Sandra Taylor Sawyer, Director, NMSBDC at Clovis Community College

Many myths and misconceptions masquerade as truths in the business world, and people trying to start or expand a business are often misled by them. Realistic expectations are critical to business success, and getting real begins with separating fact from fiction. Some examples:

“The lack of a product or service in an area is the most important indicator of a need for it.” The absence of a product or service might suggest an unmet need, but the savvy entrepreneur will want to eliminate other possibilities. Perhaps the product or service is obsolete or other products offer the same benefit. The cost of the product or service might be prohibitive, or the product might be offered online or nearby at more competitive rates.

“If I attend a tax-education seminar, the Internal Revenue Service will audit my return.” The IRS does not audit people on the basis of who attends tax-education seminars. The IRS uses a computer program called Discriminant Inventory Function System to identify returns that might warrant a closer look. All individual and corporate returns are sent through this system after processing; a score is assigned to the return and those with high scores are flagged for possible audits. High scores can be generated, for instance, by returns that that don’t show or match a Form 1099 that was reported to the IRS.

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Darrell V. Arne, Consultant

Running a business without a management plan is like embarking on a long road trip without a map: You might reach your destination eventually, but not without wasting time and money on unnecessary detours, dead-ends and delays.

Planning and controlling are the two legs on which a well-managed company stands. Planning involves setting goals, determining how to reach them and, finally, doing what’s necessary to attain those goals. Controlling involves putting the plan in motion and monitoring its progress over time.

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Paul F. Goblet, Investment Advisor, NM Small Business Investment Corporation

Finding the money to run a business is a concern that begins at conception and doesn’t stop until the business fails or is sold to someone else. Satisfying a healthy business’s appetite for capital requires knowing which kinds of investors to approach at each stage of a company’s growth and what size of investment to expect at each stage.

Each funding source has its own guidelines for when to help — and how much to give — a company that’s hungry for capital. But the first thing all investors want to know is what stage a company has reached and what chance it has to grow and make money.

Few businesses follow a predictable path and timeline from one stage of life to the next. Some linger for a long time as startups, while others dash directly from startup to exit. Knowing the life cycle of a typical business can help an entrepreneur know where to find capital to reach the next stage.

Life cycle of a business

The seed or startup stage starts with an idea or a prototype for a product or service. At this stage, entrepreneurs either tap friends, family members or other personal contacts for funds, or they seek angel investors, grants, micro loans or venture capital.

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J. Roy Miller, State Director, NMSBDC Network

It’s often said that more people start businesses during economic slumps than when the economy hums. This seems counterintuitive because when recession seizes the economy or seems to be stalking it, consumers limit purchases, businesses slow production and workers lose their jobs. But after an extensive job hunt, many laid-off workers see starting a business as a lot less risky than working for someone else.

The dream of running one’s own business has been part of American culture for centuries, championed in films, music and literature. Small business drives the U.S. economy, employing half of all private-sector workers, according to the latest statistics from the U.S. Small Business Administration. All of those businesses started with an individual who envisioned doing things independently.

How do you know if you have what it takes to be your own boss?  Consider the following questions, and be brutally honest with yourself when answering.

Do you have the right character to start a business? Are you a leader and self-starter? Can you handle stress? Are you and your family prepared for the likelihood that you — and they — might be working long hours?

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