Starting Your Own Business, Slides of Business

Download Starting Your Own Business and more Slides Business in PDF only on Docsity! Chapter IV Starting Your Own Business Surveys among men in the Army showed a huge interest in a business of their own. Many men in other branches of the service also want their own business. What were the reasons behind this desire? "The Gl Bill of Rights" One reason behind it was no doubt the passage of "The GI Bill of Rights." Parts of it are aimed directly at helping the would-be inde- pendent businessman. One major benefit is the Government guarantee of part of the loan you make from some other source. Some individuals have the mis- taken idea that the Government gives veterans money to get started in business. It doesn't. Here are the facts : 1. The Government does not make either a gift or a loan to veterans. But it will guarantee up to half of the amounts borrowed by you under certain conditions, provided that the amount guaranteed does not exceed $2,000. For example, if you borrow $3,000 from a bank or other source, Uncle Sam pledges that if you are unable to repay the full amount, he will pay back up to 50 percent, or $1,500. If you borrow $5,000, the same promise is good for $2,000 of your loan, since that is the maximum amount. You're still responsible for the debt, however. The advantage of this assistance is obvious—it helps you borrow money. 2. On the part of the loan which has been guaranteed the Govern- ment helps you even more by paying (lie interest for the first year. 3. The money must be used for the purchase of business, land, build- ings, supplies, equipment, machinery, tools, livestock, implements, or for the repair, alteration, or improvement of farm buildings or equip- ment. The purchase price must be "reasonable" and there must be a fair chance of success in the undertaking. Your experience and the usefulness of the business will be considered in judging your chances for success. 4. This guaranty is for all veterans who have been discharged under other than dishonorable conditions and have served ninety days on active duty since 16 September 1940. Those who have been discharged because of injury or disability incurred in line of duty are eligible for the guaranty no matter how long the period of service was. Another benefit of the GI Bill is the financial help you'll get if things don't go as you expect them to when you start your business. If you are fully engaged in self-employment and your net business earnings are less than $100 a month, you may receive the difference between your ;>ctual net earnings during the previous month and $100, for a period up to 10% months. 23 What's Been Happening in Self-Employment? During the war the trend was downward among the self-employed. In April 19-44, there were about one million fewer persons in their ranks than there were three years before.1 The main reasons for the decline were growth of the Armed Forces, cut in consumers' goods, and rationing.2 Retail trade, the largest nonagricultural self-employ- ment field,3 showed sharp reductions in each of the following:4 Apparel and accessories, appliances and radios, auto dealers, drugs, eating and drinking places, filling stations, general merchandise, general stores with food, grocery stores, hardware, home furnishings, liquor, lumber and building supplies, meat and seafood, shoes. Savings and the large backlog of demands may give small business a postwar shot in the arm. From 500,000 to 1,000,000 new concerns may be required to satisfy all these demands and to fill out the ranks of self-employment which were thinned during the war. Advantages If you want to be your own boss, do things your own way, and possibly make a lot of money if the business becomes a success, a business of your own is what you want. You'll have a variety of duties—buying, selling, keeping records, advertising, and all the other activities a business must do—and probably plenty of opportunities for personal contacts. You may not need much money to get started, but it's important to remember that what's easy for you may be just as simple for thousands of others. Disadvantages But is being on one's own all gravy? Not by a long shot! It may mean competition with all others who own their business and with large companies who can afford to buy national advertising, and the problem of surviving periods of loss. It means dealing with a buying public who are shrewd bargainers for their money's worth. The average life of all business in the United States is a little more than five years, but one out of three new concerns vanishes within a year; only half last long enough to celebrate their second birthday.1 And the small business suffers most. Failure isn't a little thing, either. It doesn't mean just going out of business, for in addition it can wipe out your savings, sink you in 1 Research Memorandum No. 11, Information and Education Division, Army Service Forces, U. S. Army, 15 August 1944. 2 Research Memorandum No. 2, Information and Education Division, Army Service Forces, U. S. Army, 20 May 1!)44. 3 Research Memorandum No. 12, Information and Education Division, Army Service Forces. U. S. Army, 25 August 1944. * Research Memorandum No. 10, Information and Education Division, Army Service Forces, U. S. Army, 4 August 1944. 24 ing, on-the-farm advice by experts, soil analysis, land appraisal, and other aids to financing, managing, and cul t ivat ing a farm. Experience and personal qualifications are extremely important, and adequate capital may spell the difference between success and failure if you buy your own farm. You must continue to invest in your farm in hours and dollars until it reaches a paying basis. Working hard physically in all kinds of weather, fighting insects, weeds, floods, and droughts, continuous care of your livestock and crops, working in com- parative isolation with few of the city conveniences—those arc some of the things you must consider, particularly if you were city-bred. But there are plenty of advantages, too—security from unemploy- ment, independence, a healthful outdoor life, variety, small personal and household expenses, the satisfaction of seeing things you have planted and protected grow into something useful, a good place to bring up children. Commercial Services One of the most popular fields of self-employment is in providing commercial and personal services such as auto repair shops; barber shops; beauty parlors; cleaning, dyeing, pressing, alteration and repair shops; laundries; photo studios; printing and publishing shops; radio repair shops; shoe repair shops; watch and jewelry repair shops. From 1940 to 1942, service establishments suffered the highest per- centage rate of discontinuances among all industries. An upturn in activities during the postwar years can be looked for when materials and the people to handle them become more available. Manufacturing The manufacturing field is relatively unimportant for one-man enterprises. Next to mining, manufacturing ranked lowest in the proportion of workers who were self-employed in April 1944.9 The business death rate among small manufacturers is higher than for the larger manufacturers, but lower than compared with other small busi- nesses. •Research Memorandum No. 2, Information and Education Division, Army Service Forces, TJ. S. Army. 2(5 May 1944. 27 Some of the lines requiring little capital are baking, barrel staves, baskets, rattan and willow ware, wooden furniture, cement blocks, candy, metal work, glass specialties, lamp shades, sawmilling, work clothing, umbrellas, leather specialties, fruit and vegetable canning, commercial and job printing. Your estimate of starting expenses must include the cost of equip- ment and its installation, rent, stock of materials, operating and living expenses. Trade skill, a knowledge of your product, managerial skills (such as accounting, selling, advertising and production methods), putting in long hours are all important items to consider. Professions In some professions, the self-employed constitute a large percentage of those engaged in them; dentistry, osteopathy, and medicine are ex- amples. Earnings among professional men and women are much higher than among the United States population as a whole. Even in the depression year of 1935-36, the families of salaried and inde- pendent professional workers had higher incomes than others in the United States.10 Maximum earnings were made by those over 35 years old, so again the importance of experience comes into the limelight. The decline in college enrollment is significant in connection with opportunities in these fields. From 1939 to 1943, there was a decrease of more than 200,000 in the number of students in institutions of higher learning, occasioned almost entirely by the war. Now an increase over prewar registration is expected. Testing Yourself Deciding whether you want to go into business and all the other problems related to that decision isn't something you can do in a few minutes. If you find that you have solved all your problems regarding this question within that period of time, it's 100-to-l that you've missed something important. Here are two lists of ques- 10 Census, Unitofl States. 28 tions wliich yon can ask yourself to find out how you actually feel about this subject. The first group is general, the second more specific. General 1. Do I get along well with people? 2. Am I willing to face the possibility of long hours and infrequent or nonexistent vacations ? 3. Do I like to figure costs, solve many small problems, make de- cisions that involve money? Am I good at those things? 4. Am I willing to accept responsibilities? Is my immediate family willing to accept its responsibilities? 5. Will my family responsibilities put financial drains on me (hat may interfere with my going into my own business, or maintaining it? 6. On the basis of my experience and skill, do I really know enough to start a business of my own? 7. What line offers the best opportunity for me? Does its future look promising? 8. What are the advantages of the business I have chosen? 9. What are the disadvantages of the business I have chosen ? Specific \ What Federal, State, or local regulations or laws will help me get started? ("The GI Bill of Rights" discussed earlier is a good ex- ample.) 2. Are there any Federal, State, or local regulations or laws which will make it hard to start or stay in the business I have chosen ? 3. Where can I get advice and information on my specific business problems? 4. Where should my business be located? 5. Shall I start a new business or buy an established one? 6. Shall I lease or buy the property needed in the community I've decided on ? 7. What types of competition are there in the business I have chosen ? Can I meet them ? 8. What kind of business organization should I choose—single pro- prietorship, partnership, corporation? 9. How much money will I need for a safe start? (Take into con- sideration taxes, materials, rent, insurance, interest, repairs, tele- phone, transportation, bad accounts, equipment, labor, plus your per- sonal expenses.) 10. How much credit can I get and where? 11. What insurance do I need? 12. Where will I get the necessary equipment? 13. What are my contacts for raw materials or merchandise? 14. How many employees will I need and what types? 29