Start Your Own Business or Franchise
Some folks are of the mindset that they will start a business. It does not matter how good an opportunity may present itself, some people just think they can start it for less money than they can buy an existing one. Let's explore that avenue...
First we need a plan to follow before the business is ready to be opened.
We need to decide the structure of the business. This can include a) Sole Proprietorship; b) Partnership; c) Limited Partnership; d) Corporation (C or Sub-S) or e) Limited Liability Company. If you building with the intent of going public, it will be even more involved.
The next step will be to get a Federal Taxpayer Identification number. These will be your Social Security Number and your Employer Identification Number. If you have one or more employees, it is required. You may be responsible for federal, state, county & city or local municipality taxes. Each may need separate applications and licensing.
Now we need our permits. Depending upon the type of business we are starting we may need to file for Unemployment Compensation, Workers Compensation, Retail Merchant's Certificate, State Sales, Withholding, Corporate Income Tax, Non-Property Tax, Business License Tax, (possible litter tax, consumer use tax and tire tax) State, County & Local Permits & Licenses, Fictitious Name Notice (dba), Business Professional & Occupational License tax, Business Tangible Personal Property tax, if related to hospitality, food and/or alcohol, then we have another set of laws at State, County & Local levels.
Well, we've got our license's let's start building our new business! This can vary depending upon area. Planning & Zoning... before we can apply for a building permit, some localities require a site plan. Professionally prepared by an architect who may have to confer with engineers and surveyors. This may have to be submitted with copies of detailed copies according to the present building codes. Again, these codes can be Federal, State and local. The Federal Code of the American Disabilities Act goes into effect in 2000. That is why you see so many automatic doors in new construction today. If you are in a hurricane path you may have to meet codes to a percentage of Dade County Hurricane Building Code. This can also apply to the windows, doors and shutters. If you are remodeling a previous site, you may have to upgrade electric, heating, drainage, air filtration or bathrooms. The architect knows his/her job and they will advise you.
Finally, we have the planning departments approval, and now we can get our building contractor involved in obtaining a building permit. He will actually be the one to pull the permits and oversee the installation of the construction. Just the time from application to construction start can easily be 30-120 days. Depending upon where we are. Oh yes, in the meantime we are paying rent on the space every day... Again, each area is different. If a space or building has been vacant for less than 60 days, we may be able to go in with a minimal amount of effort and not go through the "rebuilding process to the new code". We need to know the rules before we jump on the first perfect location we find.
Once the build out is done, we are ready for sign permits, landscaping permits, building inspections, electrical inspections, plumbing inspections, Fire Code & Department inspections, Health Department inspections, and inspection inspections! Each one usually has a fee involved...
We're almost ready to open. We have the telephone installation, alarm system installation, business bank accounts, credit card merchant account, Yellow Page contracts...
Now this brings up a point most buyers don't think of when looking at the assets of business to buy. What is the Yellow Page listing worth? Depending upon when a business is started, and when the cutoff date is for the next Yellow Page publication, a business could wait 9-18 months to be in the next book. If the new book comes out in April, and the cutoff date was in November and the business opens in January, we have a sixteen month wait before people can find us in the Yellow Pages. We need to budget for extra advertising!
Home Businesses. Even a business as simple as MLM may require an occupational license. Check your zoning before you start. Yes, you can go to a mail box service and "rent space" for your license. It only takes one neighbor to complain about your business at home activity and you may be shut down. Even Internet based businesses where nothing is done except uploading and downloading may require a business license. Some localities are already on line and searching for violators that are operating without a license. The fine is much more than the license fee. If you conduct any business from, even as simple as emailing customers (every real estate agent in the world!) your homeowners insurance may not cover you. (Mine dropped me May/2000) because of the liability of sending a virus to a business... Get a rider to make sure you are covered. Also, if you are considering a merchant account, consider opening up a PayPal account to test the waters. Fees are only 2.1% with no merchant account required! They revolutionized the online auctions and are now going to do it for small businesses.
"Restaurant Training Systems has outdone themselves! If you're looking to open any type of food service outlet you simply must check out 'Restaurateur: Practical Steps To Creating Restaurant Success'. I have, and it's the most remarkable step-by-step program I've ever seen."
Those of you who know me, know I started a mail order jewelry business in order to write about it here. I did everything wrong at first, in order to teach a buyer what to do correctly. My intent had been to shut it down after 15-20 months. The problem is, it experienced 503% growth in 2000 and is above that for 2001. I am constantly being solicited to sell it. Not yet. I will have a link later with the trials and tribulations as well as the income growth. If you are in the market for some jewelry, check out Seawear just the same! Even after this success, would I start one from scratch again?
No.
The learning curve was time. If I had spent 50-100K to buy a business in trouble, and learn from someone else's efforts, I could have been in six months where I ended up in two years. That time can never be duplicated. Those eighteen months were some of the strongest consumer spending months in U.S. history...
Charlie
Bizology - the study of business for sale
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