Start a Small Business

The story: Sam’s tutoring test

Sam plans a tutoring business with Maya, who suggests a small test before spending money.

1. Narrator: Sam is great at math and wants to start a tutoring business.
2. Sam: I’ll buy a website, business cards and a new tablet first. Then customers will come.
3. Maya: What if nobody signs up? Test it first. Offer a few sessions to younger students at the library.
4. Narrator: A small test shows whether people will pay, before Sam spends much.
5. Narrator: Sam tracks startup costs, keeps business money separate and checks whether the city needs a permit.
6. Sam: Eight families signed up. Now I know people will pay.
7. Narrator: Test small, then grow.

What you’ll learn

1. Start with a problem

   A business solves a problem people will pay for, like lawns to mow or students who need help. Find possible customers and ask what they’d pay before you build anything.

2. Test small

   A small test, like a few sessions or one weekend sale, shows whether people will pay. Testing small limits what you lose if the idea doesn’t work.

3. Count your costs

   Startup costs are what you spend to begin, like supplies, tools and ads. Revenue is the money customers pay you. Keep business money in a separate account or envelope, so you can see if it’s working.

4. Rules and contracts

   Some businesses need a permit or license, and selling food has its own rules. Minors can’t sign some contracts, so a grown-up may need to co-sign for accounts or leases.

Key words

entrepreneur

someone who starts and runs a business

startup cost

money spent to begin a business

revenue

money customers pay a business

permit

official permission to do something, like sell food

Also called: business license

Common questions

Do I pay taxes on business money?

Yes. Profit from your own business counts as income. The self-employment tax lesson covers when you must file and how to set money aside. Keeping business money separate makes it easy to track.

Remember this

Test small, then grow.

Try it: Three ideas, three tests

1. List 3 business ideas that solve a problem people have.
2. For each one, write a small test that costs little, like a few sessions or one sale.
3. Note any permit or rule to check first.

The whole mission; no account or app needed.

Live facts

Numbers that change over time, with when they were last checked and where they come from.

• Licenses and permits for a small business

  Source: U.S. Small Business Administration(opens in a new tab)