America’s SBDC, the Association that represents the nationwide network of Small Business Development Centers (SBDC), collaborated with the Center for Generational Kinetics to better understand how different generations view entrepreneurship. The full report can be viewed here. The study’s findings indicated that millennials were especially eager to start a business of their own, but there were some things standing in their way.
Millennials stated that they’d like help writing a business plan, and they rate money high on the list of things holding them back from starting a business. In fact, 45% of the study respondents said that finding capital to start a business was their biggest barrier. That’s not a huge shocker — there are more than 44 different types of business financing out there and they come with unique interest and fee structures.
Here are five tips that can help any millennial, no matter their entrepreneurial dream, get started.
1. Make Sure You’re Ready to Start a Business On Your Own
Don’t be in too big of a hurry to become your own boss. Make sure you’re ready to take this giant step. Ask yourself these questions:
Do you want to start a business for the right reasons? Don’t start a business because you’re frustrated with your job search or you’re in a job you hate. Make sure you’re running toward your dream, not searching for a hiding place.
Do you have financial resources to support the startup period? One of the first things you’ll work on is establishing business credit and obtaining initial financing, but those things probably won’t happen on day one. Make sure you have the resources to support yourself until the business generates a paycheck for you.
2. Create a Plan
You need a written business plan no matter how wonderful your idea is for your new company. Creating this plan will teach you a great deal about how to run your business. Put it in writing so that you can revisit it often and update it as situations change. You can write the plan yourself. If you’re not an expert at writing business plans, there are free resources to help you. Look up your local Small Business Development Center (SBDC). SBDCs offer low-cost training on a variety of subjects like marketing, finance and they offer free one- on-one advising.
3. Set Up the Best Company Structure
There are a variety of company structures you can use, from LLCs to S-Corps. Seek professional advice from your accountant and lawyer to ensure you make the right choice.
4. Get a Small Business Startup Loan (If Needed)
If your business plan calls for obtaining startup funds to support initial growth, consider your options as soon as possible. Many small business loans are reserved for companies that have a business history because they’ve been in operation for a couple years. Make sure you understand if it’s possible to fund your startup with outside funds.
5. Establish Credit for Your Business
Even if you don’t need startup funding, the odds are that you will need financing at some point to expand your company and grow. The most common reason for needing funds is to take advantage of growth opportunities that require more cash than you have in reserves. Make sure that you establish credit for your business before you need it.
For more training, advising and resources contact the Michigan Small Business Development Center.