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Starting A Business?

An improving economy and low rates on bank loans are combining to encourage business start-ups across Kentucky.

Want to join the trend? Before you do, consider answering honestly these questions: Am I a self-starter? How well do I plan and organize? How well do I get along with a variety of personalities?

This requires a business plan that includes marketing methods and financing. What type of business do you want to own—retail, service, manufacturing, or perhaps franchising?

Committing your own funds is often the first financing step, and is certainly the best indicator of how serious you are about your business. Risking your own money gives confidence for others to invest.

Get an attorney and accountant
In addition to money, you will need an attorney and an accountant. Concentrate on your core competency and hire people to do what you can’t do. No one fills their own cavities.

The legal structure of your business can take a variety of forms, such as a sole proprietorship, a partnership, a corporation, or limited liability corporation. Your attorney can help determine which is best.

An accountant can help structure your books to avoid headaches down the road, especially at tax time. The accountant can also help get a federal tax identification number, a state sales-tax identification number, and necessary operating licenses.

Without proper payment and credit procedures, even the best of businesses can find themselves on hard times, so seek the help of a professional. Will you give a discount for prepaying? Extend credit to first-time customers? What will be the standard payment schedule—30 days?

Novice business owners may want to seek out advice from experienced industry people, potential investors, and possible customers, but ignore the advice from your unemployed brother-in-law who suggests selling everything half-price to “pack the customers in.” Yes, the customers will come, but the profits will go.

Business advice & statistics
You’ve probably heard that start-up statistics are grim—just 30 percent of business survive more than five years. Stories of overnight successes and young millionaires are rare.

And the Federal Trade Commission has issued a warning about the pitfalls of franchising and/or certain “business opportunities.” These offers for “set your own hours” and “be your own boss” are often frauds, the FTC says, with the promoters taking money up front but failing to deliver on their promises in the end.

Creating a budget
Still want to be chief executive officer of your own life? Well, then push on.

The number-one reason businesses fail is that they don’t focus enough on the finances, so create a budget. Write out your expenses, including rent, mortgage, food, and operating costs. Plan to have enough money to survive for six months without relying on business income.

Plan also to offer yourself a good benefits package, and you’re in charge of providing it. You need to get major medical insurance, so consider joining a professional association where you can be part of a group medical plan.

For retirement planning, check out the Simplified Employee Pension (SEP) plan, which allows tax-deductible and tax-deferred contributions, just like a 401(k).

Setting up strategies
You’ll also need to separate your personal and professional lives. Count on spending more hours than you’re used to at your new venture.

Some simple strategies: Set certain working hours—“You shouldn’t be working in your pajamas,” says author Jane Applegate. Also, get a separate phone line and a second bank account to put yourself in the mindset of being a business person.

There’s a variety of help available on the Internet for start-up business: is a free training course for potential business owners. can provide information on the legality of franchising or business opportunities. offers profiles of successful business women, “girl-power” money- management tips, and other business news. for the Small Business Administration’s help.

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