We’re covering• Getting Started• Business Models (Corp, LLC, etc.)• Taxes• Copyright• CAN SPAM• The FTC and Disclosure
• “The problem with the Internet startup craze isn’t that too many people are starting companies; it’s that too many people aren’t sticking with it. That’s somewhat understandable, because there are many moments that are ﬁlled with despair and agony, when you have to ﬁre people and cancel things and deal with very difﬁcult situations. That’s when you ﬁnd out who you are and what your values are.• “So when these people sell out, even though they get fabulously rich, they’re gypping themselves out of one of the potentially most rewarding experiences of their unfolding lives. Without it, they may never know their values or how to keep their newfound wealth in perspective.” [Fortune, Jan. 24, 2000]
Most People...• Just start working• Hand-shake deals• No written agreements• No plans to scale• Outsourcing?• Cash ﬂow?
SBA Business Facts• 7 out of 10 businesses survive 2 years• 51% last 5 years• Small businesses employ about 1/ 2 the private sector employees• 40% high tech workers• 52% are home-based and 2% are franchises
Reasons for Success• Great Leadership/management• Attract and Attain Quality People• Disciplined Approach• Strategic use of Tech• Use of Trusted relationships (network)• Teamwork and Quality
Reasons for Failure• Lack of Experience • Mixing Personal and Business funds• Insufﬁcient Capital • Poor Credit• Location issues • Competition• Poor Management • Low sales• Lack of a Plan• Unexpected growth
Ten Things Everyone Forgets• State Business License• City Business License• Insurance - business, health, worker’s comp, etc.• Payment and Work Schedule: what’s due when• Taxes- Fill out the forms• Taxes- Deposits to avoid Surprises
10 Things Cont.• Keep track of expenses, deductables (mileage, parking, business meals, phone, gear, internet fees, hotels, etc.)• Separate Personal and Professional money• Business Correspondence- keep it organized, and easily retrieved• Contracts: Get it in Writing• You will get sick and/or need vacation. Plan accordingly.
How Locked In are You? Fully?Combination lock? Cheap plastic luggage lock?
First Steps:• Need to be a good accountant; separate business from personal.• Separate business account (EIN?)• Track business expenses
“Formal” Business• With an LLC or Inc., you separate personal from business• “Limits of Liability”- business does not bankrupt You• You are the caretaker of the “strawman”- Fiduciary responsibility
LLC, Incorporate, or...• Is this you alone, or will you have partners?• Will you have employees, or independent contractors?• What is your liability/growth potential?
If you incorporate:• The Company Corporation- fast, efﬁcient and cheap. (works for LLC as well- please let them know I sent you)• Consider incorp in Delaware (favorable laws and tax rules)
Example: consulting• Project work income; freelance assignments• If income exceeds approx $10K per year, or you anticipate it will exceed 10K, you should consider treating it like a business other than “side income”
Consulting• Time needed to generate business; marketing yourself to ensure steady and reliable income stream (Atty model)• Ability to scale and outsource- you can’t do it all, but when can you afford help?
Example- Retail• Selling stuff online- more than a few E- Bay transactions a month• Reliability is a key- reputation management• Scalability- how much business can you take? Supply/Demand• Liability higher on speciﬁc deliverables
What Do You Want? Web Based Goals Goal Metrics Friends, Fans, Attention Followers, Visits Contact Information, New Leads Data New Customers Conversions Downloads for WhiteLeadership in the ﬁeld papers, ebooks, etc.
The Tax Man• Keep it all separate means also ﬁling taxes for business, paying quarterly deposits, etc.• It also means shielding your assets if things go belly up.• The Tax Man is cranky if you don’t follow the rules.
CAN SPAM in a nutshell• Applies to email, not just bulk mail• Applies if primary purpose is commercial advertisement or promotion of a product or service• No exceptions for B to B• Penalties of up to $16,000, so be careful!
• Don’t use false or misleading header information• Don’t use deceptive subject lines• Identify message as an ad (disclosure)• Tell recipients where you’re located• Tell recipients how to opt out of future email from you
• Honor Opt out requests promptly• Monitor what others are doing on your behalf- including any company you hire to do email marketing for you.• Create your own list and database- buying lists may not be worth the penalty
Avoiding Problems with e-mail• Provide value to your customer• Watch the frequency- no one likes a full inbox• Watch open rates, do A/B Testing• Video email like Talk Fusion- The Jury is Out• Understand mobile platforms
e-mail resources• What Counts Blog• Marketing over Coffee podcast• Blue Sky Factory e-books • Build your email marketing list • Ultimate Guide to Email Marketing
Recommended• The Knack: How Street Smart Entrepreneurs learn how to handle whatever comes up - Norm Burlingham, Bo Brodsky• Lost & Found - Geneen Roth• SBA Podcasts; Available Free Courses (The tech one is REALLY basic)
Do The MathCost Per Lead* = (Total Ad Costs) / (# LeadsGenerated)Total Ad Costs = Direct Ad Costs + Indirect Ad CostsDirect Ad Costs = All Ad Fees + Design Costs + Tracking Costs + Agency FeesIndirect Ad Costs = Administrative Overhead = ($/hr) x (# hrs)Marketing ROI = (Revenue – Marketing Cost) /Marketing Cost
ConsiderCost of a lost customer in terms of lost revenueand-Loss of additional customers due to word ofmouthCost of Retention- what do you have to do tokeep existing customers happy?Churn rate- how many customers leave? Andwhat does it cost to replace them?
Lifetime Value of a CustomerFormula includes: Average number of years a customer does business with you Average revenue per customer per year Estimated costs to deliver products/services
“Social media changes the relationshipbetween companies and customers frommaster and servant, to peer to peer.”
An Ounce of Prevention...• Most small businesses fail because they were undercapitalized (keep the day job)• Be clear up front when mixing friends/family and $$$• Put it in writing (freedom of Contract)
Summary• Write a Plan• Use Freelance Calculators; know your “Burn rate”• Understand Money• READ