Begin A Business Better Prepared


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Article on business issues, protocol, and best practices for The Monitor

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Begin A Business Better Prepared

  1. 1. Begin a Business Better Prepared By Chelse Benham “Opportunity is missed by most people because it is dressed in overalls and looks like work.” - Thomas Edison Perhaps you, like many people, want to go into business for yourself, but don’t know where to start. An entrepreneurial venture is a risk-taking game because, unless you have endless amounts of cash, success is hardly guaranteed. It takes enormous perseverance, a stable stream of capital and excellent product or service placement to competitively endure in the marketplace. “When you work for a big company you may wear one hat or perform one job, but when you go into business for yourself you are, and you have to be, everything - marketer, accountant, salesperson, etc. There are a lot of different things you have to take into account,” said Pedro Salazar, assistant director for The University of Texas-Pan American Business Development Center. “A lot of times people rush into things while some take forever and never really do anything. The best thing to do is calculate the risks and have an idea of what you want to achieve. Plan, plan and plan.” Web site points out the pros and cons to starting your own business. First and foremost, all you have to do is perfect a system that enables you to: • have as much money as possible going in to your bank account. • have as little money as possible coming out of your bank account. • have fun and enjoy yourself. The Pros: • The initial investment level is decided by yourself or your ability to attract investment. • Many organizations offer support / subsidies / funding. • You have the ability to explore new business concepts / formulae. • All post-tax profits are your own. • No restrictions on your business methods. • Control expansion to suit. • Ability to adapt quickly to changing economic circumstances. • Potential to sell, franchise or float on stock market once business has stabilized. • Great sense of achievement and ability to say 'I told you so'
  2. 2. The Cons: • Comparatively little 'hands-on' help and advice. • Steep learning curve. • May fall in love with the business and forget the point, e.g. to make profit. • Most business start-ups fail in their first year. “On average, the saying goes; entrepreneurs fail three times before they are successful. If you plan to start a business do it in a way, if you make a mistake, that you won’t go bankrupt,” Salazar said. “Starting a Business: Advice from the Trenches” by Kevin Potts, creator and author of graphicPUSH Web site, a resource site for web and print designers, offers a few crucial points to consider when beginning a new business. • Write a Business Plan – The most important thing you can do to prepare for starting and operating your own business. Developing a business plan requires a lot of time and energy, but it’s invaluable for one primary reason – it forces you to come to terms with your business idea. You must decide how you will generate income, what your expenses will be, who your competitors are and most important, WHAT YOUR BUSINESS DOES. This may seem obvious to you now, but write it down. Think about it. What sets your business apart? What service do you offer that is superior or unique? What’s going to put you ahead of the competition? • File for a Fictitious Name – A fictitious name (called a doing-business-as or DBA in some states) is the government’s term for your company name. If you choose HyperGlobalMegaSoft as the start-up’s name, it has to be registered with the state to ensure no one else is using it. This will cost about $100, but prevents you from accidentally using someone else’s registered name, or from someone else using YOUR name. Also note that two companies can usually register the same name for different industries. For instance, Luigi’s (design studio) and Luigi’s (pizza joint). • Funding – Advice in a nutshell: start the business with your own savings or borrow from a bank. I highly recommend the former or a combination that includes it, since it makes you pinch your pennies a little more. If you go the bank route, make sure the business plan is polished to a high shine. This may be a good time to hire a professional business plan writer/ editor. “Make sure you have sufficient capital and take advantage of all the assistance that’s out there like our office,” said Jose Leal, director of the Small Business Development Center at UTPA. “We provide our services for free such as business planning, market, consumer and product research and demographic analysis. We also offer business seminars that help with
  3. 3. business planning, marketing and accounting in addition to special topics. All of these services are here to help clients get ready for business” • Get an Accountant – In starting your business and maintaining its future financial health, there is no greater ally than an accountant. He or she (or they if you go with a firm) will be able to give advice on innumerable aspects of your new venture. They can advise on what type of business entity to start with, setting up bank accounts, a means of invoicing and collecting and more. Most importantly, they also guide you on paying taxes properly and punctually. • Start with a Partner – If you can, start the business with a partner with a different skill set. If you’re the God of Annual Reports, your partner can be the Overlord of Identity Design. • About Your New Office – When you start a business, the option of setting up an office outside your home has dramatic pros and cons that must be weighed carefully. Good: • You have a place for clients to visit if they are local. • Reinforces good image. Proper presentation goes a long way, and making your office appear as if you’ve been in business for years (you didn't tell them you were a start-up, did you?) helps build client trust. • You can write off all office expenses (rent, repairs, phone, etc). This will affect your bottom line drastically. • Gets you out of the house. Having a real place to go to work makes the business more real, and forces you to take it that more seriously. Not-So-Good: • Money out the window. Renting an office costs $250-$10,000 a month, not including the initial deposit. This is a lot of money if you have a thin or inconsistent client base. • Requires additional expense. You will need to get a fire inspection and a certificate of occupancy, not to mention additional phone lines, Internet connection, furniture, etc. • Retain a Good Paper Trail – Make sure to keep a solid paper trail with clients, and that means a real, physical file with hardcopies of proposals, contracts, invoices, time sheets and anything else you can think of that relates to the project. This also includes all financial records, bank statements, receipts, deposit slips, etc. And please, when you sign a
  4. 4. contract with a client, make sure you have a copy with BOTH signatures. Seems like an obvious thing, but you'd be surprised. Don't do any work without one, because legally, you will have a very hard time forcing a delinquent client to pay without one. • Don't Undercharge, but Be Flexible – If there’s one thing to remember from this article, it should be this point. Proper pricing is the one thing that keeps the business alive, on multiple levels. When you charge appropriate amounts for the work, the client will feel like they hired the right people; when you undercharge, the client will know this and take advantage of you by demanding similar rates in the future. • Legal Software – Make sure all the copies of your software are retail versions. Do not use “educational” or pirated software. This is very important, and should be part of the start-up budget. • Separate Personal and Business Finances – Nothing much else to say about this. It will save you innumerable headaches come tax season. • Marketing – Even the most reliable clients have dry spells, so make sure you are constantly putting your company’s name in the marketplace. Word of mouth is the best, but getting truly fresh work usually requires spending money. • The Importance of Image – The importance of maintaining a positive image in the eyes of your clients and potential clients cannot be overstated. Know your firm’s identity so you can project that identity to the customer. The visual identity is critical. Get business cards, letterhead, and envelopes. Design a good logo or pay someone to do it if you’re not a design firm. Resources in Starting Up There are many sites with tutorials and/or sample plans and procedures for taking your idea through the initial review process (will it really fly) and then getting a new business up and running. Just a few are listed here. ...a collection of information and samples for the small to medium size business. Download any of these sample business and marketing plans for free (adobe acrobat) or view them online. Check the Planning Resource Center for more tips. eWeb, the Entrepreneurship Web ( ...lots of info for people wanting to start their own business. Check out the Business Planning section for all kinds of resources to write your own. Start-Up Kits from ...a list of over 40 types of businesses you can explore. Each kit offers industry, market and operations information with suggestions for researching business opportunities and creating a business plan, and links to associations and franchises. NASE, The National Association for the Self-Employed
  5. 5. ...founded in 1981 by a group of small-business owners who recognized they could obtain lower prices for goods and services, which large businesses enjoy, simply by banding together. The NASE represents more than 320,000 members nationwide, and has grown to be the largest association of its kind, representing the smallest of small business. SCORE, the Service Corps of Retired Executives ...SCORE has more than 12,000 volunteer business counselors ready to share their expertise with you through free and confidential business advice—helping you succeed in business. SCORE business counselors are well-versed in how to develop effective business plans and create strategies for business growth. Best Banks for Small Business at ...good places to turn to for loans. Updated annually by Raising Start-Up Capital ( ....a guide to finding funding from Inc Magazine. Includes a variety of suggestions for sources, along with resources. The MoneyTree Survey ..."a quarterly study of equity investments made by the venture capital community in private companies in the United States." A joint project of PricewaterhouseCoopers, Venture Economics and the National Venture Capital Association. " rankings of the most active venture capital firms, listings of deals by state. If you are looking for money, or are looking to work in this industry, this is a good resource for you. They even have job listings. The Venture Reporter is produced by Rising Tide Studios (RTS), a New York-based integrated media company that produces business-to-business intelligence online, in print and in person. Take the risk and go into business for yourself, but go into it well informed. The odds are against you, but at some point they’ll begin to shift in your favor, but that will take staying power and planning. ”Only those who dare to fail greatly can ever achieve greatly.” - Robert F. Kennedy