In these economic times, it can be hard to understand small business mechanics. Some necessary items to consider include the skills and proficiencies required to open and maintain a small business, the over all advantages and disadvantages of small businesses, as well as the location. Even though things seem so dismal in the economic and business realms, small businesses are something to definitely be considered as they can strongly benefit Mississippi.
Before opening a small business, there are skills and steps that need to be recognized by the individual interested in owning the business. Dr. Tammy Y. Arthur, assistant professor of business at Mississippi College, states that in order to run a small business, individuals must be willing and proficient multi-taskers. “Owners often find themselves doing everything from soothing key clients to hiring new employees to collecting on overdue accounts to cleaning bathrooms. In short, anything that needs to be done. Small businesses don’t run on strict job descriptions,” she states.
Arthur also mentions risk-taking as necessary quality. More than likely, working for a small business is riskier than working for a larger firm. Due to the current economic climate, some small business owners were “pushed” into their entrepreneurship. This means that they were pushed into starting their own business due to job loss. The additional risk here is being able to access control over situations, though most business owners have a strong internal locus of control.
In order to start a new business, there are some steps to be considered. First, decide what kind of business you want to start. “Make sure that your business is something you are passionate about because you will spend a lot of your time on it,” Arthur mentions. Secondly, research the market for your product or service to ensure its existence. “Just because it’s a cool idea doesn’t mean people are willing to pay for it,” again Arthur clarifies. Next, gain experience in that field, if you don’t have any. If there are no paid positions offered, volunteer to work in those fields. Lastly, “get buy-in from your family,” Arthur says. These buy-ins are particularly important if there is a necessity to borrow money in order to get started. “It’s vital if you plan on taking out a second mortgage (one of the most common ways to receive funding) or cashing out your retirement account (which I don’t recommend).”
If potential small business owners are nervous over location in Mississippi, they should reconsider their frets. According to surveys based on such items as income tax rate, state corporate tax rate, state capital gains tax rates, property taxes and average utilities costs, Mississippi ranks in the top third on being “friendly” to small businesses. Within the state there are thriving locations for small businesses. “Businesses both large and small need infrastructure and skilled workers. Small businesses especially need reasonable proximity to market share. This is not found easily in rural Mississippi. Population centers (such as the Jackson metro area, the Gulf Coast and the DeSoto county area) are good bets,” states Arthur. Not only can Mississippi benefit small businesses, their relationship is symbiotic. According to the Small Businesses Administration (SBA), over three-fourths of recent new jobs have come from small businesses. “Small businesses employ roughly half of the private sector workforce. With one of the highest unemployment rates in the country, we need to do all that we can to encourage job growth.”
Some of the advantages of opening a small business are being able to direct the organization where you want it to go, financial reward for better performance, ability to perform different functions and being able to do something you enjoy. The disadvantages can include financial uncertainty, never being away from work, long hours and stress. Unfortunately with the current economic times, these disadvantages may be highlighted more. There are, however, ways to manage some of the issues brought upon by the recession. Oftentimes, small businesses rely on credit cards and lines of credit to meet the day-to-day cash needs of the company. With the current credit crunch, many of these avenues are no longer available. “Cash is the lifeblood of the company; without adequate cash, the organization dies,” states Arthur. She advises that in order to assist with cash flow, small businesses should look at bartering. Also, these businesses, should try to work better terms with their suppliers, maybe receiving extra time to pay. “Cut expenses wherever possible, but don’t skimp on critical areas. You don’t want to weaken your business for whenever the economy eventually strengthens.”
Contact MBJ staff writer Leslie Galloway at email@example.com .