1.

Get some experience

If you've never clocked a day of work in your life, you might consider taking a job before striking out on your own -- even if the thought of doing time in a cubicle makes you shudder. Work experience in the field you want to break into may be the most productive use of your energy. Think of it as a paid research position. In a couple of years, you can give your business a go. By then, you'll have learned the ins and outs of the real world and reduced the risk of total inexperience. "Financial literacy is the language of owning a business," says Irwin Rudick, the vice president of the San Diego chapter of SCORE, a non-profit firm that gives advice and training to small business owners. So, if you're still in school, take classes in business, management or entrepreneurship. If you've already graduated, sign up for night classes. Durovic, an international business and marketing major, says that his formal business education has been integral to his success. "Nothing brings the classes to life like running your own business," he says.

2. Build a winning team

Bring on people who complement your skills and fill in the gaps. Mary Beth Metrey studied Spanish literature at Georgetown University, and had always dreamed of opening a boutique. But her short stint in retail didn't provide all of the details of running a shop. Heather White, her hometown friend from Wyckoff, N.J., had studied fashion design and merchandizing. Naturally, Metrey asked White to be her business partner when she opened a shop in Washington, D.C.

3. Fight inexperience with advice

Universities and alumni networks are great sources for mentors. Durovic found business plan help in a Georgetown entrepreneurship class, and he continues to consult with his former professor on business decisions. Ryan Comfort, a grad of the University of Pennsylvania's Wharton School and founder of the online art sales business Comfort2020.com, also found costcutting connections through his school's alumni network. The Internet is another great place to get free advice. SCORE, for example, boasts a mentor network of more than 10,000 mostly retired entrepreneurs nationwide. You can search by related background and meet the mentor locally or by email. You can also get feedback online from thousands of peer entrepreneurs at YoungEntrepreneur.com. And seek out local organizations. In 2005, New Yorker Leah Alani, 29, founded SophieSays.com, an online boutique for stationery and gifts for special events. She gained the confidence and the practical skills to accelerate the startup date after taking a four-week class with Ladies Who Launch, which has local chapters in metropolitan areas.

4. Write a bulletproof business plan

One of the biggest mistakes a young entrepreneur can make is simply failing to write a business plan. There is no other single process that can be more useful in beginning business problem-

solving than addressing the risks and thoughtfully forecasting by writing the plan. Don't fall into the excuse that you have the business plan in your head. "That's a fantasy," says SCORE's Rudick. "It only becomes a reality when you put it into writing because when it's in your head, no one else can see it." Not only is it a good planning tool, but a solid business plan is also your key to raising capital -the money you need to get your show on the road. Although you may not have had a time to build a long credit history to show that you are financially responsible, you can demonstrate your penchant for using sound judgment by crafting a document that sells your business and lures financers on board. It's your greatest opportunity to fill the credibility gap. A business plan will showcase your product or service, how you plan to make a profit and the exceptional team who can bring the business to success. It should include market data and tests to show the service or product will sell, the essential skills that will drive profits, estimates for startup costs, projections for sales and profits, a break-even analysis and long-term goals for the company. If, while writing the business plan, you decide from your research that the business isn't as sensible or profitable as you originally thought, the plan has served its purpose. Rather than cost you money and effort, you've spared yourself any loss. Once you've crafted a plan that satisfies you, show it to your mentor or entrepreneur friends and ask for their input on how to improve it. Find inspiration from sample plans at www.bplans.com. But be sure your plan shows your original thinking for the unique situation so that readers can see how the team problem-solves and relates to the business, says Stever Robbins, business consultant and startup veteran of nine companies. The top-rated Business Plan Pro ($100 for standard; $200 for premier) from Palo Alto Software will walk you through the entire planning process. It includes cash flow projections and a useful tool to help you understand when you'll break even. It also includes freebies like a company logo crafter and a guide to small business law.

5. Raise money
Your business plan should overestimate how much money you will need from the beginning because it's easier to raise money before the launch than it is after you've failed to meet projections. To minimize risk, limit the amount of personal money that you put into the business, says H. Irving Grousbeck, co-director of the Center for Entrepreneurial Studies at Stanford Business School. Also, you'll be tempted to use credit cards, but credit card debt is the most expensive debt you can have. Try to steer clear. Clutching a business plan that sells, go first to a bank to request a loan. "Banks are conservative, and they're still in business," says Robbins. If you have a FICO credit score of 680 or more and you're seeking a loan for less than $50,000, you'll likely be granted the loan, says SCORE's Rudick. Even if the banker can't offer you a loan, ask for his or her advice about how to improve the plan so you can try again.

If your credit history is too short, friends and family may be your best shot. But tread carefully: Set the loan up like a formal business transaction that explicitly states when it will be repaid. A smart way to manage a loan between family or friends is with a professionally-administered loan from CircleLending. The company will send statements and track payments -- and provide healthy distance.

6. Follow the money

Count on a cash cushion to live on for at least the first six months because you likely won't have an income. Conserve your money before you start. (See Build Your Financial Foundation to learn more.) Once the business launches, regularly compare your actual income and expenses to your original forecasts to take the pulse of your company. Intuit's QuickBooks software ($200 and up for Pro and more advanced versions) features many bookkeeping tools and services such as expense tracking, check printing and payroll managing. Another plus is that you can export your information to Business Plan Pro to simplify your comparisons. And stay focused on your financial goals. One of the biggest causes of failure is diffusion of focus, Grousbeck says. The first year you should have two over-arching goals: meeting or exceeding your projections and treating your customers right.

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Here are some of the key questions you will find answered in this book:

When starting a business, what are the legal issues involved? What form of incorporation is better suited to which type of business? What tax issues are involved? How do I start a business and what are the pitfalls? How do I market my business in the absence of significant funding? How do I get funded? What are the basic accounting concepts I should be aware of? What is a business plan and how should I build one?

The brief table of contents of the book is as follows: 1. 2. 3. 4. 5. 6. 7. Getting started Ideation Forms of Enterprises Funding Basic Accounting and Taxation Import and Export Licensing Trademark and Patenting

8. Rules for NRIs and Foreigners 9. Building a Business Plan 10. Marketing on a Shoestring 11. Website and Branding 12. Women Entrepreneurs 13. Templates

Here is some of what you can expect 'on your own.' Potential for higher earnings Make your own hours Make decisions about the direction of your company and your career More responsibility Potential for favorable tax benefits No unemployment insurance or worker's compensation, as an independent Income may be erratic or difficult to collect Cost of doing business may be more than you anticipate If you're working at home it may be a challenge to define your work hours and manage interruptions and distractions

Initial Steps -- Before You Decide to Quit Your Day Job 1. Create a business plan. How will you do business? How will you attract clients? How much will you charge for your services or product? Who are your vendors? How long will it take to establish yourself? How long before you break even? 2. Construct a practical budget. Do you have the necessary funds to get your business started and to keep it running through your break-even point? Are you prepared to seek outside funds in the form of a loan or investment? How long can you survive without an income?

3. Will you set up office in your home initially, or rent space? Working at home can save money. You may qualify for tax deductions. However, will it harm your professional image, and is your home space appropriate for your business? 4. Select the legal form for your business. (Corporation, Limited Liability Company, etc.) This decision is crucial as it may affect your tax liability and method, your Social Security tax responsibilities, your privacy, and your personal liability for debts. If you decide you want to follow your dream, here are tasks to accomplish in the early days of your new company. 1. Establish an accounting process, and pick a year end date. One approach is to purchase a desktop accounting software package. Another option is to hire or contract an accountant. 2. Select your company name. This involves verifying that the name is available, and registering it in your state. If you would like a Web presence, check if your desired domain name is available through a service such as Network Solutions. If you plan to protect your name and/or logo with a trademark, you can check the ability to use your desired name by visiting uspto.gov. 3. Obtain the necessary business licenses and permits. This will vary by your location and type of business. 4. Obtain an Employer Identification Number from the Internal Revenue Service. 5. Set up a Dun and Bradstreet DUNS number by visiting dnb.com. 6. Discuss your business plan with your insurance agent. Together, determine your needs for business insurance. 7. Loans, if you need them. Don't assume that you can easily get a loan. Take time and discuss your options with a professional financial advisor or your banker. A. Personal Loans Banks, credit unions and life insurance policies are avenues to explore when seeking a loan. Be prepared to have your credit history scrutinized and in many cases you'll need collateral or a sponsor. B. Business Loans There are three types of business loans that you may qualify for. Have all of your documents ready, including your business plan and pro forma, and speak to your banker about all available options. If you have steady accounts receivable (AR) that are not delinquent, you may seek a loan secured by your AR. You also may seek a loan to be secured by your inventory or equipment.

If your business holds real estate, you could apply for a loan secured with real estate. If none of the above is right for you, visit the Small Business Administration at sbaonline.org. 8. Is venture capital for your business? Venture capital firms (VC) are an option if you are planning a high and rapid growth business in which your investors have potential to make five to ten times their initial investment. VCs usually invest between $250,000 to $2,000,000 in a company. In return they take considerable ownership of the company. They generally make their decision on the strength of the management team and the viability of the business model in the current market. If your company does not fit this profile, that is OK. It may be better to spend your time seeking funds in other ways. If you are interested in venture capital or recruiting angel investors, visit garage.com. You'll find some great resources online, and in addition, they conduct a seminars several times a year called Boot Camp for Start Ups. The book, "Financing the New Venture" by Mark Long is a good primer if you're new to raising funds. 9. Select a bank and establish banking accounts. 10. If you have decided to incorporate, you may need to set up an Operating Agreement, create Bylaws, establish a Board of Directors, distribute share or unit certificates, and many other tasks related to the establishment of a corporation. Your legal advisor can help you determine what you need to do. 11. Create templates for vendor contracts, client contracts and other legal documents such as a Non Disclosure Agreement or Transfer of Rights. 12. Set up accounts with a printer, office supply vendor, and other special vendors your business requires. If you're on a tight budget, you may want to check out vistaprint.com for their low cost and free business card offers. 13. A lawyer would be helpful in the following areas: o Establishment of your business o Client and vendor contracts o Partnership agreements and negotiations o Corporate set-up, if so desired o Leases o Employment and labor issues o Trademarks, copyrights and patent issues o Tax planning How to Select a Lawyer:

o o o

Contact your local Chamber of Commerce or professional associations for a referral Check out lawyer candidates at MartindaleHubbell.com Check status of your lawyer candidate with the local chapter of the American Bar Association, or the national office at (312) 988-5522.

14. An accounting professional would be valuable in the following ways: o Understanding of the consequences and benefits of each business form (i.e., C Corp, S Corp, LLC, etc.) o Set up of an accounting system and procedure o Tax planning o Preparation of tax documents o Payroll issues o IRS audits