It’s the nature of New Year’s resolutions to make promises that we can’t keep. This is the year we’ll go on a diet, work out at the gym, quit smoking, feed the homeless, learn Chinese and be a better Mom, Dad, brother, sister, son, daughter or friend.
But if there’s one New Year’s resolution you should try to keep this year, it’s this one: To start your own business and be your own boss.
Here are 10 good reasons to take the plunge this January instead of procrastinating until 2012.
About the Author
Rosalind Resnick is the founder and CEO and Axxess Business Consulting Inc., a New York consulting firm that develops business plans and financial projections for start-ups and early-stage companies. She is also the author of “The Vest Pocket Consultant’s Secrets of Small Business Success.”
1. You’ll never get laid off again. Tired of being a number on somebody else’s spreadsheet? That won’t happen once you start working for yourself. “Jobs used to be for life, and leaving a company to start your own could put your entire career in jeopardy,” says David Ronick, co-founder of UpStartBootcamp.com, a New York company that provides coaching, classes and information to first-time entrepreneurs. “Now the average job lasts about four years—if you can get one.” On the flip side, most start-ups don’t succeed and, while you won’t get fired from your own business, you might end up shutting it down and losing the money you invested. “You’ll probably take home a smaller salary, work harder and face higher stress levels, too,” Mr. Ronick says.
2. You can stop asking your boss for a raise and give yourself one. When you run your own business, there’s no limit to how much money you can make if your company takes off. Because you’re taking all the risk, you’re entitled to all the upside. “A ‘real’ job does not have your best interests at heart—ever,” says Scott Gerber, a New York entrepreneur and author of “Never Get a ‘Real’ Job.” “Most jobs offer employees nothing more than a false sense of security, a workload that far exceeds their pay grades and a benefits package that they are most likely paying for themselves.” While getting a business off the ground is never easy, every dollar that you put in and every hour that you work is an investment that returns profit back to you. “Find me any job that offers that level of financial incentive, and perhaps I’ll think of getting a ‘real’ job,” Mr. Gerber says. (Mr. Gerber is also head of Young Entrepreneur Council, which writes a guest column for WSJ.com.)
3. You can write off that new laptop, BlackBerry, iPad or printer. One of the fringe benefits of running your own business is the opportunity to write off or depreciate legitimate business expenses. Recent changes in the tax laws make these deductions even sweeter. Under expanded bonus depreciation rules, qualified investments in fixed assets purchased between Sept. 9, 2010, and Dec. 31, 2011, can be fully written off for federal tax purposes, according to Michael J. Goldberg of New York’s Ganer, Grossbach & Ganer LP. (Check with your accountant to make sure your state accepts bonus depreciation for tax purposes.) A new business also can use the Section 179 deduction to write off the price of certain equipment or software, up to $500,000 in 2011. The disadvantage is that the current year Section 179 deduction cannot exceed the net income of the business. Start-up costs of up to $10,000 are deductible once the business begins, Mr. Goldberg adds.
4. You can unplug and work anywhere there’s WiFi reception. Forget the daily grind of commuting to the office. Today’s mobile start-ups have unplugged from their digital tether. Small business and social-media marketing consultant Richard Wooley, co-founder of New York’s Bond/Wooley Inc., says the key to working virtually is picking your spots—ideally, locations that offer comfy chairs and free WiFi. “When I’m spending an afternoon working through a call list, the best place for me is an independent coffee shop,” Mr. Wooley says. “Starbucks can get too noisy to have a real conversation on a cell phone.” By contrast, Mr. Wooley finds a quiet bar the perfect setting for crunching complex formulas in the Excel spreadsheets he prepares for clients’ business plans. Says Mr. Wooley, “The key is to take off the shackles of a cubicle, charge your laptop battery and get out in the world.”
5. There’s never been a cheaper time to start a business. Ten years ago, a typical Internet start-up needed $1 million to launch a product and millions more to prove its business model and scale it to profitability or an IPO. Today’s start-ups run lean and mean thanks to the plunging cost of technology and a surplus of real estate and talent. “The popular ‘lean start-ups’ approach favors developing a product and getting it into the hands of customers as quickly and inexpensively as possible,” says Mr. Ronick of UpStartBootcamp.com. “Plus, the stigma of freelancing has lifted for both companies and individuals so start-ups can hire top talent on an as-needed, virtual basis. This lets founders hire better talent with more flexibility, reduced office space needs, and lower benefits costs.” And thanks to the power of social networking, it’s no longer necessary to hire an expensive PR firm to generate press. You can target niche publishers and bloggers instead.
6. There’s a huge talent pool just waiting to be tapped. While businesses have started staffing up again, there are still plenty of executives, bookkeepers, sales reps and other skilled professionals looking for work. Not only can you scoop up top talent at bargain prices (either as employees or independent contractors), but you may also be able to find someone who’s prepared to roll up his or her sleeves and share the risk. “There are lots of people out there with complementary skills who are between jobs and ready with time and talent to be your partner and give your business idea the internal expertise you are missing,” says Gregg Stebben, CEO and co-founder of Press4, a New York digital-marketing start-up. It’s a great time to partner up with Web designers, graphic artists and other service providers who are struggling to fill their dance cards with paying gigs.
7. Consumers and businesses have started spending again. With the economy slowly beginning to rebound, both retail shoppers and corporate purchasing departments are opening their wallets once again. But customers are demanding more bang for the buck, keeping companies’ prices low and margins thin while the cost of commodities and other materials continues to rise. “Value is the new black and it isn’t going anywhere,” says Elyissia Wassung, CEO of 2 Chicks with Chocolate, a Matawan, N.J., chocolate maker. “As a premium chocolatier, we’ve had to get very creative on flavors, packaging and overall value while maintaining exceptional quality.” Ms. Wassung’s advice: If you can’t deliver a unique selling proposition, keep your day job until you can.
8. Capital has started flowing again for small businesses. Banks have started lending again—but only to borrowers who check all their boxes. And while getting a small business bank loan may no longer be as tough as landing a date with George Clooney on Oscar night, it’s still not as easy as getting tickets to a comedy starring Vince Vaughn. Some alternatives: Crowdfunding (raising small amounts through sites like Kickstarter.com), peer-to-peer lending, credit unions, microlending, merchant cash advances, factoring accounts receivable, purchase order financing and good old-fashioned credit cards.
9. Sellers will lend you the money to buy their businesses. With the market for small, privately held businesses still soft and bank financing hard to come by, businesses that are looking to sell are willing to “hold notes” to bridge the gap between the purchase price of the company and the cash and loans that the buyer can bring to the table. Sally Anne Hughes, a New York business broker at Hughes Klaiber LLC who helps small businesses find buyers, says that seller financing can help deals close more quickly by giving the seller a higher purchase price while limiting the amount of capital the buyer needs to put down. While most sellers would prefer an all-cash deal, seller financing offers the selling business owner an income stream that’s usually higher than he or she could get from investing the proceeds in a bond, money-market account or CD. “Financing may also allow a seller to postpone some of the taxes due on the sale of the business,” Ms. Hughes says.
10. You can finally set your inner entrepreneur free. Probably the best reason to start a business this year has nothing to do with start-up costs, financing or taxes. It’s so that you can stop making excuses and spread your entrepreneurial wings and fly. But before you take the leap, check out Barry Moltz’s quiz. (And if that’s not enough, here are five questions to ask before you start your own business.)
“Entrepreneurship is a tough test,” says Mr. Moltz, a Chicago entrepreneur, author and small-business consultant. “If you scored [low on the test], you are not quite ready to quit your day job. If you no longer have a day job, consider joining a small business to get the experience you will need to venture out on your own.”
That’s sound advice, and I hope that anybody thinking about becoming an entrepreneur will take it. If you’re anything like me, you might just become a lifer
Yup… I did it.