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Things to Consider Before Becoming an Entrepreneur

Written By: Gary 20 July 2010 Other Posts By: Gary

When Congress was first proposing health care reform, I had a conversation with a member of the United States House of Representatives about health care reform. During our conversation, the Congressman made an interesting comment to me about entrepreneurship; he said that the biggest concern with health care costs now are that they prohibit people from becoming entrepreneurs.

When deciding whether or not to pursue an entrepreneurial opportunity, you are forced to choose between a job with a steady salary and health benefits or starting your own company with no salary and out-of-pocket healthcare fees that can cost you thousands of dollars each year.

The lack of salary is not as prohibitive for entrepreneurs as people build up their own cushion prior to leaving their 9-5 job knowing they will not have a salary while starting their business. But losing all of the various benefits that come along with a full time position at an established company can be a hindrance to budding new entrepreneurs as they loose these benefits, including the group rate costs of health insurance and a reduced cost for health insurance as some of the employees costs are picked up by the employer.

Different people will have different opinions on the health insurance dilemma for entrepreneurs. Insurance brokers will try and sell you a plan for your company stressing that it is a tax deduction, while others will tell you that you don’t need insurance right away since you can always go to a clinic or to just buy the cheapest insurance you can find in case of emergencies. But at the end of the day, this is just one of the decisions that people need to consider before starting their own company.

Some others include:

  1. Do I need to quit my job – Can I continue working at my 9-5 job while working on my company at nights and on weekends so I can maintain a salary and benefits or do I have to give it all up and focus 100% on my new idea?
  2. Should I try and raise capital right away – Do I need money in the company to cover benefits and expenses or should I keep as many shares as I can to myself and live on a shoestring budget until I am making a profits or ready for partners?
  3. Should I rent an office – Do you need a place to work every day and pay rent or can you work from home until the company gets going?
  4. Should I incorporate – Often people are very quick to incorporate so they can say that they have their own company. With LegalZoom and MyCorporation, it is so easy to do, but people often don’t understand what they are doing or the long-term effects of their decision now. The type of corporation you choose now may not be the best in the future should you need to bring on investors.

At the end of the day, entrepreneurs need to realize that while they have an idea that they believe in, starting your own company is much more than just an idea. When starting your own company, many decisions will affect not only your cash flow but also your personal life dramatically. You will essentially be married to your idea and your business and you must devote all of your efforts to it. Entrepreneurs need to make sure that if the business fails, it is a result of the business and not because issues in their personal life caused them to shut it down. Being able to say that you gave it your best shot is all anyone can ever ask for.

Aron Schoenfeld is the founder of Do It In Person, a unique media brand focusing on the importance of in person communication skills and face to face time for individuals and families.

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