Kerry Hannon

As a child, Belinda Stubblefield loved playing the banker in Monopoly. She resold the gum her mother bought for her to classmates for a nickel a piece. Then she stashed the cash in her "rainy day" piggy bank, which was shaped like a little girl with an umbrella over her head. "I made a good profit," Stubblefield says with a laugh.

It's little wonder that today Stubblefield is satisfying her entrepreneurial drive after decades of working for large corporations. Stubblefield left the relative safety of her job at Delta Air Lines with a generous buyout package in hand. Six months later, she opened a wine shop. "I wanted to be an entrepreneur for a long time," she says. "My biggest question was what I wanted to do."

She's not alone. More and more workers are exiting the once secure realm of corporate jobs and starting their own small businesses. Trouble is, only half of small businesses will survive beyond five years. It takes far more than a brilliant idea to succeed in starting your own small business. Here are some steps to help you kick-start your own small business and land among the winners:

1. Find a mentor

Connect with someone in the field you're entering for guidance. Check out, a site dedicated to small-business groups, or SCORE (, a nonprofit that provides education to entrepreneurs. At SCORE, working and retired executives and business owners donate their time and expertise free of charge in person or online. The Association of Small Business Development Centers, a joint effort of the Small Business Administration, universities, colleges, and local governments, provides no-cost consulting and low-cost training at about 1,000 locations.

2. Do the prep work

You may have to study marketing, finance, and employment law. Sign up for a community college or certification program to get the necessary skills. You can begin by contacting your town's or county's Small Business Development Center.

A three-hour course in the essentials of starting a business or E-mail marketing might cost little.

Stubblefield's move into the wine trade was a combination of inspiration and market research. "I love fine wines, although I'm not a connoisseur, but there wasn't an upscale wine shop near where I live -- an upscale, predominantly African-American section of Atlanta," she says. With an M.B.A. from Harvard and executive marketing jobs at Procter & Gamble and Nestlé under her belt, Stubblefield had the chops to enter the consumer retail trade. After painstaking research, she went the franchise route with WineStyles, a national wine retail boutique with more than 100 independently owned locations. Her total cost: $250,000.

3. Write a business plan

There's no strict model to follow, but in general, a simple plan--which you'll have to submit to get a loan or other financing--should be about 20 pages. Here's what you'll need:

-- An executive summary that explains what your company will do, who the customers will be, why you are qualified to run it, how you'll sell your goods and services, and your financial outlook.

-- A detailed description of the business, its location, who your management team is, and what your staffing requirements are. You'll also need to include information about your industry and competition.

-- A market analysis that targets your customers more specifically, including age, gender, and where they live. The analysis also will describe your sales and promotional strategy to reach them.

-- A realistic forecast of start-up outlays--cost of raw materials, equipment, employee salaries, marketing materials, insurance, utilities, and fees for attorneys and accountants--and how much you expect to sell and to earn.

[ For more details review Creating Your Business Plan ]

4. Line up sources of funding

Here are some ways to find the money to get started:

-- Savings: Most start-ups are funded with personal savings. (This is where a severance package comes in handy.) It's advisable to set aside at least six months of fixed living expenses. Try not to dip into your retirement savings: You'll be subject to withdrawal penalties and income taxes and lose the tax-deferred compounding that could serve you well in retirement.

-- Credit cards: Use plastic with care. It's fairly easy to tap into, but this should be a last option. Most cards have double-digit interest rates, a very high cost of capital to carry on your new company's books.

-- Home equity loans: This is an appealing option because the funds are usually taken as a lump sum that you can pay off over time. In this housing market, though, qualifying for such a loan can be tough. If you have equity in your home and a credit score above 700, it's worth exploring. You may also qualify for a tax deduction on the interest on a loan up to $100,000.

-- Friends and relatives: Money is often lent interest free or at a low rate. Be sure to put the terms in writing so that there are no misunderstandings about interest and repayment. Be forewarned: Money can wreak havoc on relationships should things not work out as planned.

-- Banks and credit unions: A tight lending environment has made borrowing a struggle. A solid business plan and a shiny credit record are prerequisites. You might try a bank that's familiar with you or your industry, or one that is active in small-business lending.

To find a bank that offers SBA-guaranteed loans, check the "Local Resources" section of the agency's website ( Keep in mind that a lender will still want you to put up collateral, usually in the form of a real estate asset. Plan to have some capital or equity that you personally put into the business. Lenders want you to have some skin in the game, so to speak.

-- Angel investors and venture capital firms: These individuals and firms invest in exchange for equity or partial ownership. But they are typically overwhelmed by requests for financing and are exceedingly cautious with their funding. Some have a mission. San Franciso-based Investors Circle, for example, favors small companies that address social issues and environmental concerns. One source of venture capital is the SBA's Small Business Investment Company Program.

5. Purchase health insurance

Some sources to check for availability are,, and the National Association of Health Underwriters website (, which can direct you to a local agent. Sole proprietors can deduct the premiums for medical, dental, and long-term-care insurance. Consider a health savings account that permits you to contribute pretax money that you can use tax free for future medical expenses. For individual coverage, you can contribute up to $3,050 to an HSA in 2010. For families, the maximum is $6,150. And you can contribute an extra $1,000 if you're 55 or older. For a list of insurers that offer these plans, see

6. Hire an accountant

It's critical to know which business expenses are deductible. Careful record keeping is essential, and having a pro to guide you will come in handy. Go to the source to find what's deductible: IRS Publication 334, "Tax Guide for Small Businesses." Useful information is available at the IRS Small Business and Self-Employed Tax Center on the agency's site.

7. Don't neglect retirement savings

You have two basic ways to set aside pretax savings: a simplified employee pension, or SEP IRA, and an individual 401(k). With a SEP IRA, you can contribute up to 25 percent of your net self-employment income, up to a maximum of $49,000 in 2010. With a solo 401(k), you can contribute up to $16,500. In addition to the 25 percent contribution, self-employed business owners can contribute $16,500, plus $5,500 more if they're 50 or older.

8. Accept what you can't have

"For my birthday, I'm going to ask my husband for an assistant," Stubblefield says. "The business is constantly on my mind. There are no days off." In truth, that's fine with her. Since she opened the wine shop, Stubblefield and her husband have become co-owners of a restaurant, and she's a joint venture partner in Paradies-Atlanta LLC, an affiliate company of the Paradies Shops, an airport and specialty retailer. That's a long way from a little girl's rainy-day piggy bank brimming with nickels.


Small Business Guide


How to Start Your Own Business: Kick-Starting a Business of Your Own

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