How To Start and Run Your Own Business! By
Gabor Olah http://IncomeAutopilot.com
DISCLAIMER AND/OR LEGAL NOTICES The information presented herein represents the view of the author as of the date of publication. Because of the rate with which conditions change, the author reserves the right to alter and update his opinion based on the new conditions. The report is for informational purposes only. While every attempt has been made to verify the information provided in this report, neither the author nor his affiliates/partners assume any responsibility for errors, inaccuracies or omissions. Any slights of people or organizations are unintentional. If advice concerning legal or related matters is needed, the services of a fully qualified professional should be sought. This report is not intended for use as a source of legal or accounting advice. You should be aware of any laws which govern business transactions or other business practices in your country and state. Any reference to any person or business whether living or deal is purely coincidental. By reading this report you agree to be governed by the Privacy Policy, Terms of Service, and Purchase Agreement.
Introduction Welcome! If your goal is to start your own business, you're at the right place. What I'm going to be giving you is a process, or a blueprint if you will, for launching your own business from scratch. You can take the steps as quickly or slowly as you would like. The speed at which you complete them is completely up to you and your individual circumstances. I want to say very clearly that I am pleased that you are considering starting your own business. I have a confession to make, I do have a selfish reason and that is I believe as more and more folks begin their own businesses, everyone will benefit, including me. Why do I say that? Well, what I mean, is when people in general increase their productivity, everyone is helped by that increase in productivity. I'll give you an example, ok? If I had a business where I manufactured computers, let's say they are laptop computers, and I figured out a way to make laptop batteries last twice as long without any increase in weight. I don't know if you have travelled much in your business (if you have or have had a job) but if you take your laptop with you away from your familiar environment, it is sometimes a problem to find a place to plug in. So battery life is a big deal. So in my example of the laptop batteries, if I can increase the battery life and let's say I do it without any increase in cost, I have helped my customers get more output. And that productivity boost will have some impact on everyone they associate with in their business, especially their own customers. The other piece to this is the belief that most people can be more productive working in their own business than in a job. Notice I said CAN be, it's really up to you to govern yourself and your time and what you do with your time, but most people realize there are huge inefficiencies in corporate America, particularly in the typical office environment. And in my experience the same can be said of many blue-collar type fields as well. Your boss wants to get the most work out of you that he or she can (that's their job), but in most cases they are not really that interested in developing you as an individual, and of course that's why many of us went to college or took some specialized training and also why we want to keep learning all the time. We recognize that it's our individual responsibility to be good stewards
of the talents and skills that we possess. The bottom line is that when you have your own business, you are free to do WHAT you want WHEN you want, you're not hampered by company protocol or office politics, and I truly hope that you will make your aim to maintain a high output level. The plan that I have laid out will work whether you are online, offline, or both. Sometimes marketers tend to just jump right in and start selling without dotting all of the "i's" and crossing all the "t's" as I'm going to suggest you do. My way isn't the only way, but it is a way that WILL work if you do all the steps. For the person that craves a methodical approach, this should be perfect for you. Now let's jump right in to the ten steps. Some of these may take longer than others. They are laid out in order, to give you a methodical process for both preparing yourself mentally and doing the required legwork that will help ensure your success. The steps are: 1.
Self Assessment
2.
Market Research
3.
Decision Time
4.
Business Planning
5.
Financing
6.
Startup Paperwork
7.
Marketing Plan
8.
Assemble Your Support Team
9.
Evaluate
10.
Launch
Chapter 1: Self Assessment Knowing Your Situation A.
Examine your life. Take stock of where you are in life. Part of this has to do with your age, which I'll be discussing later, but what I'm asking you to focus on now is your responsibilities, both current and future.
B.
Take inventory of your commitments. 1.
Financial Commitments. Are you behind on your bills? Are you responsible to support others (spouse, children, parents)? It may be that you need to adjust your time-frame, don't abandon your business plans but maybe you'll need to continue working your job for a while, or find a job so you'll have some income to pay your bills. Can you find a job that would further your business plans, for example work as an assistant with someone already in your field? 2. Time Commitments. A new business will consume your time, at least in the launch stages. Are you prepared to go the distance? Do your current responsibilities have any "wiggle" room in them in terms of how much time you need to give them? For all the talk about the four hour work week --espoused by Tim Ferris in his book by the same name-- when I look around at most business owners, online and offline, most of them appear to be working 10+ hour days, five or six days a week.
And while what you do is ultimately up to you, also consider that most businesses take more time than their owners initially thought they would. That means a couple of things to me: first, if I'm going to have a different experience than the norm, I'm going to put some concerted effort into doing some things differently structurally than most: checklists and so forth and constantly be analyzing my businesses processes, and second, it's going to behoove me to choose my business wisely. It doesn't have to be something I'm in love with, but it has to be something I can learn to love because I'll likely be spending a great deal of time in it. If you have children, consider getting them to work with you in your business. Up until very recently, this was how most children learned to work: either from their parents or by apprenticing to a professional chosen by their parents. We have gotten away from this model but I think it has much to commend it. The family business model is an excellent one and if the particular business is chosen wisely, the children will receive experience in a variety of tasks. And this may take some of the sting out the time required to run the business. C.
Future Plans. Of course, even if you don't have big responsibilities right now, what is on the horizon for the near future? Will you be getting married? Having a child? Factor those realities into your plans as well. We can't plan for every single contingency, but by thinking about the big potential conflicts ahead of time, you will be less likely to give up when the inevitable problems arise.
Knowing Yourself A.
Your Age. Are you 18, 48, or 68?
Youth has the advantage of more time available. You have more time to make mistakes and take it slow if you want to. I think many young people should consider the apprenticeship model, as I alluded to earlier. You can literally have someone pay you to learn by working as an assistant to someone else. And today, you can even do this from anywhere, as a Virtual Assistant or VA. And you can be making connections all along the way. Another benefit is that you will essentially be in business for yourself, so you can take many of the tax advantages available to business owners. Of course, anyone can work as a VA so I didn't mean to single out younger people, but I do want to impress upon you that you age should factor into your plans. Exactly how will depend upon you and your outlook. B.
Your Past Experiences. Here is where the not-so-young have an advantage. We have simply lived longer and have seen and experienced more. Presumably we are wiser because of it. Do you have some unique set of experiences in your background that can be capitalized on in the marketplace? People tend to discount their own background, experiences, and skills. Not everyone has seen and experienced what you have. And that makes you unique.
C.
Your Education. Frankly, formal education is becoming less and less important in today's economy, though it should be considered. Take stock of your formal education, informal education such as conferences and seminars, and self education.
D.
Your Work History (if any). It almost goes without saying that you should examine your own work
history when assessing a business to start. Many of us have gained some unique set of skills in one or more jobs, and we tend to discount them. "Everyone knows how to do what I can do", we think. Well, the reality is just the opposite. There are many people right now who want to know what you know, and will pay to get that information. People pay for all kinds of information, including specialized information that will save them time or just satisfy some need they have to learn more. People pay for information about baseball cards, for information on bird watching, for all types of self improvement information and, of course, for business-related information. E.
Your Natural Strengths and Weaknesses This one is a little harder for most people to discover on their own. What you may want to consider is asking several close friends to list four or five things you are really good at doing. And prepare one of your own too. When you have several lists completed, compare them and see what keeps appearing on most of the lists. You want to capitalize on your strengths, and find ways to overcome your weaknesses. By overcome them, I mean that you should do whatever you can to make sure they don't make for your undoing. For example, if you're not a detail person, get someone else to do your accounting.
F.
Consider Taking a Formal Test. There are many books and tests available that will walk you through the process of understanding yourself, and I have been through many of them myself. If I were to pick just one, I would say to take the KOLBE test. The KOLBE test was recommended to me by my mentor and I’m so glad that he did. You can find it at KOLBE.com. The last time I checked, it was $50. I took it as did my wife, and there is a youth version that my older
children took as well. Phew! This chapter is a little longer than most of the lessons will be, but it is a lot of foundational material that you should get out of the way early. On the next page you’ll find this week’s assignment.
This Week’s Assignment Your lesson this week is to answer the following questions. You may either print out this sheet or write them out on a separate sheet of paper or on your computer. •
Are you behind on your bills?
•
Are you responsible to support others (spouse, children, parents)?
If so, do you have savings set aside (or another source of income) to cover you for a time while you get established? •
How much time do you have each week to devote to your business?
•
Do you have any expected responsibilities that may require your attention in the near future?
•
What is your age? (this question is only important insofar as it impacts our life goals, our strengths and our limitations)
•
What unique background, experiences, and skills do you have?
•
List your educational achievements (formal and informal).
•
List the jobs you have held.
•
List any volunteer positions you have held.
•
What are my natural strengths and weaknesses? (Enlist the help of friends or family members and/or take a formal test).
Chapter 2: Market Research Knowing Your Market A.
General Economic Conditions Be aware of the economic cycle we are in right now. In periods of economic downturns, as we have experienced for a few years now, people's spending habits are different than when the economy is booming. Unnecessary purchases are cut back. That doesn't mean you should rule out any particular market based on the economy, but you may have to work a lot harder to get the same sales you could if things were brighter. Marketing and positioning come into play here.
B.
Specific Market Research By now you should have some idea of potential market that you want to explore, based on your work history and other interests. If you are not sure, you want to be in a market where people spend money. Makes sense, doesn’t it? Don’t get caught up in the trap of trying to “create” new markets; i.e. manufacture demand where people are willing to spend money where they were not before. One easy test is to check a local magazine rack to see if there are one or more magazines on the topic. OR if you want to start a brick and mortar business...just look around and see if there are other people doing what you want to do. Come up with at least 3-4 potential markets and get an understanding of who the market is and their demographics. How often do they buy, how much do they spend… and ultimately, what motivates them to buy in this market? This knowledge will help you later when crafting your sales messages and may also be a guide to joint venture projects to join and create. If you get stuck in the research phase, there are numerous places
online to do market research... eBay, Amazon, other book sellers, Google trends, and many other places that are in most cases free. Once you narrow down your choice to a handful of markets, consider actually participating in that market as a consumer, if you have not already. Buy a product and take note of the sales process, and learn all you can. C.
Competition Competition is another form of market research. You can learn a great deal from what other people are doing to serve the same market. If there are no competitors, then you may want to consider that your marketing idea is not the best because there are very few untapped markets today. In other words, there may not be enough business in that market. It is not a hard and fast rule, but especially if you are starting out, you should work where you know people are buying. When you find competitors in your niche, you should study your competitors carefully and look at how they communicate, and observe the sales process... if they do upsells and down sells, and related services, coaching and extended programs. What they do and how they do it will teach you about what works, if they are successful. Ideally, you will find a market with lots of demand and you then identify some segment that is underserved. For example, there are thousands of people every day that are looking for dog training information, and many sellers of that information. What you could do is serve a segment of that market and be the best at doing so. You might focus on a certain breed of dog or a certain type of training.
This Week’s Assignment List 3 markets you are interested in serving, and study the competition. Feel free to start another page if you are studying more than 3 markets.
Market #1 Name: _____________________________________________ What I learned about this market (buyers and prospects):
What I learned about the competition in this market:
Any underserved opportunities:
Market #2 Name: _____________________________________________ What I learned about this market (buyers and prospects):
What I learned about the competition in this market:
Any underserved opportunities:
Market #3 Name: _____________________________________________ What I learned about this market (buyers and prospects):
What I learned about the competition in this market:
Any underserved opportunities:
Chapter 3: Decision Time A.
Target Market In the chapter, I suggested that you pick 3 or more markets to study in depth...now select one that seems to be the best bet for you and has the most viable market. You may need to narrow the market down. Especially if you are marketing online you may need to focus on a narrower niche. As an example, if you chose bicycling, you should look at mountain biking, or biking over 50, or bike racing and the reason is that the tighter the marketing niche, the more clearly you'll be able to understand their needs and desires. This is important because your goal should be to become a trusted advisor for your customers. The more directly you can speak to their real or perceived wants and needs, the more they will trust you. This task is much easier to accomplish if you narrow your niche.
B.
Develop your USP USP stands for “Unique Selling Proposition�. What makes you unique, standing out from everyone else? The average person is hit with thousands of marketing messages every day, through the various media they encounter. But your prospect only cares about his or her wants and desires. That is how it should be! The best way to get and hold their attention is to communicate exactly how you will benefit your prospects, in terms that make sense and matter to them. There's a lot of helpful material available on the issue of crafting your USP. Jay Abraham teaches extensively on the subject, as does Mark Joyner in his book The Irresistible Offer.
C.
Company name When choosing your company name you should look at the following criteria:
D.
1.
Do you want your own name in the company? If you plan to sell the company later, probably not.
2.
If you want your domain name to be the same as your company name, then you will have to check to see if the domain name is available. If so, then buy it before you register your company name with your state, or your domain name may be gone.
3.
Try to convey some benefit to the prospective customer in your company name (try using your USP in the name). A good example of this is the company Guaranteed Resumes. From the name, I can tell they provide a resume service, and in some sense offer a guarantee for their service.
Domain Name You should have at least one website, describing what your company does and giving customers and prospects a way to connect with you on the web. A domain name can be purchased for about $10, and once you have found the one you want, you should buy it even if you're not ready to put up your website. Otherwise, someone else may buy it in the interim. If you already have one or more domain names picked out and are comfortable with the process of selecting a domain name, great? If not, I’ve included some pointers to guide you. These are some tips that I have picked up by experience. None of them is unique to me but I think it's helpful to review them because if you're just starting out, you might not be aware of all of them.
First, in almost all cases, you will want to choose the .com name. There are three reasons for this. A. Some browsers will automatically put in the .com if the person
types a domain without the extension.
B. Many people put in the .com unconsciously, so if you choose a
different extension, you will be sending traffic to someone else's site.
C. Some experts argue that the .com has a slight search engine benefit. There are some exceptions, the main one being if you are doing business in another country and you primarily sell to people in that country, then you will likely want to choose that country's extension. For example, in the United Kingdom, the extension is .co.uk. In Australia, it's com.au, and so forth. Now why are people sometimes tempted to use something other than the .com? Well, the reason is that many of the good .com names are taken, and so people look at the .net, .org, or other extension. While that might be acceptable for an informational type site or if you're not a commercial enterprise, for your company's main web site you should go with the .com. The second factor in choosing a domain name is you want it to be easy to spell. In other words, you will want to avoid words which have multiple ways of spelling, or are easily confused with other words. Examples of these words would include the word, "to". Is the word "to", "t-o-o", or "t-w-o"? If someone types in your domain name but gets even one character wrong, the traffic will not go to your site and may even end up at another person's site. So you can see that selecting a name with easy to spell words is a must. The third factor in choosing a domain name is you want it to be easy to say over the phone. If you're talking with someone on the phone, or you have a radio ad, or a recorded interview and you mention your domain name, the person will have to write it down or remember it later if they are going to visit your site. Therefore, easy to spell words are important, as I just mentioned, but also consider things like having words that end in the same letter that the next word begins with, like SamsSports.com. This can be confusing for the end user, is there one
"s" after "Sam" or two? Also avoid the use of dashes for the same reason. It's difficult to convey to someone unless in print. The fourth factor, and this is a little harder to get a handle on, is the domain should be memorable. If you can include some alliteration, anything to make is stand out, it will be to your advantage. A great example is Ralph Wilson's site WilsonWeb.com. And that is also why domain names that are too long can be a mistake; they are often simply too difficult to remember. Now I've spent a lot of time on domain names, and it's important because the domain name is your real estate on the internet. It's where you are located. It's been often stated for a brick and mortar business that the three most important factors are location, location, location, in other words the actual real estate where you are located. And on the internet it is no different. There are many tools available to help you select a domain name, and one that I like is domaintools.com. One other point about selecting names, and this refers both to domain names and business names, there are professional naming companies. There really is a science to it and while I wouldn't recommend this step for everyone, it may be worth consideration if you’re willing to pay the fee. E.
Location (If Physical Business) If you will a brick and mortar business, obviously it needs to be housed somewhere. Even if you will only be operating virtually--on the internet or via mail order-- your office will need to be located somewhere. Will it be in a spare bedroom, or dedicated office space in your home? I can tell you from experience that this is a challenge with young children in the home.
One way around that challenge is to discipline yourself to get up early--before the kids do-- and get as much work done as you can before the kids get up. F.
Business Entity Your choice of business entity is an important one, and has at least three aspects: legal, tax, and image. The legal aspects mainly have to do with liability management. You want to have liability protection to counteract the effect of someone suing you unjustly. A properly structured business entity will protect your personal assets even if you business loses everything. The tax aspects refer to reducing your taxes to their absolute minimum. I have in mind here Federal taxes, though you will also probably have state and local taxes you must pay. I recommend doing some research on your own, and then going to an attorney and CPA or Enrolled Agent for advice on your choice of business entity. An attorney will be more interested in the legal aspects of your choice, unless they also specialize in taxation, and many do. The CPA or Enrolled Agent will be more in tune with taxation issues. Some attorneys are also CPAs so bear that in mind as well. I'm going to recommend that you get several recommendations before seeing professionals on this issue, and then try and get some sense of how much they are going to charge to give you the advice, and whether they are amenable to having you file the documents yourself if you choose. Another strategy is to decide which tax preparer you are going to use, and ask for their recommendation on a local attorney to advise you on the entity issue. The third aspect, image, may or may not be important to you. The
prestige of a corporation is important in some markets, and in others it doesn't matter.
This Week’s Assignment What is the target market you’ve selected?
What is your USP?
What company name have you chosen?
What domain name have you chosen?
Where will you conduct business?
Which form of business entity have you selected?
Chapter 4: Mission Statement/Planning A. Mission Statement Here's a helpful definition of a mission statement: A Mission Statement defines the organization's purpose and primary objectives. Its prime function is internal - to define the key measure or measures of the organization’s success - and its prime audience is the leadership team and stockholders. A mission statement is what you place on your wall, to remind you of what you are doing and why. B. Business plan, including costs A business plan is often required if you go to a bank for financing, and we'll be talking about that in a later section, but in reality it should be completed for any business...whether financing is required or not. All of the research you conducted and the decisions you made will be reflected in your business plan. There are many guides available to help you with your business. One resource for U.S. residents is your local SCORE chapter, where you can get help with your business plan if necessary. In essence you are putting to paper what your business is, or will be, what it will be doing, what are the challenges you will probably face, and what will be the result of your operations? It doesn't have to be long, convoluted document. A well written business plan can help you stay on track if you lose track of what you're supposed to be doing. If you bring on employees for key positions or even joint venture partners, your business plan can help to communicate what your business is trying to achieve.
This Week’s Assignment Locate a good resource for writing a mission statement, and prepare one.
Similarly, write your business plan, using a guide if required.
Chapter 5: Financing Identify potential sources of funding if needed It may be that you will be financing the startup yourself. If so, that will simplify your life immensely. If you do not have funds required to finance your startup, other options include: •
Personal loan from family or friends
This is an area in which you will want to tread lightly, if at all. Many relationships have been soured by misunderstandings and broken promises when friends and relatives borrow money. If you decide to go this route, keep the transaction as businesslike as possible. Don't assume that anyone must loan you money just because they are your friend, father, brother, what have you. Remember, the money they possess, they have probably worked very hard to earn it. Whatever you do, don't adopt the "entitlement" mentality. They don't "owe" it to you. Have an agreement written. It doesn't have to be as detailed as a bank loan agreement, just state how much you are borrowing and what the terms are, including penalties for late payments. •
Investment by family member or friend
A similar option is for a family or friend to invest in your business. Give them a percentage of your company. I wouldn't recommend this option for most people, again due to the potential for misunderstanding. There may be differences of opinion as to how much involvement the investor should have in your business. Be aware of those pitfalls before proceeding. You will also want to ensure that the business you select will be amenable to this arrangement, especially if you will be allocating expenses, revenues,
and profits on percentage other than the shares in the company. •
Bank loan
Of course, a bank loan is always an option too. If you have done a good job with your business plan, it will make the process much smoother. For many small businesses, what we are talking about is an SBA loan. What is an SBA loan? An SBA Loan is a business loan that is made by a local bank. The loan is guaranteed by the United States Small Business Administration. If the borrower doesn't pay the loan, the SBA steps up and pays back the bank for a portion of the loss. The SBA guarantee encourages the bank to make loans that is would not make, if the guarantee were not in place. As you might expect, there's a number of qualifications and hoops you must jump through. The positive side of programs like this is it gets experienced professionals to look at your business or business plans, whether that makes you comfortable or not. Whatever option you choose to finance the startup of your business, any funds of your own that you can include will induce confidence in your business. If others can see that you believe enough in yourself to risk your own money, they will be more likely to do so too. There are numerous examples of people who have borrowed money for their business startup and had it backfire, whether borrowing from more traditional sources such as banks or from family or friends. One positive example is Debbi Fields, the creator of Mrs. Fields' cookies. When looking for startup funds for her business, she was discouraged from even trying by her family, and almost all of the bankers she approached wouldn't touch her business. This was in the late 70's. One banker did finally agree to loan her the money, at 21% interest. That was clearly a gamble, and in her case, as we all know, it paid off. She is
probably a multi-millionaire today due to her tenacity in doing whatever it took to get her business off the ground and running successfully. Today, she could have started an internet-based business, for very little money and used the funds from her business to finance her cookie business. I want to be clear: I think the best scenario is not to have to borrow money at all. If you must borrow, negotiate the best terms you can, and do whatever you must to pay it back.
This Week’s Assignment Do you require funding for your business?
If so, where will you seek these funds?
Chapter 6: Paperwork Not only must you have sufficient funds in place to begin, there is going to be a great deal of paper work in the beginning. A.
Initial startup paperwork: City/County/State/Federal I'm assuming that the first step in this process has already been completed; namely the creation of your business entity. If not, that should be your first step in the startup paperwork process. There are at least two reasons for this, first, in the process of creating your entity, you or your representative will have selected a name that is not a duplication of another business name within your state, and second, you will report this business name and entity type to the IRS when signing up with them. The creation and naming of your business entity is filed with your Secretary of State or equivalent. Also, at the state level: •
You will probably need to get a license from your state department of licensing.
•
If you have a state income tax, you will need to create an account through which to file and pay your business income taxes
•
If your state has sales tax, you will need to apply for a resale certificate if you'll be manufacturing goods or purchasing for resale, and create an account with your department of revenue or equivalent, to whom you will pay any collected sales tax.
By the way, I recommend setting up a liability account in your financial system for "sales tax payable". Whenever you receive sales tax, make an entry for the sales tax that you owe to the state, and don't spend
it! Keep track of the total payable so that you don't spend money that doesn't belong to you, and not have it when it's time to pay it. If you have employees, you will probably have to file documents for: •
Industrial insurance
•
Unemployment insurance
If you will hire minors, there are often special work permits you are expected to obtain. In addition, depending on your type of business, there may be additional licenses or permits specific to your type of business. How does one find out about them all? It's not always easy. You may want to use some or all of the following methods: •
Retain the services of an experienced accountant
•
Ask others in similar businesses
•
Call the various agencies and ask questions
•
Research online or at your local library
At the federal level, you will need to register your business and obtain an Employer Identification Number or EIN. Now there's a few cases in which an EIN is not required, generally if you're a sole proprietor with no employees, but I'm going to suggest you obtain one for privacy reasons. Often there are forms that require a federal tax ID, and if you don't have an EIN, you're stuck with using your Social Security number. You may also need a business license from your city or county, and one or more permits to perform certain functions. No one likes to have to obtain these, but they are a cost of doing business. If, for instance, I owned a brick and mortar store or operated heavy equipment, I would have to deal with my county to get required licenses and permits. You will want to check with your own city and county to find out what they require.
A good accountant can handle most or all of the above paperwork for you, although you will generally need to sign the applications. B.
Ongoing paperwork: City/County/State/Federal Much of this ongoing paperwork will be related to taxes. You will have taxes at the federal level, in most cases at the state level, and possibly the county and city level. Not only must you factor in paying these taxes, the process of computing them and filling out the required returns is not always simple. Here's a couple of tips to help you get a handle on them. First, create a calendar on which you list all of the required returns. This can be handled in different ways. I like to use Google calendar, it's very easy to set recurring items that repeat every week, month, year or whatever, and I can share my calendar with whomever I choose. Many people like to use the scheduling feature in Microsoft Outlook. If you want to go low tech, you can just keep a schedule in a 3-ring binder and fill it out once a year, adding to it as necessary. For maximum effectiveness, you will actually need two entries for each return, one for the actual due date and the other for the date you will be doing the work, because you don't want to fill them out at the last minute. For example, your Federal income tax return will be completed once per year, though your estimated tax payments will be due once per quarter. If you have employees, you will have a 941 tax return to complete once per quarter. This is how you document your withheld Federal payroll taxes and the employer's side of Social Security and Medicare tax. Your federal unemployment tax return, if required, will come due once per year. Be aware that Federal taxes generally must be deposited on a more frequent basis, either estimated in the case of income taxes, or actual in the case of employment taxes.
At the state level, you will probably also have an annual income tax return, and if you collect sales taxes, you will be reporting and paying those once per month or quarter. If you have employees, all states of which I am aware will have industrial insurance returns to file and pay, along with state unemployment tax. I've just hit the highlights here. Unfortunately, there may be other ongoing requirements as well. No one likes paying taxes, but they are a cost of doing business. If you ignore them, you will pay dearly in the long run. So do whatever you can to reduce your taxes legally, and make it your aim to get them paid on time. If you follow my advice in this section, I believe you will find keeping up with them much easier. The second thing you can do to keep up with ongoing paperwork is create checklists and informational sheets if you or someone on your team is completing these, versus an outside professional. An outside professional will generally know what do without your help and also remember that they do many of these returns on a fairly frequent basis. The reason for this is simply to save time and aggravation. Some of these returns will be filled out only once per year or every three months, and often there will be one or two steps that are difficult to remember. By creating your own personalized checklists to follow each time, and including reminders about problem areas as you discover them, you will be miles ahead of the person that has to recreate the wheel each time. The third recommendation I have for keeping up with paperwork, is put all of your startup paperwork in a 3-ring binder for easy access. You will receive a notice from the IRS with your Employer Identification Number, and each state and local agency will have something similar for the various accounts and records you are responsible to report on. Keeping it all accessible in one location will make your life much easier later. I personally like to use sheet protectors for this purpose, plastic sleeves that you slide pages into. While taxes and record keeping is required, it's not going to keep you in business.
This Week’s Assignment Who have you selected to take care of the startup and ongoing paperwork for your business?
Chapter 7: Marketing Plan The next step is creating your marketing plan and doing test marketing. Now we're getting to the reason you are in business in the first place. It's not to pay taxes or to comply with government regulations, but your purpose is to provide something useful in the marketplace, something that consumers value and are willing to spend money to acquire. A marketing plan is simply the methods and media you plan to use to reach your prospects and future customers. You will probably have more than one method, and the exact mix and frequency of contact is going to be different for each business. To be effective in this, you must do two things: First, you must know your market, you must know what drives them, what causes them to take action... and you should always be increasing your knowledge by doing research. Are your customers predominantly male, female, or an equal mix? Are they homeowners? What is their income level? Second, you should test to determine which marketing methods and media are valued most by your prospects and customers. Here are some of the media that are available to you: •
Website
•
Video
•
Email marketing
•
Affiliate marketing (paying others a percentage of every sale they bring to you)
•
Direct mail (letters, brochures, postcards, samples, trial offers)
•
Teleseminars
•
Informational local seminars
•
Cold calling (in person or telephone)
•
Radio
•
Television
•
Billboard
Methods or techniques would include: •
Money back guarantee (almost a must in many markets)
•
Trial offers (a limited time or quantity for a small amount of money or free)
•
Free support or coaching to accompany a related product or service
•
Upsells
•
Down sells
Now some explanation on the latter two. Upsells and downsells are used commonly on the internet, but they are not restricted to online sales. When the McDonald's employee asks, "Do you want fries with that?" they are doing an upsell. You've already decided to buy and they are asking if you want to buy more. A down sell is where you decline the offer, and some less expensive option is offered. This technique is often used in telemarketing, and can be used in many direct selling environments. Test marketing: Here is where the "rubber meets the road" to use a worn out cliche that is nonetheless very appropriate to the topic at hand. Once you have a pretty good handle on your demographic and the means by which to reach them, now is the time to see if you can connect with representative members of your market. You need to know whether people are willing to pay for what you are offering. If you're offline, you can try pitching your offer to people who are in your demographic. You may have to get creative to do this. Here are a few ideas: Find some public place where your target market frequents, and get permission from the business owner to leave a fishbowl or box where people can leave their business cards or fill out an informational card (if your target is not business people). Offer some free service that encompasses part of what you are offering, and also promise that one person will receive a gift certificate to the restaurant, hardware store, or whatever is appropriate.
This step will increase the chances of the business establishment's owner saying "yes" to your plan. Collect the names for two to four weeks, draw a winner (have someone at the store do the drawing, do it with as much fanfare as possible), and then start calling the names with your free offer and pitch. See if you can get interviewed on a local radio station, and see if they'll allow you to make a special, limited time offer to listeners. Local newspapers will often print news about new businesses that people have started. Follow the radio interview advice above. Do a free one or two hour informational seminar and see if anyone shows up. This can be a great option; you can audio or video tape the event for future marketing promotions, and you can make a short offer at the end. Online, you have other options, and many of them will not cost you a penny. If your target market frequents forums, become an expert in that forum by contributing helpful posts, especially if you can promote your products and services in your forum signature. Marketing on eBay is a tried-and-true method of doing test marketing, and it still works in many markets. If you're willing to spend a little money, Google Adwords is a great way to test. You can include as many ads as you like, and make them compete with one another. You only pay for ads that are clicked on. You can drive the traffic to a survey page, offering something for free if your prospects fill out the survey and give you their email address. If you have a list of email addresses, you can become an affiliate for products similar to the one you are selling, and take notice of which offers and products your prospects buy most. You can ask that list to fill out a survey. Or you can simply offer them a special deal on *your* offering, provided they tell you what they think people will pay for it. If you have a relationship with someone who has a list of names of people in
your market, see if they will interview you or do a review of your product, send the interview or review to their list, and give them an affiliate commission on any sales.
This Week’s Assignment What have you learned about your target market, and how will you reach them?
Chapter 8: Assemble Your Support Team Your support team is going to be vital to your success. There are many businesses today with their owner as the sole employee, and the only way to be successful is to build a support team. In truth, you could be building your support team from day one, and you should start in earnest now. I'm going to suggest that your support team will exist on multiple levels: Employees - now this is not going to apply to everyone but if you do have employees, they will become part of your support team, especially those at the highest level. Independent contractors and suppliers - you may depend on local services to carry out needed or vital functions for your business, or they might live across the country or on the other side of the world. Either way, you must have some confidence that they will do what they say they will, and do so on time. This includes businesses which supply raw material, components, or wholesale complete products that you resell. Professional service providers and advisors - these are paid professionals, such as accountants and attorneys, that you depend upon not only to provide services, but to advise you in terms of "what if" scenarios, to give you options when problems arise, and to be proactive about letting you know about pitfalls further down the road. It may also include technical consultants, marketing advisors, or others depending on your specific business. Peer groups - if you can join a networking group, offline or online, you will have a resource to turn to when necessary. If you don't know of one, start one! Online, there are thousands of groups devoted to every topic imaginable, and if you can't find one, it's easy to start one on Yahoo groups or Google groups.
Mentors - finding someone who has gone before you can be a fantastic resource. They are often available to ask questions and to help you solve problems. Often you must pay several hundred dollars per month for the privilege, so you may not want to engage a mentor right away but you should consider doing so in the future. Collectively, all of the above: employees, independent contractors and suppliers, professional service providers and advisors, peer groups, and mentors, are your support team. John Donne said, no man is an island, and it just as true today as it was in the 17th century. You need people around you who can be strong where you are weak, who have specialties you don't possess, and who have seen what you have not seen.
This Week’s Assignment What support team members have you assembled, or do you need to assemble? Employees:
Independent Contractors:
Suppliers:
Professional Services Providers:
Advisers:
Peer Groups:
Mentors:
Chapter 9: Evaluate Consider the effectiveness of your test marketing. Take note of what you have learned from the extent of the support team you have gathered thus far. What appears to be working, and what doesn't? This is the "point of no return" so to speak, where you take in all of your knowledge to date. Has anything come to light which causes you to reconsider this particular type of business? We don't expect that anything has gone seriously wrong but if it has, now may be the perfect time to change course. Perhaps there is far more government regulation than you anticipated, or the business would require more travel than you originally thought. If any new information has come to light that would have affected your decision if you knew it in the beginning of this process, consider carefully whether you should move forward or not. If you decide in the negative, all is not lost; the market research you have done can probably be salvaged. Maybe you want to serve the same market but with a different type of product in that market. Or a similar market; possibly a subset of the original target market. Even without any major problems, now is the time to make minor course corrections and adjustments as necessary.
This Week’s Assignment What have you learned from your test marketing?
Do you still want to proceed with the same target market?
Chapter 10: Launch! Once all the pieces are in place for your product or service, your marketing plan, your startup paperwork, and the beginnings of your support team, start putting the pieces together for your launch. Order business cards and stationery (if they are customary for your business), any forms you might need. Take note of any elements crucial to your operation that are missing. Do several press releases, direct mailings, joint marketing agreements with other merchants, whatever it takes to get the word out. If you have collected a set of names in the test marketing stage, contact those individuals and let them know what you are doing. Then, at the appropriate time, hang out your shingle if you have not already done so, and let the world welcome your business!
In Conclusion: These ten steps are the steps you need to take to start your own business, and as I stated in the beginning, can also be used whenever you decide to start your second business or enter a new market. If you're experienced, some of the steps can be completed in a matter of minutes. Others may take longer. Just don't get discouraged; it's not a race.
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