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October 12, 2015

Starting a business may be easier than you think

  • The primary obstacles most people cite — lack of finances, training and leadership experience — may not be so difficult to overcome.
  • By CAROL K. NELSON
    Special to the Journal

    Image courtesy of iStockPhoto

    In the land of Boeing and Microsoft, it's sometimes easy to forget the major force that small business plays in our state. But Washington's small businesses employ more than half of the state's private workforce.

    The challenges for small firms are many, as I know from my own family experience. My siblings and I were all employed in mom's downtown Seattle flower shop as kids and my son now owns a CrossFit studio in Edmonds. But I also appreciate the many benefits that small business owners enjoy and the satisfaction that they feel as they fuel the local economy and contributing to their communities.

    Chances are you've dreamed of joining their ranks. In fact, a recent survey of working adults found that young and older workers alike may want to jump ship and become self-employed: 67 percent of employed millennials (aged 18 to 34) expressed interest in starting a business, as did 45 percent of workers aged 35 and over.

    There's good news: The primary obstacles most people cite — lack of finances, training and leadership experience — may not be as difficult to overcome as you think.

    Here are five things you should know:

    1. The odds are not against you. One of the biggest myths in business is that 90 percent of businesses fail. This is simply not true. Statistics from the Small Business Administration show that more than half of all business start-ups survive five years or more, approximately one-third of start-ups survive at least 10 years and nearly one-third of “failed” businesses are successful when they stop operating.

    So if we go by statistics, you're more likely to be successful than you realize. If you're not, it's more likely that you give up on your business before the market gives up on you. This is especially true if you take the time and put forth the energy to start a business the right way.

    2. People are on your side. Starting and running a business may feel like a lonely endeavor, but if you take the time and make the right connections, you'll find there are many people who are willing to help you develop and execute a successful plan. SCORE (score.org), a nonprofit dedicated to helping small businesses gets off the ground and grow, provides owners with access to free volunteer mentors, business counseling, and tools and resources for managing all aspects of your business.

    Local and regional chambers of commerce can help you promote your business and network with other business owners and potential customers. The UW Foster School of Business Student Consulting Program assigns teams of grad students to problem-solve for small businesses in underserved communities.

    The value of what we can learn through the mentorship and advice of others is immeasurable.

    3. Affordable financing is available. Banks want to invest in successful businesses. While applying for a business loan may seem daunting, the process and qualifiers are similar to other loan applications. You need to provide the bank with good documentation — financial statements and a business plan — and demonstrate that you can repay the loan.

    If you have trouble obtaining traditional financing, the Small Business Administration has a number of loan programs designed to help new and existing businesses secure financing. SBA loan applications are structured to meet SBA requirements, so that the loan is eligible for an SBA guarantee. You will need to work with a bank that participates in the SBA lending program to apply.

    4. Competition is healthy. Think you need a completely unique idea? Think again. Facebook was not the first social network. It succeeded largely because it made connecting and communicating with friends and family easier than any other service. Don't be dissuaded by what other people with your skills, talents and interests are doing within your market. The fact that somebody is already doing it should never be an excuse. Learn from them.

    Analyze your strengths — and theirs — and identify gaps in products, services or delivery that you can leverage to differentiate yourself from the competition. Also, keep in mind that healthy competition is a positive indicator there is a market for your goods and/or services.

    5. The Internet is an equalizer. The Internet may not completely level the playing field for small businesses, but it provides a chance by making previous budget busters — infrastructure, marketing and advertising — accessible and affordable.

    From social networks to virtual phone systems and cloud-based email and web hosting, it's easier than ever to manage your overhead while presenting a professional appearance. Online banking makes bill-paying easy, makes account management possible from the office or the road, and provides identity theft and fraud prevention measures.

    Every day people like you take a leap of faith in themselves and start their own business. Most who have succeeded will admit they weren't fully prepared, that they learned on the job and their ability to lead was forged by experience.

    Carol Nelson is KeyBank's Seattle market president and Pacific region executive.



    
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