by Elizabeth M Young

Created on: September 04, 2009   Last Updated: June 25, 2010

There are many roadblocks to starting a business. Whether it is a small and part time venture or a major leap into a costly franchise or catalogue store operation, it is wise to read the traffic signs, especially the ones that tell us whether to stop, wait for passing traffic, or go.

Starting a home based business requires a detailed examination of the home! If the kitchen is not up to code for a catering operation, or there are safety roadblocks for a childcare operation, these issues must be dealt with as part of the business startup plan. If room is required for storing supplies and for manufacturing the product, or if the neighbors absolutely do not want customer traffic on the street, a home based business can be in trouble before it even gets off the ground.

A major warning sign is lack of preparation, knowledge, or planning for a business venture. Not having even a rudimentary business plan, not having ideas as to where to market the product, and not having the faintest clue as to the cost, labor, supply chain, and other facts about making or selling the product are red lights. Worst of all is the budding "entrepreneur" who has no idea as to what particular business is interesting or desirable to them.

If a person has contacted the Service Corps Of Retired Executives and gone through any of their programs, then a great opportunity has been missed. Other warning signs include lack of effort to research matters that are as simple as getting a business license, doing a cost analysis to make sure that sale price will cover all expenses plus salary. A person should know in advance about tax deductions for supplies, equipment and other allowable expenses. When there is not even a basic understanding of how to keep books and records for a small business, it is no time to start one.

Another warning sign is: No customers! If a person has only done work, produced products, or cooked the world's best pie to give to others for free, there is no way to know if paying customers will show up to actually buy the product. It is good to start small and build a loyal clientele, learning how to improve work or product on the way before quitting the day job and taking out loans for a full time operation.

Another sign is: lack of capitalization or cash reserves. Many businesses can take years before they see a profit. Catering from home is a prime example. Money is put into brochures, overly fancy service ware and the fringe issues when some should be held back for dealing with the unexpected, such as undiscovered code violations in the kitchen.

The last warning sign: No real passion. Sometimes it is sheer passion for the work, the product, and the goal accomplishment that can keep a small business owner going when times are discouraging. Sometimes people are talked into starting a business that may offer good income, but involves work that becomes tiresome over time because there is no love or passion for the work.

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