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The grim economic outlook and stagnant job market has led some people to strike out on their own. It is never easy to start a business but when the economy is in bad shape, it is even more difficult. As millions of Americans face unemployment, many see the opportunity despite the risks and are becoming their own boss.

For some people, being a successful entrepreneur is the ultimate revenge for losing a job or not being hired. Other people are forced to come out of retirement due to losses suffered during the recent stock market crash. Many older workers are delaying retirement but after a layoff, have had trouble finding a job.

Small business watchers report that many of these individuals are creating businesses that operate from home. As with any self-owned business, people can run into issues if they do not do their research or plan adequately. One area that many new entrepreneurs underestimate is startup costs. Some do not save enough money, requiring them to take cash advances from credit cards or use payday loans to cover the gap.

Other new business owners spend money in the wrong areas. When capital is limited, money is better spent on advertising than a fancy Web site and business cards. Building the client base is what brings in the money to spend on these less important items. Early decisions can affect future success so though moving quickly is important, so is thinking things through.

When people need cash to finance their business, they often turn to bank loans. These have become harder to get and more collateral is often required. People who do not have home equity are using credit cards, merchant cash advances, and factoring. Which financing option is most viable depends on the type of business and total startup costs.