as well as public-health and domestic-security challenges,State budgets faced reduced revenues because of the economic downturn. While many Americans where off fighting the war in Iraq many others where here in America fighting off hunger.
While between jobs or before/after all the unemployment checks ran out some Americans went to sleep unemployed and woke up Entrepreneurs. Many Americans work from home and operate a small business, many of those stay at home dads now consider themselves entrepreneurs.
As Americans picked themselves up and dusted themselves off they found underneath it all there was an Entrepreneurial spirit. According to an article titled The Entrepreneurial Edge: can America Keep It? “It’s the entrepreneurial spirit of smaller, often virtually invisible firms that supplies much of the economy’s energy and most of its new jobs” (The Wilson Quarterly)
So what does it take to be an Entrepreneur?
According to Bob Herbert in his article The Destruction of Black Wealth “small businesses generally get started and survive their early stages with capital drawn from the personal assets–mainly savings and real estate–of the business owners, their relatives, and friends”(Herbert). Of course we need capital to start a small business and if you’re unemployed where do you find that capital? If you have an “Idea” for a business that is a start but it is not good enough. You can’t take an idea to the bank. You must have a product or service that is already generating an income.
Just because you are offering a product or service that is generating an income doesn’t mean you have a business it could simply be a lucrative hobby. Check out Starting a Business http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Starting-a-Business – August 01, 2012 … Is it a Business or a Hobby?
So how do you know if you have a legitimate business idea?
Logo of Internal Revenue Service, USA (Photo credit: Wikipedia)
According to the Internal Revenue Service “The IRS presumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year” (IRS.com). So how do you really know if you’re dealing with a possible goldmine or a landmine? Just ask yourself the following questions:
Does the time and effort put into the activity indicate an intention to make a profit?
The old adage time is money should come to mind. The best way for me to explain this concept is to give you a scenario.
If it takes you 10 hours to make one widget and it also cost 10 dollars in materials. If all you can get customers to pay for your product is $10 the time and effort put into the activity does not indicate an intention to make a profit.
Do you depend on income from the activity?
If your activity cannot generate enough money to pay your bills it will not generate enough to pay its own bills. Keep this in mind when you think of all the overhead involved in owning a small business.
If there are losses, are they due to circumstances beyond your control or did they occur in the start-up phase of the business?
If you are using your savings to fund your business, because you just can’t seem to turn a profit this is a sure sign of trouble. Many businesses have failed do to overly optimistic entrepreneurs who under estimate how soon they will turn a profit. Experts say give yourself at least six months to a year without earning a profit.
Have you changed methods of operation to improve profitability?
Do you have a Balance Sheet, Income Statement, and Cash Flow Statement?
Do you have a Business Phone and Business cards or are you still using your cell phone/home phone and a pen and paper.
Do you have a Business Plan and Marketing Strategy?
Do you or your advisors have the knowledge needed to carry on the activity as a successful business?
As an entrepreneur early on I sought out opportunities to educate myself about all things business. According to Ebert and Griffin the authors of Business Essentials Managerial in competence or inexperience is the number one reason for failure when it comes to new businesses.
Have you made a profit in similar activities in the past?
As an Entrepreneur you might have a few “hare-brained schemes” that’s ok we all do. One of my ideas is the “peanut butter and jelly filled donut’s” (patent pending) something many people have laughed at. It doesn’t matter if the idea is crazy to others, what matters is if it’s making crazy money. If you have a tried and true way to make money start your business plan your partly there.
You can get one-on-one business coaching with Stanton Adams Consulting, LLC we can help you “work from home”
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