Somebody tells you that your product is great and you should start your own business, not somebody else’s. Do you know how close to insanity this is? Yes, we know that America runs on small business, but did you know the government defines small as having fewer than five hundred people? Oh, no, you say, I would just start with me and my lemonade stand. Everybody loves my lemonade, and how bad could it be?
It could be really bad. Unless you are only going to sell lemonade on the occasional hot day, first off you need a business license, which usually runs upwards of $150. That’s an annual expense. If you need a store, go ahead and try to rent a cheap commercial space that looks like someone would walk up to it. Then you get to sign a lease, a long term very scary number of dollars. But you are sure you’ll be good at choosing how to start your own business.
You are competent to start your own business; after all you won’t have a boss telling you what to do. That really means you are alone, without anyone with business experience to tell you if you need to buy insurance on the store. (You do.) Going to have a phone? A computer? The gas and electric company want big deposits before even turning on the lights for a new business. Guess they know something? How are you going to pay the lemon guy? Can you paint signs? Write ads? This is thousands of dollars and you are nowhere near to opening the doors.
Minding your own business requires capital (money). This is what capitalism means. Anyone (with lots of money) can open his or her own business. You can talk fast and get people to give you money, or worse, lend you money. This is called under capitalization, meaning you start in the hole and can’t handle any slow periods.
But let’s say the lemonade is a hit from the beginning. You are going to have to hire people to help you, and you’d be amazed how the government says that’s supposed to happen. No hiring of the nice Latino guy who does your lawn because you have to provide a Social Security number to the government. Preferably one that exists and belongs to him. Otherwise they send you a tart note. When you hire someone, that large rumbling sound in the background is the noise of the bureaucracies shifting into gear. OSHA says you can’t store the sugar over there. The Worker’s Comp people say the place isn’t light enough; the Fire Department says the heating vents all have to be replaced. The benefits insurance people want to talk to you and so do your employees about their own benefits. Are you starting to wonder where the employer benefits are? In all that money you have left after you start your own business.
Are you good at math? If not, who is figuring out payroll, and one of the most complicated insidious requirements ever: payroll withholding taxes. Hiring an accountant? How about record keeping? All these agencies want to see all the paperwork that proves all the claims you made on your tax form. How about marketing? Do you know things like target populations, and locations? Who you gonna call?
Starting your own business can mean many sleepless nights. You do not just worry about money and where it will come from, but employees and how to pay them, and cover for them if they are sick. It just kind of takes all the fun out of it.