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11 Posts authored by: Rieva Lesonsky

If you were thinking of launching a new beauty product, here’s the great news: The global beauty industry is booming. cosmetics.jpg

 

In the U.S., NPD Group and Statista report the cosmetics segment was worth $93.5 billion last year, up from $74.7 billion in 2018. According to projections, revenues this year should reach $97.3 billion. Globally, the industry is expected to have a market value of nearly $805 billion by 2023.

 

Somewhat surprisingly, the industry has long been welcoming to entrepreneurs, even though it’s dominated by iconic brands, both old (Estee Lauder, L'Oréal) and new (Mac, IT Cosmetics, Drunk Elephant and Fenty Beauty, to name a few).

 

How do you break into an industry with a lineup of brands like that? Like any startup today  you have to follow the trends and understand the country’s changing demographics. But to gain share in a highly competitive environment, you need to launch with a disruptive product or concept.

 

One of the advantages of being a beauty startup is the industry is so broad and diverse, there are many paths to building brand awareness. Statista defines the main product categories of the cosmetic market to include skincare, hair care, make-up, perfumes, toiletries and deodorants, and oral cosmetics.

 

M&A activity

 

Entrepreneurs launching beauty businesses today are likely thinking about their potential exits, even as they come into the market. Reality is while you can gain a foothold in the market by introducing a disruptive product, in the long run it’s hard to compete with the major players.

 

Mergers and acquisitions “in the beauty category have been on fire for several years,” according to industry blog BeautyMatter.  This M&A activity is good for smaller brands. Susan Babinsky, SVP of Kline Group, told BeautyMatter, “The flurry of M&A activity…has reduced the pipeline of good-sized opportunities [so] companies are snatching up small and sometimes less proven businesses—often for quite a premium.”

 

The success stories in this industry are truly astounding.

 

IT Cosmetics got its start in 2008 when then news anchor Jamie Kern Lima couldn’t find a product to cover her rosacea and hyperpigmentation. After consulting with plastic surgeons and dermatologists she launched her disruptive product,  Bye Bye Under Eye concealer. Kern Lima gained attention by selling on QVC and sold the company in 2016 to L'Oréal for $1.2 billion.

 

In 2019’s biggest beauty M&A deal Elemis, founded in 1990 by three entrepreneurs, was bought by L’Occitane International S.A. for $900 million.

 

Tiffany Masterson started Drunk Elephant in 2012 after she couldn’t find products without the six ingredients (the “Suspicious 6”) she thought shouldn’t be in skincare products. At the time “clean” products were a disruptive concept. Within two years the brand had attained cult-like status, and was Sephora’s top-growing skincare brand. Last fall Shiseido bought the company for $845 million.

 

Of course, you don’t have to exit your beauty startup to succeed. Glossier’s Emily Weiss was a beauty blogger who decided to transform her business. She got turned down by 11 VC companies, before one said yes and funded her. She launched in 2014 with four products. Although she told The Cut,  “I had no idea what I was doing. I was 28 years old. I didn’t have an M.B.A. I went to art school,” Weiss succeeded by focusing on millennials. Glossier is valued at $1.2 billion.

 

What trends will dominate this year? Ilya Seglin, Managing Director at Threadstone told BeautyMatter:

 

  • “Clean” beauty will continue to grow, but businesses with “influencers with marketing megaphones and/or distribution partners that can help grow sales” will attract the most attention.

 

  • Corporations interested in acquisitions will be “looking to buy true innovation and consumer engagement,” particularly with younger demographics.

 

  • Most beauty brands will need to become beauty businesses to attract capital/get sold.

 

Other experts predict haircare and skincare products (particularly “clean”) will be strong this year.

 

Getting exposure

 

There are several avenues for new beauty brands to get exposure.

 

 

  • · Sephora Accelerate is a 6+ months-long program “dedicated to building a community of innovative female founders in beauty.”

 

  • · Target Takeoffinternally-run accelerator programprogramming, guidance and mentorship to help startups learn how to scale to mass retail.

 

There are other ways to explore the beauty business. Service providers (hair salons, barber shops) are often dependent on product sales to make a profit.

 

You can open a beauty supply store—on- or off-line.

 

NPD’s Jensen says her “one word to characterize the beauty industry for 2020 is ‘connection’,” meaning “the human connection we have to each other, to brands, and to the environment.”

 

 

About Rieva Lesonsky

 

Rieva Lesonsky is CEO and Co-founder of GrowBiz Media, a custom content and media company focusing on small business and entrepreneurship, and the Rieva headshot.pngblog SmallBizDaily.com. A nationally known speaker and authority on entrepreneurship, Rieva has been covering America’s entrepreneurs for more than 30 years. Before co-founding GrowBiz Media, Lesonsky was the long-time Editorial Director of Entrepreneur Magazine. Lesonsky has appeared on hundreds of radio shows and numerous local and national television programs, including the Today Show, Good Morning America, CNN, The Martha Stewart Show and Oprah.

 

Lesonsky regularly writes about small business for numerous websites and for corporations targeting entrepreneurs. Many organizations have recognized Lesonsky for her tireless devotion to helping entrepreneurs. She served on the Small Business Administration’s National Advisory Council for six years, was honored by the SBA as a Small Business Media Advocate and a Woman in Business Advocate, and received the prestigious Lou Campanelli award from SCORE. She is a long-time member of the Business Journalists Hall of Fame.

 

Web: www.growbizmedia.com or Twitter: @Rieva

You can read more articles from Rieva Lesonsky by clicking here

 

Bank of America, N.A. engages with Rieva Lesonsky to provide materials for informational purposes only, and is not responsible for, and does not guarantee or endorse any of the third-party products or services mentioned.  All third-party logos and company names mentioned herein are the property of their respective owners and are used under license from Rieva Lesonsky.

 

Bank of America, N.A. Member FDIC. ©2019 Bank of America Corporation

George Bernard Shaw allegedly said, “Youth is wasted on the young.” One could make the same argument about entrepreneurship.Small Biz After50.jpg

 

While we are regaled with the success of wunderkinds like Mark Zuckerberg, consider the uber-successful entrepreneurs who started their businesses later—much later—in life. Colonel Harland Sanders started franchising KFC when he was 62 and Ray Kroc launched the McDonald’s juggernaut at 51. Martha Stewart who believes, “You should never retire; you shouldn’t even use the word. It implies going off into the sunset, and who wants to do that?”, started her magazine empire at 50. Coca-Cola, Red Bull and Nestle’s were all started by men in their 50s.

 

If you’re considering starting a business, whether you’re a Gen X’er in your 50s or a baby boomer in your 60s (or even 70s), these iconic role models should give you hope. And the numbers are on your side as well. According to the Trends for Boomers report in the 2019 State of Small Business study from Guidant Financial and Lending Club, “Boomers rule American small business.”

 

Motivation for startup

What’s the impetus behind the boomer business surge? The Guidant reports says boomer men start businesses because they want to be their own boss, while boomer women start  to “pursue their passion.” Bridget Weston, CEO of SCORE, says “Research from our Megaphone of Main Street data report series shows baby boomers tend to start businesses out of necessity, such as getting laid off from a job. They might face challenges like age discrimination in the workforce, and business ownership is a rewarding way to capitalize on the valuable skills they have honed over the course of their careers.”

 

Aliza Sir, director of Financial Security at the AARP Foundation, says we’re experiencing a wave of “encore entrepreneurship.”

 

Data from the Kauffman Indicators of Entrepreneurship show the percent of the U.S. population that starts a new business is highest in the 45-55 year-old category (39%), with 55-65 year-olds a close second (38%).

 

Boomer business struggles

 

Guidant’s data show the most challenging part of running a business for boomers is lack of capital or cash flow. Their second biggest challenges vary. For newer companies (0-3 years in business) it’s marketing and advertising, companies in business 4-7 years cite time management and administrative work (bookkeeping and payroll), while companies in business more than 8 years struggle with recruiting and retention of employees.

 

Better odds of success

 

A study conducted by two MIT professors and the U.S. Census Bureau shows:

 

  • Businesses founded by a 50-year-old are 2.2 times more likely to be successful than those founded by a 30-year-old and 2.8 times more likely to succeed than those founded by a 25-year-old
  • Businesses founded by a 60-year-old are 3 times more likely to succeed than those founded by a 30-year-old

 

Boomers are in this for the long run—73% of those surveyed by Guidant are focused on growing their current businesses, 19% want to open an additional location, while only 8% are considering selling their businesses.

 

Some entrepreneurs are taking advantage of the trend. Tom Kamber started Senior Planet in 2006 to serve those who are “aging with attitude.” In their six locations across the country, boomers can take (mostly) free classes where they learn computer skills (digital photography, social media, website creation) that can help them launch businesses.

 

Talking to The MIT Technology Review, Kamber says he believes that while age is not a barrier to entrepreneurial success, sometimes technology can be. “When you’re a senior, and you’ve got an idea, and you want to make it happen,” he says, “somebody’s got to help out a little bit.”

 

Ready to make the leap?

 

Before you jump into boomer entrepreneurship, consider the risk. Starting a business at any age entails some risk, but the older you are, the less time you have to recoup any losses from a startup gone wrong. You can mitigate the risk by:

 

  • Teaming up. Starting a business with a partner can expand your capabilities, reduce your risk, and make the startup journey a little less lonely.
  • Purchase an existing business or franchise. It’s often less expensive and less risky to buy an existing business. Before you close the deal, have an attorney and accountant vet the business.

 

Here are some tips to help you succeed:

 

  • Location. If possible, launch your business from home or a local coworking space to save on overhead.
  • Create a business plan. No matter what type of business you’re starting, you need a business plan to help guide you.
  • Tap into your network. You should have plenty of contacts and connections who can help you launch.
  • Be tech savvy. Your business needs a mobile-friendly website. You’ll also need to know about social media, SEO and other digital marketing tools.

 

No matter your motivation, whether it’s necessity or choice, whether you’re pushed out of your last job, or just decide your time has come, make the leap. I started my own company in my 50s—and I have no regrets.

 

About Rieva Lesonsky

 

Rieva Lesonsky is CEO and Co-founder of GrowBiz Media, a custom content and media company focusing on small business and entrepreneurship, and the blog SmallBizDaily.com. A nationally known speaker and authority on entrepreneurship, Rieva has been covering America’s entrepreneurs for more than 30 years. Before co-founding GrowBiz Media, Lesonsky was the long-time Editorial Director of Entrepreneur Magazine. Lesonsky has appeared on hundreds of radio shows and numerous local and national television programs, including the Today Show, Good Morning America, CNN, The Martha Stewart Show and Oprah. Rieva headshot.png/servlet/JiveServlet/downloadImage/38-3364-414071/Rieva+headshot.png

 

Lesonsky regularly writes about small business for numerous websites and for corporations targeting entrepreneurs. Many organizations have recognized Lesonsky for her tireless devotion to helping entrepreneurs. She served on the Small Business Administration’s National Advisory Council for six years, was honored by the SBA as a Small Business Media Advocate and a Woman in Business Advocate, and received the prestigious Lou Campanelli award from SCORE. She is a long-time member of the Business Journalists Hall of Fame.

 

Web: www.growbizmedia.com or Twitter: @Rieva

You can read more articles from Rieva Lesonsky by clicking here

 

Bank of America, N.A. engages with Rieva Lesonsky to provide materials for informational purposes only, and is not responsible for, and does not guarantee or endorse any of the third-party products or services mentioned.  All third-party logos and company names mentioned herein are the property of their respective owners and are used under license from Rieva Lesonsky.

 

Bank of America, N.A. Member FDIC. ©2019 Bank of America Corporation

Sometimes entrepreneurial success is finely crafted—planned out years in advance. More often, it’s a matter of serendipity, of paying attention to what the universe brings you, accepting it and letting spontaneous combustion take care of the rest.

 

That’s what happened to Kelley McShane and Nick Carr, a young married couple who just happened to be in the right place at the right time when the universe came calling. #2+Granny-Bottle+Photo-w-frame copy.jpg

This is the story of the Granny Squibb Company, a beverage business (they sell six flavors of iced tea) based in Providence, Rhode Island, with dreams of becoming a big fish in a small pond. And the story of how a small business transitioned management from family to friends without losing its soul.

 

Granny Sqibb’s tea is brewed for today’s health-conscious consumers—it’s organic and non-GMO, but it’s rooted in the past. In the early 1930’s Sally Squibb (yes, there was an actual Granny Squibb) took a recipe her mother-in-law gave her and brewed a cold tea (apparently, unusual in those days). Granny thought her brew was “astonishingly delicious” and shared it with the local community.

 

Flash forward to 2009, when Sally’s granddaughter Robin retired from the film business, moved back to Providence and decided to bottle her grandmother’s recipe, saying Granny had always encouraged her to try everything and “never say never.”

 

Robin tried 50 or so different formulas before settling on the one that was as “astonishingly delicious” as her grandmother’s and launched the Granny Squibb Co. with sweetened and unsweetened version of two teas—Sally’s Lemon and Mojito Lime.

 

The rest of the story unfolds like a Hallmark movie—except the “heroic” young couple was already married when they rented an apartment in Robin Squibb’s home.

 

Neither had beverage experience. Carr was a financial advisor; McShane ran her own tutoring company and worked for a local nonprofit. But in an instant, they went from being friendly renters to co-owners (managing partners) of the Granny Squibb Company.

 

I talked to Kelley McShane about their unlikely journey becoming beverage entrepreneurs.

 

20190109-223310-Squibb.jpg

Rieva Lesonsky: The st0ry about how you and Nick came to be involved is the stuff of TV movies. Was it really that straightforward?

 

Kelley McShane: Yes. We moved into the house two years ago—and became part of the business 18 months ago. We were friendly with Robin. One day Nick passed her in the hall and asked, “How’s it going?” She told him (half joking), it had been a terrible day and asked, “Do you want it?”

 

Nick came upstairs and said to me you won’t believe what happened. We went down to her apartment and asked, “Were you serious?” And she was. She’d been working on the business for nine years, had gotten the teas in local chains like Dave’s Marketplace, Whole Foods and Wegmans.

 

But she’d been a one-woman show. The company survived by barely marketing.

Lesonsky: What made you think you could run a beverage company?          Oct6 square copy.jpg

 

McShane: We had both just turned 30. We wanted a change, wanted an adventure, wanted to work together. We’d been married for five years, but never saw one another.

 

Robin agreed to stay on for one year to mentor us. And a year in, we were ready. We still live in the same apartment, which makes it convenient. Robin is very creative and still involved in the big-picture decisions.

 

Lesonsky: You came in with an existing infrastructure in place. How did that work?

 

McShane: It wasn’t complicated. This is her grandmother’s legacy. We knew we needed to keep the integrity of the company and the brand.

 

We worked full-time for two months before the papers were signed. We just sat down and agreed on everything. People warned us against doing that. But we did it, and it worked. Then we brought in the lawyers and made it legal.

 

We learned from Robin. Once we were in the industry and trained, we had our own ideas. We built the [new] infrastructure together. We still see her every day. There’s not a lot of opportunity to be sneaky.

 

Lesonsky: What are your expansion plans?

 

McShane: Last winter we added a third flavor, Charlie’s Cranberry, named after Robin’s dog. We made it in the same house Granny Squibb lived in. Used the same tea kettle and measuring cups and sat at the same table Granny did.

 

We’ve expanded to upstate New York and in New England. In 2020 we’re adding new distribution in Massachusetts. But we want to focus on growing sales in Rhode Island.

 

We don’t want to go nationwide. We’re a New England product. And we’d like to stay here. We source our ingredients in New England. We can drive to accounts if there’s a problem. We want to be accessible. Be local. Build a local, legendary company.

 

Lesonsky: What has the biggest surprise been for you?

 

McShane: By far how incredibly supportive other RI brands have been. Companies like Yacht Club Soda (the official soda of RI) have gone over and above to train and support us.

 

Everyone in RI is easy to work with. People here work with integrity and kindness. We were warned the beverage industry was cutthroat. Not in RI.

 

Lesonsky: What was your biggest challenge?

 

McShane: The first year was hard. We were working 24/7. You have to. And growth took off.

 

At one point Nick and I spent 72 hours within 30 feet of one another. That was tough. But we know it would be. We planned for it. We heard the people who said “don’t work with your spouse.” We knew we needed to expand so we didn’t have to work with just one another. At the beginning we’d go to a trade show and trip over each other’s words. One year in—we got the spiel down, got stronger and more confident.

 

Lesonsky: I know community involvement is important to you. How does Granny Squibb do that?

 

McShane: We participate in tons of community events, like Save the Bay. We donate a percentage of sales from the Charlie’s Cranberry to benefit them. [McShane actually swam Narragansett Bay for the event.]

 

We encourage our employees to pick a cause they support and get on their boards.

We just launched our first big digital campaign, If We Can, We Will. Any Rhode Islander can send an email telling us what they need, whether it’s volunteers for an event, connections, or help with collecting items for drives. If we can help them without spending any money, we will.

 

Lesonsky: Sales increased about 40% in your first seven months. What changes did you bring?

 

McShane: In 2018 we added marketing. In 2019 we focused on sales—and they more than doubled—up 250%.

 

Lesonsky: And you’re in this for the long haul?

 

McShane: We are committed to being beverage entrepreneurs. We’ve found our calling. We love iced tea. We love the story.

 

What we really value is the people here. We all love each other.

 

About Rieva Lesonsky

 

Rieva Lesonsky is CEO and Co-founder of GrowBiz Media, a custom content and media company focusing on small business Rieva+Lesonsky+Headshot.pngand entrepreneurship, and the blog SmallBizDaily.com. A nationally known speaker and authority on entrepreneurship, Rieva has been covering America’s entrepreneurs for more than 30 years. Before co-founding GrowBiz Media, Lesonsky was the long-time Editorial Director of Entrepreneur Magazine. Lesonsky has appeared on hundreds of radio shows and numerous local and national television programs, including the Today Show, Good Morning America, CNN, The Martha Stewart Show and Oprah.

 

Lesonsky regularly writes about small business for numerous websites and for corporations targeting entrepreneurs. Many organizations have recognized Lesonsky for her tireless devotion to helping entrepreneurs. She served on the Small Business Administration’s National Advisory Council for six years, was honored by the SBA as a Small Business Media Advocate and a Woman in Business Advocate, and received the prestigious Lou Campanelli award from SCORE. She is a long-time member of the Business Journalists Hall of Fame.

 

Web: www.growbizmedia.com or Twitter: @Rieva

You can read more articles from Rieva Lesonsky by clicking here

 

Bank of America, N.A. engages with Rieva Lesonsky to provide informational materials for your discussion or review purposes only. Rieva Lesonsky is a registered trademark, used pursuant to license. The third parties within articles are used under license from Rieva Lesonsky. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC. ©2019 Bank of America Corporation

There’s a lot of information available to those who want to start a business. So much, in fact, it can feel overwhelming. So, let’s cut to the chase and look at the three key steps 3 tips for starting a biz.jpgto successfully starting a business:

 

Focus, fact-finding and finances.

 

1. Focus: Make a commitment

 

Unswerving focus separates the dreamers from the doers. If you want to start a business, you must commit to making it happen. Set aside time to work on your business every day. Just half an hour a day is all it takes to make steady progress. Can you give up half an hour of watching Netflix, hanging out with your friends or scrolling through Instagram to focus on your business?

 

If not, you probably don’t have what it takes. (Sorry to be so frank, but starting a business is not for the easily discouraged.) To stay motivated, find a support system—someone who will encourage you and hold your feet to the fire when necessary.

 

2. Fact-finding: Do your homework

 

You’ve got a business idea. But is it a viable idea?

 

To find out, first research your competition, including both online and offline competitors. Learn as much as you can about them. Visit their businesses, dig deep into their websites, look at their marketing and pricing. What can you offer that’s different and better?

 

Next, research your target market. Who will buy what you’re planning to sell? You can’t target the whole world. In fact, the more you can narrow your target market, the better. Learn so much about your target customers you can picture them in front of you:

 

  • Where do they live?
  • What do they do?
  • Are they married?
  • Do they have children?
  • How do they spend their free time?
  • What’s their discretionary income and what do they spend it on?

 

You may discover your market is too small to support your business. It’s better to learn this now than after you open your doors. Adjust your business idea or find a new target market and keep going.  Once your target customers are defined, figure out how you will sell to them. Will your product be sold in your store, sold through another retailer, or sold online? If it’s a service, will you deliver it yourself or hire employees? Will you sell direct to customers, hire outside salespeople, or sell to a reseller?

 

3. Finances: Set a budget and source your startup capital


You know your business idea is viable. But, how much will it cost to launch? There are lots of expenses to consider, including the costs of:

 

  • Buying or making a product
  • Renting a location
  • Creating and maintaining a website
  • Marketing and advertising
  • Equipment and business supplies
  • Hiring employees or independent contractors

 

Like much in life, a business startup often costs more than you expect, so build wiggle room into your budget.

 

Now, figure out how you will get the money. It’s very difficult to get startup financing from outside sources, so most startup entrepreneurs use their own money or borrow from friends and family. Can you tap into savings, sell some assets, start part-time or work a second job? Get creative about finding ways to finance your dream.

 

Bonus step: Get help

 

There are many resources available to help you start a business. Find local organizations, such as economic development centers, that assist business owners. Educate yourself by taking classes at your local community college.

 

Two great resources available nationwide are SCORE and the Small Business Development Center) network. Each provides free or low-cost business consulting and advice from successful business owners and business experts. SCORE’s website has tons of tools such as online webinars, training courses and templates to get you started. (Note: SCORE is a client of my company, but I’d recommend them even if they weren’t.)

 

Focus, facts and financing are the three essential keys to startup success. Commit to each of them and make 2020 the year you actually launch your business.

 

About Rieva Lesonsky

 

Rieva Lesonsky is CEO and Co-founder of GrowBiz Media, a custom content and media company focusing on small business and Rieva+Lesonsky+Headshot.pngentrepreneurship, and the blog SmallBizDaily.com. A nationally known speaker and authority on entrepreneurship, Rieva has been covering America’s entrepreneurs for more than 30 years. Before co-founding GrowBiz Media, Lesonsky was the long-time Editorial Director of Entrepreneur Magazine. Lesonsky has appeared on hundreds of radio shows and numerous local and national television programs, including the Today Show, Good Morning America, CNN, The Martha Stewart Show and Oprah.

 

Lesonsky regularly writes about small business for numerous websites and for corporations targeting entrepreneurs. Many organizations have recognized Lesonsky for her tireless devotion to helping entrepreneurs. She served on the Small Business Administration’s National Advisory Council for six years, was honored by the SBA as a Small Business Media Advocate and a Woman in Business Advocate, and received the prestigious Lou Campanelli award from SCORE. She is a long-time member of the Business Journalists Hall of Fame.

 

Web: www.growbizmedia.com or Twitter: @Rieva

You can read more articles from Rieva Lesonsky by clicking here

 

Bank of America, N.A. engages with Rieva Lesonsky to provide informational materials for your discussion or review purposes only. Rieva Lesonsky is a registered trademark, used pursuant to license. The third parties within articles are used under license from Rieva Lesonsky. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC. ©2019 Bank of America Corporation

Do you dream of being your own boss but don’t think you have enough startup capital? Starting a business is more affordable than ever.

 

Don’t believe me? Read on to discover 21 businesses you can start for $25,000 or less—and find out how you can win $25,000 to launch your dream business. (see note below)

 

First, the secrets to low-cost business success

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  • Start as a one-person business and hire freelancers/independent contractors as you grow.
  • Run your business from home and meet with clients at their office or a neutral location.
  • Instead of buying new equipment, buy used or lease what you need
  • Focus on basics: a computer, smartphone and a website, plus any licenses, permits or certifications you need.
  • Consider incorporating to protect your personal assets from liability.

 

Best business startup ideas under $25,000

 

  1. Tutoring service: Tutor students in their homes or offer services at schools.  (National Tutoring Association)
  2. Photography business: Specialize in weddings, sports teams, class photos or pets; or market your services to businesses. (American Photographic Artists)
  3. Graphic design company: Create logos, marketing materials and more for business clients. (Graphic Artists Guild)
  4. Website design company: Help other small business owners create an online presence. Offer additional services, like SEO and marketing assistance, to boost your sales. (Association of Web Design Professionals)
  5. Event/Party/Wedding planner: Plan parties or weddings for individuals, or meetings and conventions for businesses. (PCMA, Meeting Professionals International)
  6. Personal trainer: Get basic workout equipment and certification from a professional organization and start helping clients shape up. (ACE, National Strength and Conditioning Association)
  7. Handyman services: Market your services to homeowners, property managers and landlords. (Association of Certified Handyman Professionals)
  8. In-home childcare service: Get licensed and insured, then start marketing your childcare services through word-of-mouth. (National Association for Family Child Care)
  9. Virtual assistant business: Help other small business owners with administrative tasks. (International Virtual Assistants Association)
  10. Consulting business: From IT and management to marketing and sales, just about any professional expertise can become a consulting business. (Institute of Management Consultants)
  11. Pool cleaning business: A used truck and equipment will get you started; network with other home services businesses to find customers. (Association of Pool & Spa Professionals)
  12. House painting service: Invest in equipment and promote your business via word-of-mouth and networking. (Painting and Decorating Contractors of America)
  13. Personal chef/Caterer: Cook up success preparing meals for private clients as a personal chef or cater bigger events for individuals and organizations. (National Association for Catering & Events, United States Personal Chef Association)
  14. Maid service: Busy Americans need someone to keep their homes clean. Also target the senior living-at-home market. (ISSA The Worldwide Cleaning Industry Association)
  15. Dog walking/Pet sitting service: Profit from Americans’ love of pets by watching and exercising their dogs. (National Association of Professional Pet Sitters)
  16. Crafts business: Sell your wares at Amazon, Etsy or local crafts fairs. (Craft Industry Alliance)
  17. E-commerce business: Find a niche and use drop shipping to keep your costs down. Also sell via a marketplace like Amazon or eBay. (Internet Merchants Association)
  18. Bookkeeping service: Put your skills to work helping other businesses get their finances in order. (National Association of Professional Bookkeepers)
  19. Mobile auto detailing service: A used truck or van and some equipment will get you started on the road to success. (International Detailing Association)
  20. College admissions/financial aid consulting: Getting into college is harder and more expensive than ever; help students and their parents prepare for success. (Independent Educational Consultants Association)
  21. Buy a franchise: Find low-investment franchises at the International Franchise Association(IFA) website.

 

Are You a Small Business Owner Interested in Winning $25,000?

 

Entrepreneurs who want to win $25,000 have the opportunity to do so by entering the Mastercard Grow Your Biz Contest, in association with Bank of America. To enter the Grow Your Biz Contest, small business owners must answer the simple question, “How would $25,000 help your business grow?” by submitting a video up to 1 minute long online explaining how they could use $25,000 to improve an existing business*. Four finalists will pitch their business to the Grow Your Biz Panel in New York City on 11/14/2019 for the chance to win $25,000, in addition to an industry-expert consultation.  Learn more at www.growyourbizcontest.com

 

*NO PURCHASE NECESSARY TO ENTER OR WIN. Void where prohibited. Open only to small business owners who are legal U.S. residents, and 18 and older. Ends 10/6/19. For Official Rules and complete details, click here.

 

About Rieva Lesonsky

 

Rieva Lesonsky Headshot.png

Rieva Lesonsky is CEO and Co-founder of GrowBiz Media, a custom content and media company focusing on small business and entrepreneurship, and the blog SmallBizDaily.com. A nationally known speaker and authority on entrepreneurship, Rieva has been covering America’s entrepreneurs for more than 30 years. Before co-founding GrowBiz Media, Lesonsky was the long-time Editorial Director of Entrepreneur Magazine. Lesonsky has appeared on hundreds of radio shows and numerous local and national television programs, including the Today Show, Good Morning America, CNN, The Martha Stewart Show and Oprah.

 

Lesonsky regularly writes about small business for numerous websites and for corporations targeting entrepreneurs. Many organizations have recognized Lesonsky for her tireless devotion to helping entrepreneurs. She served on the Small Business Administration’s National Advisory Council for six years, was honored by the SBA as a Small Business Media Advocate and a Woman in Business Advocate, and received the prestigious Lou Campanelli award from SCORE. She is a long-time member of the Business Journalists Hall of Fame.

 

Web: www.growbizmedia.com or Twitter: @Rieva

You can read more articles from Rieva Lesonsky by clicking here

 

Bank of America, N.A. engages with Rieva Lesonsky to provide informational materials for your discussion or review purposes only. Rieva Lesonsky is a registered trademark, used pursuant to license. The third parties within articles are used under license from Rieva Lesonsky. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC. ©2019 Bank of America Corporation

Passion can be a powerful motivator for startup entrepreneurs. And for those starting a nonprofit business, passion is particularly important.

 

“Passion has to drive the individual or the nonprofit will fail,” said Jill Dominguez, the founder and CEO of Essergy, a consulting firm for nonprofits. “If you start a nonprofit thinking you will get rich, you’re starting it for the wrong reason.”

 

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Some of us discover our passion early in life—for others it comes later—after accumulating a lifetime of experience and knowledge. That is what happened to Brett Weiss, the founder and director of the Weiss Scholarship Foundation.

 

In 2009, Weiss, an Illinois native, then 59, headed to Dago, a small (population 3,000) village in Kenya. Weiss, in his second go-round of being a teacher (he sandwiched a career in software sales in between teaching gigs), had “always wanted to go to Africa and volunteer.” In fact, Weiss says, that’s why he returned to teaching in 2004—so he could have his summers free.

 

But like many of us, Weiss kept making “lousy excuses for not going.” Finally, a “health scare” in 2007 (thyroid cancer) gave him the “kick in the butt” he needed to join Village Volunteers and go to Dago.

 

Most residents of Dago, Weiss says, live in mud huts, without electricity or plumbing. The average family income is less than $2 a day. AIDS has decimated much of the adult population and Weiss says most children don’t have two living parents. Anyone experiencing that would be affected, but as a long-time educator, “I had to do something to help,” he said

 

He came back from Dago and got his students involved. They took on new projects every semester, including buying a cow for the village.

 

As he was preparing for his second trip in 2011, he wanted to do something “more substantial.” Drawing on his passion for education, he created the Weiss Scholarship Foundation to try to “end the cycle of extreme poverty.” At that time, most kids in Dago never went past 4th grade. High school is not free in Kenya, and most families can’t afford to send their kids. The Foundation awards high school scholarships—the first student who got a scholarship is attending university today.

To date, the Weiss Scholarship Foundation has awarded 54 four-year high school scholarships. They just started sending some of the kids who aren’t college-bound to vocational schools.

 

That’s the passion play. But what about business?

 

Weiss had never run a company before, but his father was an entrepreneur, so he was familiar with business ownership.

 

At the beginning, he did not form his own 501(c) (3) nonprofit. He “piggybacked” on another nonprofit that handled the donations, tax credits and legal and accounting issues. Weiss’s brother, a successful CEO and venture capitalist , came with him on his fifth trip to Dago—and the brothers decided to create an organization to help even more Kenyan children and become an enduring foundation—one that would last beyond Weiss’s lifetime.

 

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Weiss had to up his game. This is common among founders of nonprofits, Dominguez said. “The majority of nonprofits are started on a shoestring budget with money invested by the founders.” Indeed, up until a year ago, Weiss paid 100% of the operating expenses, adding up to about $70,000 of his savings.

 

Weiss started his own 501 (c) (3) in 2018. He admittedly knew “very little” about running a nonprofit. In the last two years he’s been on a “crash course to try to learn as much as I can. I really think of myself as an entrepreneur.”

 

He’s applied the business skills from his software sales experience—“I make lots of cold calls, on the phone and in person. Every day I repeat a line I heard so many times when I was in sales, ‘Every time you get a no, you are just one step closer to the yes.’”

 

The most challenging aspect of running the foundation for Weiss is balancing the “two parts of the job.  One is running the day-to-day operations and the other is doing short-term and long-term fundraising,” he said. “If I spend too much time on the operations part, then we are not raising enough money.”

 

Dominguez says most nonprofit startups find raising money to be their biggest challenge.  “Can you [continually] ask for money to achieve your mission? This is a different animal than starting a business. You are asking for a cause, not selling the latest tools,” she said. “You have no widget, just a belief in changing the world.”

 

To become “more professional,” Weiss turned to his network. He formed a Board of Directors (a legal requirement) and an Advisory Board, consisting of his former students. Another former student built his website for free; and one of his board members designed marketing materials.

 

Get 7 Tips on Choosing and Using Board Advisors from Carol Roth

 

If you want to help, go here.

 

The Questions to Ask Yourself

 

Do you have what it takes to start a nonprofit? Here are a list of questions Weiss asked himself before he plunged into launching a nonprofit.

 

  • I have this great idea; how can I make it real and successful?
  • Where am I going to get money?
  • What are my goals and what is my plan to make them a reality?
  • I will need help from people on the ground in Kenya. How am I going to get this help?
  • I am going to have to go to Kenya on a regular basis. How am I going to pay for this?
  • There will be other expenses. How am I going to pay for this?
  • How do I make sure this organization is always providing first-class service on a very limited budget?
  • How do I communicate with my donors and work to insure they will donate again?
  • How am I going to market this foundation with very limited resources?
  • How am I going to do this while I work my full-time job? I still need  income coming in?

 

          Read next:

 

About Rieva Lesonsky

 

Rieva Lesonsky Headshot.png

Rieva Lesonsky is CEO and Co-founder of GrowBiz Media, a custom content and media company focusing on small business and entrepreneurship, and the blog SmallBizDaily.com. A nationally known speaker and authority on entrepreneurship, Rieva has been covering America’s entrepreneurs for more than 30 years. Before co-founding GrowBiz Media, Lesonsky was the long-time Editorial Director of Entrepreneur Magazine. Lesonsky has appeared on hundreds of radio shows and numerous local and national television programs, including the Today Show, Good Morning America, CNN, The Martha Stewart Show and Oprah.

 

Lesonsky regularly writes about small business for numerous websites and for corporations targeting entrepreneurs. Many organizations have recognized Lesonsky for her tireless devotion to helping entrepreneurs. She served on the Small Business Administration’s National Advisory Council for six years, was honored by the SBA as a Small Business Media Advocate and a Woman in Business Advocate, and received the prestigious Lou Campanelli award from SCORE. She is a long-time member of the Business Journalists Hall of Fame.

 

Web: www.growbizmedia.com or Twitter: @Rieva

You can read more articles from Rieva Lesonsky by clicking here

 

Bank of America, N.A. engages with Rieva Lesonsky to provide informational materials for your discussion or review purposes only. Rieva Lesonsky is a registered trademark, used pursuant to license. The third parties within articles are used under license from Rieva Lesonsky. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC. ©2018 Bank of America Corporation

Do you want to give back? Pay it forward? Change the world?Starting a Nonprofit.jpg

 

There are many ways to accomplish that. In the business world, many with those goals decide to start a 501 (c) (3) nonprofit organization.

 

Navigating the world of nonprofits can be tricky. To learn more, I talked to Jill Dominguez, the founder and CEO of Essergy, a consulting firm for nonprofits about what it takes to be a nonprofit entrepreneur.

 

Rieva Lesonsky: In general, why do people start nonprofits?

 

Jill Dominguez: For the same reasons people start businesses—they see a problem and want to solve it. The same business principles apply, but your income is derived from getting donations and your success is measured by performance and trust. You don’t pay taxes on income, but you’re still operating a business—making payroll, paying payroll taxes, insurance, employee benefits, etc. A 501 (c) (3) is a tax status, not a profit margin indicator.

The biggest difference is you are selling a cause, not a widget.

 

Lesonsky: How do you get paid?

 

Dominguez: Salaries for executive directors of nonprofits are far below those of for-profit CEOs in similar fields. An executive-level salary review is required annually by nonprofits. IRS regulations keep your salaries and expenditures in line. A nonprofit has the American public to answer to as shareholders and the IRS as the “hall monitor.”

 

Lesonsky: When starting a nonprofit, what factors should you consider?

 

Dominguez: Questions to ask yourself before taking the plunge:

 

  • Know the need—and the market. Are you solving a problem that is already addressed by other nonprofits? Is what’s really needed a good volunteer and more money? Do your homework!
  • If the need is not being met, what’s the best usage of your time and effort? Should you serve on a Board of Directors and make that unmet need part of the mission of an existing nonprofit?
  • Assess your passion. Are you willing to work numerous unpaid hours, invest startup funds for your 501 (c) (3) application, learn a new skill set, new business operation rules, tax rules, accounting policies, answer to a Board of Directors? Non-profits are not for the faint of heart.

 

The real question is—can you ask for money? This is not as easy as it sounds. My rule is, “no blinking, no blushing.” If you believe in your cause enough to convince others to give you money and can spend it wisely and solve the problem you are promising to address, then go for it!

 

Lesonsky: Are there go/no go signs startup nonprofits should look for?

 

Dominguez: Yes, market drivers. Is the societal problem you are trying to solve best served by a nonprofit or are you crossing into business income territory? Do you need a 501 (c) (3) to develop a cure for what ails society? Do you need a nonprofit to tutor kids in reading or will a new education for-profit model do the same thing? Can you honestly say your nonprofit is serving a mission for public benefit that should be tax free? If in doubt, ask an expert.

 

Lesonsky: What’s the biggest challenge in starting a nonprofit?

 

Dominguez: Raising money.

 

Lesonsky: How are most nonprofits initially funded?

 

Dominguez: They’re self-funded. It takes about 18 months to get approved for 501 (c) (3) tax status and a professional to complete an application for nonprofit status. While you are waiting for approval you musttell funders all donations are pending a charitable contribution receipt. Or a fiscal agent can manage your startup.

 

Lesonsky: You’re a nonprofit guru. When you initially meet with nonprofit entrepreneurs, do you have a good idea if they’re going to succeed?

 

Dominguez: Yes, it only takes me a couple of hours. Here’s what I look for:

 

  • Do you know the problem you intend to solve?
  • Do you know your audience (those you’re helping and those who will fund you)?
  • Do you have the passion?
  • Do you have a “true believer” attitude?
  • Are you fearless?

 

I look for honesty, integrity and trust. Nonprofits are transparent. I check up on everyone. My reputation is at stake if I take you on as a client.

 

 

About Rieva Lesonsky

 

Rieva Lesonsky Headshot.png

Rieva Lesonsky is CEO and Co-founder of GrowBiz Media, a custom content and media company focusing on small business and entrepreneurship, and the blog SmallBizDaily.com. A nationally known speaker and authority on entrepreneurship, Rieva has been covering America’s entrepreneurs for more than 30 years. Before co-founding GrowBiz Media, Lesonsky was the long-time Editorial Director of Entrepreneur Magazine. Lesonsky has appeared on hundreds of radio shows and numerous local and national television programs, including the Today Show, Good Morning America, CNN, The Martha Stewart Show and Oprah.

 

Lesonsky regularly writes about small business for numerous websites and for corporations targeting entrepreneurs. Many organizations have recognized Lesonsky for her tireless devotion to helping entrepreneurs. She served on the Small Business Administration’s National Advisory Council for six years, was honored by the SBA as a Small Business Media Advocate and a Woman in Business Advocate, and received the prestigious Lou Campanelli award from SCORE. She is a long-time member of the Business Journalists Hall of Fame.

 

Web: www.growbizmedia.com or Twitter: @Rieva

You can read more articles from Rieva Lesonsky by clicking here

 

Bank of America, N.A. engages with Rieva Lesonsky to provide informational materials for your discussion or review purposes only. Rieva Lesonsky is a registered trademark, used pursuant to license. The third parties within articles are used under license from Rieva Lesonsky. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC. ©2018 Bank of America Corporation

Everyone loves a good rags-to-riches story—even when it’s not literal. One of my favorite examples is author J.K. Rowling who was collecting welfare benefits while writing the first Harry Potter book.

 

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While Mary Molina’s story isn’t quite that grand – yet – her path is an inspiring one. Molina’s LOLA snacks can now be found in stores across the country, including CVS, Costco, and Target, but her company had a humble beginning in 2011 when Molina and her husband were struggling financially. Her husband had just closed his business, Molina was unemployed, and the family was receiving social service support. Today, her business, located in Westchester County, N.Y., has more than 34 employees and contract workers.

 

Rieva Lesonsky: What led you to start a business?

 

Mary Molina: It was a really hard time in our lives. My husband, who had a commission-only sales job, had been eating off of value menus at lunch and was starting to feel unwell. He asked me to make him a snack to help get him through the day. Since my children also have allergies, we eat very clean. I grabbed what I had on hand and made protein bars. I packed the protein bars in his lunch bag, labeling them LOLA Granola, after our daughter. He loved them and so did his co-workers.

 

Lesonsky: Once you learned people at his work wanted the bars, what did you do?

 

Molina: I packed extra bars for his co-workers, who then started asking to buy them. I quickly did a cost analysis to make sure I wouldn’t lose money, then called different agencies to find out how to get certified.

 

Lesonsky: How did you get your bars into a store?

 

Molina: In May 2011, I walked in Who’s Cooking in Croton Falls and asked if they would sell my protein bars. They said yes!

 

Lesonsky: At what point did you think this was the start of a “real” business?

 

Molina: About two weeks after I started selling into small cafes, I realized I wasn’t going to be able to keep up with production. I needed to rent a larger space, but that would cut into my very small profit margin. I wasn’t sure what to do, so I met with a SCORE small business advisor and realized if I wanted this to be a real business with maximum growth potential, I would need to go into automated manufacturing.

Lesonsky:How did you go from local stores to Whole Foods?

 

Molina: At a fundraising event for the Food Bank for Westchester (which had been helping feed my family) we were handing out samples of LOLA bars and were introduced to Whole Foods. They wanted to carry LOLA Bars, but our packaging wasn’t right for grocery stores. So, in 2013, they asked us to come in through an in-store farmer’s market and sell directly to their customers. It was amazing—we sold 200 bars in three hours.

Lesonsky:How did you solve the packaging issue?

 

Molina: This was my biggest challenge. The packaging had to be food safe, have barriers to protect from moisture, mold, etc. Not knowing the packaged food industry, I turned to Google. It took four days of searching before I found the Prepared Foods Packaging Association website. Now I had people to call and ask a million questions. Once I had packaging, I found a manufacturer to produce my bars.

 

Lesonsky: How did you get your products carried by Costco?

 

Molina: First I called several brokers, but they wanted an up-front retainer, so I called Costco HQ to get more info and the buyer answered the phone. I told her my story and she wanted samples.

 

Lesonsky: How do you differentiate your bars from the competition?

 

Molina: LOLA Bars are the only VEGAN Protein + Probiotic Bars on the market with 1 Billion CFUs.

 

Lesonsky: What are your goals?

 

Molina: My goal is to launch more products and get into more retail outlets. I want to be the next brand in Starbucks.

 

 

About Rieva Lesonsky

 

Rieva Lesonsky Headshot.png

Rieva Lesonsky is CEO and Co-founder of GrowBiz Media, a custom content and media company focusing on small business and entrepreneurship, and the blog SmallBizDaily.com. A nationally known speaker and authority on entrepreneurship, Rieva has been covering America’s entrepreneurs for more than 30 years. Before co-founding GrowBiz Media, Lesonsky was the long-time Editorial Director of Entrepreneur Magazine. Lesonsky has appeared on hundreds of radio shows and numerous local and national television programs, including the Today Show, Good Morning America, CNN, The Martha Stewart Show and Oprah.

 

Lesonsky regularly writes about small business for numerous websites and for corporations targeting entrepreneurs. Many organizations have recognized Lesonsky for her tireless devotion to helping entrepreneurs. She served on the Small Business Administration’s National Advisory Council for six years, was honored by the SBA as a Small Business Media Advocate and a Woman in Business Advocate, and received the prestigious Lou Campanelli award from SCORE. She is a long-time member of the Business Journalists Hall of Fame.

 

Web: www.growbizmedia.com or Twitter: @Rieva

You can read more articles from Rieva Lesonsky by clicking here

 

Bank of America, N.A. engages with Rieva Lesonsky to provide informational materials for your discussion or review purposes only. Rieva Lesonsky is a registered trademark, used pursuant to license. The third parties within articles are used under license from Rieva Lesonsky. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC. ©2018 Bank of America Corporation

Side hustles are a great way to start a business, while keeping your day job or a smart way to start or test an additional business. One increasingly common side hustle is selling products online. But what’s the best way to do it? Here’s a closer look at the best platforms for starting an e-commerce side hustle.

 

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There are two basic options for selling online if you don’t want to build your own e-commerce site:

 

  1. Online marketplacesare like digital shopping malls. You rent a “space” in a larger marketplace.
  2. Hosted e-commerce platforms are like freestanding stores with landlords. You customize your online store using their software; they handle the behind-the-scenes stuff like site hosting and software maintenance.

 

Online marketplaces

 

Amazon

Almost half of all U.S. online spending takes place on Amazon, where 83 percent of U.S. consumers have bought something in the past six months. The third-party sellers who account for over 50 percent of Amazon’s total unit sales are benefiting from that exposure.

 

Amazon’s Individual plans (starting at $0.99/sale) are an affordable way to test the waters but limit the number and type of products you can sell. For unlimited items and product categories, choose a Professional plan (starting at $39.99/month). Simplify your life and use Fulfillment by Amazon to handle packing and shipping for you.

 

Etsy

You can sell handmade goods, craft supplies or vintage products (at least 20-years old) on Etsy. The Standard plan is free to join. Just create an Etsy account, select a shop name, create a listing ($0.20 per item, plus fees when it sells), and choose how you want to be paid and pay your fees. Accept payments via credit and debit cards, PayPal, Google Wallet, Apple Pay and more.

 

Etsy offers tools to promote your products, customize your store and design a website powered by Etsy; it also providesshipping labels and discounts. Upgrade to a Plus plan ($10/month) for additional marketing tools; a Premium plan will launch later this year.

 

eBay

eBay isn’t just an auction site anymore. You can sell both used and new items and choose from auction-style or fixed-price listings. You can start with a Personal account, but for those looking to scale, a Business account offers more functionality. Listing up to 50 items per month is free; you pay $10 of the Final Value after an item sells. eBay provides shipping labels and postage discounts.

 

For additional selling tools, bigger shipping discounts, and lower Final Value fees, set up an eBay Store. This lets you designa custom homepageand access a wide range oflisting tools to help you manage your business better.

 

Hosted e-commerce platforms

 

BigCommerce

If you have big plans for your side hustle, BigCommerce could be for you. Big businesses and small startups alike use BigCommerce to create e-commerce sites using responsive design templates with best-in-class SEO built in.

 

BigCommerce also features built-in selling on Amazon, eBay, Google Shopping, Facebook and Pinterest—with no transaction fees. The Standard plan ($29.99/month) is ideal for startups and offers a free trial.

 

Shopify

Basic Shopify ($29/month) is also great for side hustles. Design your e-commerce website and blog using one of Shopify’s theme templates with drag-and-drop ease. You get 24/7 support and can sell via online marketplaces and social media.

 

Want to start reallysmall? Use Shopify Lite ($9/month) to sell on Facebook and communicate with your customers via Facebook Messenger. Want to do more? Shopify offers tools to help you do everything from choosing your domain name to marketing your business and accepting payments.

 

Volusion

Use Volusion’s responsive website themes to create an e-commerce site with features including inventory management, unlimited storage and product listings, and secure checkout and payment collection. It accepts payments via Stripe, PayPal or Apple Pay.

 

Volusion has built-in SEO tools and a comprehensive management hub that lets you see customer details, create discounts, and enable flat, free or special shipping rates. The personal account ($29/month) has everything you need and offers a free trial.

 

Take some time to explore all the options. By choosing the solution that best fits your budget, product mix, and target customers, you’ll put your side hustle on the road to success.

 

READ NEXT:

 

 

About Rieva Lesonsky

 

Rieva Lesonsky Headshot.png

Rieva Lesonsky is CEO and Co-founder of GrowBiz Media, a custom content and media company focusing on small business and entrepreneurship, and the blog SmallBizDaily.com. A nationally known speaker and authority on entrepreneurship, Rieva has been covering America’s entrepreneurs for more than 30 years. Before co-founding GrowBiz Media, Lesonsky was the long-time Editorial Director of Entrepreneur Magazine. Lesonsky has appeared on hundreds of radio shows and numerous local and national television programs, including the Today Show, Good Morning America, CNN, The Martha Stewart Show and Oprah.

 

Lesonsky regularly writes about small business for numerous websites and for corporations targeting entrepreneurs. Many organizations have recognized Lesonsky for her tireless devotion to helping entrepreneurs. She served on the Small Business Administration’s National Advisory Council for six years, was honored by the SBA as a Small Business Media Advocate and a Woman in Business Advocate, and received the prestigious Lou Campanelli award from SCORE. She is a long-time member of the Business Journalists Hall of Fame.

 

Web: www.growbizmedia.com or Twitter: @Rieva

You can read more articles from Rieva Lesonsky by clicking here

 

Bank of America, N.A. engages with Rieva Lesonsky to provide informational materials for your discussion or review purposes only. Rieva Lesonsky is a registered trademark, used pursuant to license. The third parties within articles are used under license from Rieva Lesonsky. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC. ©2018 Bank of America Corporation

Are you in debt? If you’re like most Americans, the answer is a resounding yes. According to recent Federal Reserve statistics, the average American household has about Starting a biz in debt.jpg$182,000 in mortgage debt, $50,000 in student loan debt, over $29,000 in auto loans and nearly $17,000 in credit card debt.

But should you let debt hold you back from starting your own business?

 

More than half (52 percent) of millennials have student loan debt, according to an EIG study, and 43 percent believe it limits their career options. If you manage your new business wisely, however, there’s no reason debt should put a damper on your entrepreneurial dreams.

 

Key questions about personal debt

 

How much debt do you have, and what kind of debt is it? There’s a difference between a $180,000, 30-year mortgage and $180,000 worth of student loans. There’s also a difference between carrying a credit card balance at 16.73 percent APR (the current average) and mortgage debt at 3.5 percent interest.

 

If your debt is manageable, making payments on time can actually make it easier for your startup to access capital by improving your personal credit rating. But if your debt-to-income ratio (your monthly debt payments divided by your monthly gross income) is too high, your loan options will be limited. A debt-to-income ratio of 35 percent or less is good; over 50 percent spells trouble, according to Bankrate.com.

 

Financing your business when you're already in debt

 

If your current debt makes getting a business loan unrealistic, you still have plenty of options:

  • Reduce your monthly debt load. Refinance or consolidate outstanding loans to lower interest rates and reduce monthly payments. If you’re racking up interest on your credit card balances, find a low or zero balance transfer offer.
  • Start a low-cost business. A service business using equipment you already own (like your laptop) is ideal. If you do need equipment, consider leasing, equipment loans, or buying used equipment. Working from home will save you money, too.
  • Be frugal. If you’re a recent college graduate with student loan debt, now is the time to live in your parents’ basement—0r childhood bedroom. If you're not willing to live with your parents, forgo spending on a social life, or subsist on ramen, you may not be ready to be an entrepreneur.
  • Is your heart set on a product-based business? Try a crowdfunding website like Kickstarter to solicit donations from consumers who believe in your product idea. Essentially, they give you the money to make your product by purchasing it in advance.
  • Tap into friends and family. Will friends and family invest in your business in return for a share of ownership, or lend you startup capital? If you do accept a loan from a loved one, be sure to draw up loan documents and treat the loan seriously.
  • Start a part-time business. If you need income from your job to handle your debt load, look for a business you can launch part-time, working at nights or on weekends. Some entrepreneurs get part-time jobs to pay the bills and devote the rest of their time to their startups.

 

Rules to live by

 

Once your business is off the ground, getting a business credit card for necessary purchases is a good idea. Just be sure to keep the balance manageable and make payments on time to build your business’s credit rating.

 

Make your personal debt payments on time, too. As a startup business owner, your personal credit rating affects that of your fledgling business. Since your business doesn’t have a track record yet, lenders use your personal credit rating as an indicator of your company’s creditworthiness.

 

As your business begins generating income, resist the temptation to use it to pay down personal debt. Instead, put the profit back into building your business. The more you bootstrap your business growth, the faster your business will become profitable—and the sooner you can pay off all your debt.

 

About Rieva LesonskyRieva Lesonsky Headshot.png

Rieva Lesonsky is CEO and Co-founder of GrowBiz Media, a custom content and media company focusing on small business and entrepreneurship, and the blog SmallBizDaily.com. A nationally known speaker and authority on entrepreneurship, Rieva has been covering America’s entrepreneurs for more than 30 years. Before co-founding GrowBiz Media, Lesonsky was the long-time Editorial Director of Entrepreneur Magazine. Lesonsky has appeared on hundreds of radio shows and numerous local and national television programs, including the Today Show, Good Morning America, CNN, The Martha Stewart Show and Oprah.

 

Lesonsky regularly writes about small business for numerous websites and for corporations targeting entrepreneurs. Many organizations have recognized Lesonsky for her tireless devotion to helping entrepreneurs. She served on the Small Business Administration’s National Advisory Council for six years, was honored by the SBA as a Small Business Media Advocate and a Woman in Business Advocate, and received the prestigious Lou Campanelli award from SCORE. She is a long-time member of the Business Journalists Hall of Fame.

 

Web: www.growbizmedia.com or Twitter: @Rieva

You can read more articles from Rieva Lesonsky by clicking here

 

Bank of America, N.A. engages with Rieva Lesonsky to provide materials for informational purposes only, and is not responsible for, and does not guarantee or endorse any of the third-party products or services mentioned.  All third-party logos and company names mentioned herein are the property of their respective owners and are used under license from Rieva Lesonsky. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC. ©2020 Bank of America Corporation

Choosing your business structure is a key step when starting any for-profit business. You’ll need a business structure to open a business bank account, get a business credit Chossing Business Structure.jpgcard, or apply for a small business loan.

 

Your business structure also affects your tax and legal liability, so it’s important to consider your choice carefully. Here’s an overview of the different types of business structures and the pros and cons of each one.

 

Sole Proprietorship: When you start a business by yourself and don’t select a business structure, you’re a sole proprietorship by default. As the name implies, sole proprietorships are owned and run by one person. You pay taxes on your business’s income as part of your personal income tax return.

 

Pros: This is the easiest form of business to start. Generally there is no paperwork to file and no special regulation applies.

Cons: You are responsible for all the company’s debts and liabilities, which puts your personal assets, such as your home, at risk. When you die, the business becomes part of your estate.

 

Partnership: If you start a business with one or several people and all the partners have personal liability for the debts of the partnership, that is considered a general partnership. If someone invests a chunk of money in your business but doesn’t want personal liability beyond that investment, you can form a limited partnership. The investor would be the limited partner.  Both types of partnerships feature pass-through taxation which means that the partnership itself is not subject to tax, but each partner must include its share of partnership income, gain, loss, deductions, etc. on its own tax return.

 

Pros: No paperwork filing is required, and the partnership can continue if one of the partners retires or dies.

Cons: The general partners are personally liable for the company’s debts and liabilities. (However, the limited partner’s responsibility is limited to the amount of money they put in to the business.)

 

C Corporation: A C Corporation is a separate legal entity from its owners, which generally protects the owners from personal liability. Instead of pass-through taxation, the business pays its own taxes.

 

Pros: In some ways, a C Corp enjoys the greatest flexibility of any business structure. You can transfer shares of the C Corp to your heirs, there is no pass-through taxation to worry about, and there’s no limit on the number of owners. If you have big plans for your business, a C Corp is probably the way to go, since it can sell shares to investors (in fact, if you want to go public someday, you may have to form a C Corp).

Cons: You’ll pay for that flexibility with bureaucracy and fees. C Corps file state paperwork and pay fees at incorporation and every year thereafter. You’ll also need to choose a Board of Directors, hold annual meetings of shareholders, and file annual reports with the state.

 

S Corporation: An S Corporation is a form of corporation that meets specific Internal Revenue Code requirements. The requirements give a corporation with 100 shareholders, or less, the benefits of incorporation while being taxed on a pass-through basis.

 

Pros: An S Corporation offers the same protection from personal liability of a C Corp.

Cons: It requires state filing and fees, and has greater limitations than a C Corp. For example, there are limits on the number and type of owners an S Corp can have, the kind of business it can be engaged in, and the transferability of the business. Additionally, an S Corporation has pass-through taxation.

 

Limited Liability Company (LLC): A limited liability company (LLC) is a corporate structure whereby the members of the company cannot be held personally liable for the company's debts or liabilities. Limited liability companies are essentially hybrid entities that combine the asset protection characteristics of a corporation with the tax characteristics of a partnership or sole proprietorship.

 

An LLC offers some benefits of the corporate structure, such as protecting your personal assets. This form of business offers more flexibility in how you distribute profits compared to S and C Corps.

 

Clearly, there’s a lot to consider when choosing your form of business. You’ll need to think ahead and choose a corporate structure that can grow with your business. Because this is a big decision that can greatly affect your business, you should consult with an attorney as well as a tax advisor to choose the best business structure for your needs and goals.

 

Neither Bank of America nor any of its affiliates provide legal, tax or accounting advice.  You should consult your legal and/or tax advisors before making any financial decisions.

 

About Rieva LesonskyRieva Lesonsky Headshot.png

Rieva Lesonsky is CEO and Co-founder of GrowBiz Media, a custom content and media company focusing on small business and entrepreneurship, and the blog SmallBizDaily.com. A nationally known speaker and authority on entrepreneurship, Rieva has been covering America’s entrepreneurs for more than 30 years. Before co-founding GrowBiz Media, Lesonsky was the long-time Editorial Director of Entrepreneur Magazine. Lesonsky has appeared on hundreds of radio shows and numerous local and national television programs, including the Today Show, Good Morning America, CNN, The Martha Stewart Show and Oprah.

 

Lesonsky regularly writes about small business for numerous websites and for corporations targeting entrepreneurs. Many organizations have recognized Lesonsky for her tireless devotion to helping entrepreneurs. She served on the Small Business Administration’s National Advisory Council for six years, was honored by the SBA as a Small Business Media Advocate and a Woman in Business Advocate, and received the prestigious Lou Campanelli award from SCORE. She is a long-time member of the Business Journalists Hall of Fame.

 

Web: www.growbizmedia.com or Twitter: @Rieva

You can read more articles from Rieva Lesonsky by clicking here

 

Bank of America, N.A. engages with Rieva Lesonsky to provide informational materials for your discussion or review purposes only. Rieva Lesonsky is a registered trademark, used pursuant to license. The third parties within articles are used under license from Rieva Lesonsky. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

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