Start a Business

If you are struggling to find work post-incarceration or if you have a passion for something specific, consider becoming an entrepreneur. This career route has many benefits over traditional work. As a small business owner, you can take control of your circumstances, while building a business to support yourself. A successful entrepreneur is disciplined, creative, willing to try new things, adaptable, and persistent. Learn more about how to start a small business below. Plus, use our free Start a Business worksheet to help guide you in the process.

There are programs that can help you create a business, and some are aimed at individuals who were formerly incarcerated. These programs offer many tools, such as education, training, and financial resources.

• Inmates to Entrepreneurs hosts a free eight-week online course and a self-paced online course to teach individuals previously incarcerated how to plan, launch, and execute a business idea.
• Start Small Think Big pairs individuals with free marketing, legal, and financial assistance to help them achieve their business goals.
• Defy Ventures offers a 14-week entrepreneurship bootcamp available both online and in-person.

Additional Programs Where Your Criminal Record Will Not Affect Eligibility

• Rising Tide Capital offers a 12-week business academy to teach business planning and management. The course is free, although you may have to pay a small fee for supplies. They also have financial assistance programs to help get your business up and running.
• Small Business Development Centers (SBDC) offer individualized mentorship and counseling to help you plan and grow your small business at little to no cost.

The first step is to decide what type of business you want to start. Being an entrepreneur does not mean you have to invent the next million-dollar idea. Simple business ideas can be very profitable. Click here for tips from others who started their own business.

Businesses fall into one of two categories—products or services. Decide whether you want to sell a physical product or provide a service.

• Providing a service can be anything from landscaping, car washing/detailing, or meal prepping to electrical, plumbing, and HVAC services.
• Products can be handmade or purchased specifically for resale.

When coming up with your business idea, think about your skills and what you enjoy doing. Consider taking a career assessment to help you. Does your idea require a certain license or certificate? Many trades require a license, but don’t let that be a barrier. Search trade schools and programs.

When you are your own boss, there is nobody else to hold you accountable. You are responsible for all business operations and making sure the business is profitable. Setting goals provides a way to measure your success. Goals should be SMART (specific, measurable, attainable, relevant, and time-bound). Download our worksheet to help you set your business goals.

If this is your first business venture, consider something that involves low start-up costs. Think about what you already have access to and what supplies you need to start a business. Do some online research, and talk to other small business owners to get advice.

Compile a list of items and the associated costs to calculate how much money you need to get started. If you plan to ask others to invest in your business, they will likely want to know how the money will be spent. Be thorough, and consider expenses for the first year.

When deciding the price of your products or services, take time to research how much your competitors charge. Consider the cost of materials, your time, and other expenses, then price your products or services accordingly. Your prices should fall somewhere between the lowest and highest competitor rates. Know what your products or services are worth, and price accordingly—even if it is too expensive for some people.

The simplest pricing strategy for small businesses is called cost-plus pricing. This method involves finding the break-even point for your product and adding a percentage markup to the price. This method works better for products than services.

When running a business, you want to make sure you are not just breaking even, but that you are earning enough profit to support yourself financially. You can estimate your profit in three steps using this formula: Profit = Revenue – Expenses.

1. Calculate estimated revenue. Revenue is the money generated from the business. You can estimate monthly revenue by multiplying how many units you think you will sell or how many services you will provide by the cost per product/service. Use market knowledge or previous months to get an estimate of how many products or services you think you will sell.
2. Calculate estimated expenses. Business expenses are the costs incurred to operate your business. Monthly expenses can include cost of inventory, rent, payroll, or supplies. Add up your monthly expenses.
3. Subtract estimated expenses from your estimated revenue. To estimate business profit, subtract monthly expenses from monthly revenue. The difference between these two numbers is how much money you will make, also known as your net income.

If your estimated monthly revenue is not enough to turn a decent profit, you will have to adjust your business plan. You can either raise your prices, try to lower your costs, or research business ideas with higher profits.

It is recommended to keep business expenses separate from personal expenses by opening a separate bank account and credit card. This will make it easier for accounting and tax purposes.

• When applying for a business credit card, apply in the company’s name.
• Keep a separate record of business expenses, so that you can easily identify and claim operating expenses on your tax return. Regardless of how your business finances are set up, you will have to pay taxes on your business earnings. TurboTax is a great resource that makes tax filing simpler.

The amount of money you need to execute your business idea will depend on your startup and operating costs. There are many resources available to help small business owners find funding.

Grants are provided by government and charitable foundations to fund new ideas and projects. Plus, grants do not have to be paid back.

• Grants.gov makes it easy to search and filter for grants.
• Some corporations offer money and other business-related services through contests like FedEx Grant Contest and Incfile Fresh Start Business Grant.

Tip: Apply for a free Data Universal Numbering System (DUNS) number. It is required when applying for government grants and loans. Plus, having a DUNS number can help you build credit for your company.

Business loans are another option. However, unlike grants, they must be paid back and usually involve interest. Loans consider your credit score and may have other requirements such as minimum income or revenue. Luckily, there are loans available for those with poor credit. Short-term loans and Small Business Administration (SBA) microloans can be good alternatives to traditional business loans.

Tip: Run a soft credit inquiry on Credit Karma to check your credit score before applying for a loan.

Crowdfunding is a donation-based way to of raise money. The benefit of crowdfunding is that there are no eligibility requirements, and you do not have to pay back the money. However, the online platform will take a small percentage of donations raised.

• IndieGoGo allows you to raise funds for a variety of business ventures, as well as other nonprofit and community projects.
• Kickstarter focuses on creative projects that are shared with others, such as technology, art, and events.
• GoFundMe is typically used to raise money for causes such as medical, animal, or education, but campaigning for business funds is also allowed.

Sole proprietorship: A sole proprietorship is a business that is owned and run by one person. With this type of business, you are not required to register your business. As a sole proprietor, your legal business name defaults to your name unless you file for a Doing Business As (DBA). A DBA allows you to register a business name for free, which can provide some separation between you and your business.

Limited Liability Company (LLC): Registering your business as an LLC or a corporation gives you legal separation from your business. It also makes it easier to raise capital because you are seen as a lower-risk borrower. However, there is a lot more paperwork and registration required, so you may want to focus on operating as a sole proprietor first. If you are interested in registering your business as an LLC, contact your state Bureau, Secretary of State, or Business agency to find requirements and costs.

Corporation: A corporation is similar to an LLC in that they both are separate entities from their owners. An LLC is owned by one or more individuals, whereas a corporation is owned by shareholders. A corporation provides a lot of legal protection to its owners from personal liability but, operating a corporation requires extensive record-keeping and reporting.

Insurance requirements vary depending on location, type of business, and number of employees. Check your state requirements, and comply with all insurance requirements.

It is recommended that, even if there are no insurance requirements for your business, you purchase general liability insurance for protection against common customer or client incidents such as bodily injury or property damage. Accidents happen, and it is better to be safe than stuck with high legal or medical expenses.

If you have employees other than yourself, you must purchase worker’s compensation insurance to cover any on-the-job employee injuries.

Learn more about the different types of insurance here.

Once you set up your business, it’s time to get your first customer. Begin by letting friends and family know about your new business. Consider offering your products or services for free or for a donation to gain exposure and generate interest.

• Social media is a free and effective way to promote your business. Platforms such as Instagram and Facebook allow you to reach a broad audience. Down the road, you can purchase ads or boost your posts to further grow your business.
• Print business cards to distribute around town. Be sure to include the type of services or products you offer and your contact information.
• Print and post flyers or ground signs. Local coffee shops, libraries, and restaurants often have community boards where you can advertise.
• Talk to local businesses to see if they will advertise your company. For example, if you start a handyman business, speak to your local hardware store, and ask them to post your business cards or flyers.

Customer service is important in maintaining customer loyalty. Happy customers are more likely to return and recommend your business to others. Listen to customer feedback, and be involved in resolving any issues. Include something special wherever you can, such as a handwritten thank-you note with your signature to add a personal touch. These small details do not go unnoticed, and they can leave a lasting impression on customers. Here are some examples of ways to provide excellent customer service:

• Referral program (reward customers for referring others to your business)
• Customer appreciation days
• Loyalty program (reward individuals for being repeat customers)
• Never let a customer leave unhappy
• Resolve issues quickly and remain calm
• Add extra touches, such as thank-you notes

As demand for your products or services increases, you may need to hire employees. This may change your business infrastructure and requirements. Most states require you to provide worker’s compensation insurance for employees in case they are injured or become ill on the job. Once you have a certain number of employees, you are also required to register your business with the government.

Before hiring an employee, make sure it is truly necessary and that you can afford the payroll.  Here are five signs it may be time to expand your workforce:

1. Customer service is suffering.
2. You are overworked, and the quality of your product or service is taking a hit.
3. You are spending too much time on administrative work.
4. You are saying “no” to new business.
5. You need to bring in new skillsets to meet the needs of your customers.

Review our list of interview questions to help you in the recruitment process.

As your business grows, you may face new challenges. Find a business mentor who can guide you through the expansion process—someone who knows how to navigate the legalities of owning a small business and can help you follow the proper procedures. A good place to start is to network with other local businesses and ask them for advice. Additionally, SBDC provides some counseling and tools to help with business expansion.