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Dear Entrepreneur: It’s All Up to You

Dear Entrepreneur: It’s All Up to You


    When you are in the first few years of business it can be a roller-coaster ride. This is the case whether you still have a day job and you’re trying to start a business on the side, or whether you’ve jumped in with two feet and are ready to make something of yourself.

    I have some advice for you…it’s good news and bad news all rolled into one.

    It’s all up to you.

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    The Good News

    You control your time, you have the freedom to choose what to work on, you are an awesome person which means you have the opportunity to build an awesome company! Unlimited opportunity awaits!

    The Bad News

    You now have control. That’s like flying the plane after you have only read the manual. It is a different experience to read about business and actually have a business. You’ll also need to face the hard choices of working or being with your family. Or whether or not to take risks. Or how you are going to handle all of the requests of your customers and still do a good job.

    It’s Scary!

    Amos Winbush III was a songwriter, and started his own company. He now has a multimillion dollar company but here is what he said when he was first starting.

    “I was extremely scared. I was excited and really frightened at the exact same time that this company that we had dreamt about and started to develop was actually a reality and people were using the service. And it was all up to me. It wasn’t an idea at this point. It wasn’t something that was remaining within the four walls of my apartment which is where we launched CyberSynchs and it was actually on the market and people were using it and we had the responsibility of keeping these individuals contents secure and safe and accessible at any given time.”

    Your customers and clients will start to rely on you. Your family will start to rely on this income source that you control. The responsibility will keep growing and growing especially when you start having employees and start being responsible for other people’s families too.

    But everyone is scared at first. I am willing to bet that every new entrepreneur has had some sort of freak out. Just know that millionaires and ultra-successful people have done the same thing.

    You Are Not Entitled

    But we also need to remember and prepare for a lot of hard work. Even if you get past the scariness of it, you’ll still need to deliver in order to feed your family.

    I interviewed Michael Port, millionaire and best selling author of Booked Yourself Solid. I asked him about when he became an entrepreneur and he had these words of wisdom:

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    “When I left my corporate job and I just thought clients were going to fall into my lap. I left with my bonus. I figured okay I’ll be fine; it’ll give me a couple of months. Well here I am living in New York City, my rent was like $3,500 a month and that was like a small two bedroom in Long Island city and I’m blowing through my money.

    It was just a huge big scary experience. I said this is wrong. So I really put the pedal to the metal at that point. I think the first sort of big change that happened was for me to realize that I’m not entitled to anything. I thought I was entitled. I’ve worked hard and I’m an adult and blah, blah, blah. When it didn’t happen, I realized I’m not entitled. You know what, that means… I have to work, I have to do whatever it takes – 18 hours a day, I have to get over my fears.

    I‘ve got to be willing to be bold and fully self expressed and do things that I’ve never done before and really think bigger about who I am and what I offer the world.”

    Many entrepreneurs go through something similar to this when they start. They are told that being an entrepreneur is awesome, and that it’s so great to have the control. They jump in all excited and ready to go.

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    Then that moment hits when you realize it’s going to be a lot of long and hard work.

    That said, remember this quote from Ronco Johnson, a millionaire and President of L.R. Johnson & Associates:

    “We all come with two days – a start date and an end date. What you do between it, you have to make sure that everything you want to do is taken care of.”

    Well, I’m here to tell you that whether you draw the line in the sand and accept that it is hard or whether you decide it’s not right for you at this time…

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    It’s all up to you.

    (Photo credit: Confident Businessman via Shutterstock)

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    Published on December 13, 2018

    How to Start a Company from Scratch (A Step-By-Step Guide)

    How to Start a Company from Scratch (A Step-By-Step Guide)

    If you’ve ever thought about starting and running your own business, you’re not alone. Being your own boss, having flexibility with your schedule and keeping more of the financial rewards that come with business ownership are all good reasons to own your own company.

    But as you might expect, it’s not all vacations and fat bank accounts. According to the SBA, 2/3 of businesses survive at least 2 years and approximately 50% survive 5 years.[1] So why is the failure rate so high? At least for the businesses that fail early on, lack of, or poor planning can be a major factor.

    So how to start a company?

    Starting a business from scratch doesn’t have to be hard or complicated, but it does take planning and work. Here are the first and most important 9 steps to take when your are starting a company from scratch.

    1. Do an Honest Evaluation of Yourself

    Do you work better in a structured or unstructured environment? Does a daily routine reduce your anxiety? What kinds of things are you good at? Does public speaking or making presentations make you nervous? Are you good at accounting and numbers? Can you handle the rejections you’re bound to get when selling or cold calling?

    These are all important questions to ask yourself, in fact it’s a good idea to get other peoples opinion about their perception of you in each of these situations.

    Whatever the answers you come up with for your evaluation, remember that’s all it is, an evaluation of where you are now. Think of it as a way to identify both your areas of strength and weaknesses.

    You maybe good at public speaking which can help when raising money, but bad at accounting which just means that you’ll need to find some kind of help with that area of the business.

    2. Evaluate Your Idea

    If your business idea involves a new product or service (or even an enhancement to an existing product or service), it needs to be evaluated. This is technically called market research.

    There are firms that specialize in doing market research for new products, but if you are on a tight budget, you can do this yourself.

    First, if you can build a prototype for people to use, touch and look at that’s the best option. If a prototype is not possible or it’s a service business, then offer a highly descriptive presentation of the business plan complete with it’s unique benefits and how it’s different from the competition.

    Then listen! Remember that this is not about others liking your product, this is not your baby that they are talking about. You want honest market research that gives you the best chance for a successful business. Take notes, when someone tells you that they didn’t like a feature or some aspect of your idea tell them ‘Thank you”.

    After several rounds of market research with different groups of people, you should see patterns emerging about things that they both liked and didn’t like. Use this information to tweak your product or service and do another round of market research.

    Keep in mind that you’ll never come up with a universally loved product, your job is to produce a product or service that appeals to the broadest range of your target market.

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    3. Make a Business Plan

    I know, I know this isn’t the “fun” part of starting your own business, but it is an very important step in creating a successful business!

    Basically, you can think of a business plan as an outline or blueprint of your business. A good business plan should have the following elements:

    • Executive Summary – This should lay out the businesses product or service and the problem that it solves for the consumer.
    • Market Evaluation – This should talk about the market you are serving. Is it an expanding market, and how does your product better fulfill the consumers in that market.
    • Market Strategies – How are you going to penetrate the market and sell your product.
    • Operational Plan – How will the company run from day to day? Who are the key employees and what are their specific rolls. Do your key players have specific goals set for them in advance?

    A final word on making a business plan: while lying is never acceptable especially when you are using the business plan to raise money, it is acceptable to “put your best foot forward”.

    Playing up the positives while minimizing the negatives is almost expected in a business plan.

    Besides, banks as well as professional investors will both do a more in-depth analysis before investing any money into your idea.

    4. Decide on a Business Structure

    You have many options here, and discussing them with your accountant or financial adviser is really the only way to know what’s right for you. But just to give you a quick rundown of the types of business entities and their pros and cons we will briefly go through them:

    Sole Proprietorship

    This is a common way for small businesses to get started.

    The pros being:

    Relatively low costs to set up (usually a business license and sales tax license).Owners normally do not have to set up a special bank account, they are allowed to use their personal one. Any income earned can be offset by other losses (check with your state!). You as the sole proprietor have complete control over all decision making. 

    Finally, sole proprietorship’s are relative easy to dissolve.

    The cons of using a sole proprietorship include:

    You as the sole proprietor can be held personally responsible for the debts and liabilities of the company. Some benefits, such as health insurance premiums, are not directly deductible from business income.

    If you need to raise money, you are not allowed to sell an equity stake in the company. In that same vein, hiring key people maybe more difficult because you cannot offer them an equity stake in the company.

    Partnership

    A partnership is formed when two or more people decide to start a business. Although there is no legal requirement for any documentation to form a partnership, it is my advice that you never enter into a partnership without having a partnership agreement. (Remember, spending $1500 now can save you $150,000 in legal fees later!).

    The pros of a partnership include:

    Being relatively easy and inexpensive to start. Hiring key employees can be easier as you are allowed to give equity ownership to as many partners as you want.

    For tax purposes, partnerships are relative simple as any income is treated as “pass through” meaning that each partner pays tax on their individual portion of the partnerships income (As of this writing, always check with your tax adviser).

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    As far as the cons go:

    It can be difficult for some general partnerships to raise capitol. Because it is a partnership, the actions of one of the partners can obligate the entire organisation. All profits must be shared according to the partnership agreement regardless of the amount of work done by any single partner.

    Some employee benefits may not be able to be deducted on income tax returns.

    Limited Liability Company (LLC)

    This is a very popular business entity for small to medium sized businesses. The reason for this is the cost of set up is not prohibitive and there is a separation between the owners and the company.

    The pros of an LLC include:

    Limited liability for the partners, unlike sole proprietorship’s and partnerships where the owners are held responsible for all of the companies debts and liabilities, an LLC provides some protection against certain debts and liabilities that are solely the companies.

    Simple taxation, just like the sole proprietorship and partnerships, income is considered “pass through” and is only taxed once on an individual level.

    There is no limit on the number of shareholders in an LLC. An LLC requires fewer fillings and administrative requirements than a corporation.

    Corporation

    A corporation is much more complex and expensive to set up. And a corporation is legally considered an independent entity that is separate from its owners.

    The pros of a corporation include:

    Complete separation between the owners and the company. Because the corporation is considered its own legal entity, owners can not be held personally responsible for any debts or liabilities of the company.

    A corporation can raise capital much easier just by selling more shares in the company.

    Cons of corporations include:

    Much higher administrative costs than any other business entity. Corporations generally have a higher tax rate. Dividends are not tax deductible for corporations. Income paid in dividends is taxed twice, once by the corporation and again by the shareholder.

    Again, this is just a short summary of the pros and cons, always check with your tax adviser about what will work best in your situation.

    5. Address Finances

    Again, not one of the “Sexier” parts of starting your business from scratch, but very important nonetheless.

    So, you’ve done your business plan and an estimate of your start up funding should be included. It should include the amount of funding you’ll need to get you through your first full year of operations.

    Now, how do you get that money?

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    Self Funding

    If possible, self funding is the easiest. You won’t have to go to banks and investors with hat in hand, or give up ownership or control of your company. But as we know, this is not a reality for most people. But don’t worry, there are still plenty of options available.

    Friends and Family

    They can be a good source of funding your business if they can see and understand your vision.

    Remember that business plan? Pass them out to everyone you know. Then follow up, be prepared to tell them the total amount of money you expect to raise, the minimum investment you are looking for and what you will give in return for the investment.

    For example, you give a friend your business plan and follow up with him/her a few days later. You can explain that you have secured funding for $80,000 of the $100,000 you need. You are selling a 2% share in the company for every $2,000 investment. How many shares would he like?

    And when he/she tells you no, thank him/her and ask if he/she can think of anyone off the top of his head who might be interested? Tell him/her you really appreciate his/her time and if he/she does come across someone who might be interested to let you know.

    Banks

    These guys are happy to lend you money when you don’t need it, but all of the sudden they get stingy when you actually need a loan! This is where preparation comes in.

    It’s a good idea to go over your business plan with an expert and maybe even have it rewritten by an expert before you approach either a bank or professional investor. Both will want to go over your business plan with a fine tooth comb, verifying all the numbers and data you provide.

    You should also brush up on everything in the plan so that you can answer any questions they have with authority.

    Crowdfunding

    Finally, there is crowdfunding through sites like Kickstarter or GoFundMe. Crowdfunding helps to build interest, community spirit, and a customer base. It’s also an efficient way to raise funds. You can take a look at these tips to find out more:

    6 Crowdfunding Tips To Get Your Project 100 Percent Funded

    6. Register with the Government

    As stated earlier, different types of business entities have different filling and administrative requirements. At the very least, you’ll probably need a business license as well as a state sales tax license.

    Unless you are forming a corporation, there are many good resources on the web that will do everything for you at a minimal cost.

    7. Assemble Your Team

    Remember when we evaluated your strengths and weaknesses? Here is where we fill in the gaps!

    Do you hate sales and cold calling? Great! There are people who love selling and wouldn’t want to do anything else.

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    Bored to death with accounting? There are a ton of small accounting firms out there that will take care of that for you.

    What about marketing? You can hire someone in-house or out-source that too.

    Your job is to keep on top of all the different aspects of the business to make sure they are all running smoothly and getting the results you need. If not, it’s your job to figure out the problem and implement a solution.

    Check out this guide and learn how to delegate effectively:

    How to Delegate Work (the Definitive Guide for Successful Leaders)

    8. Buy Insurance

    No matter what kind of business you start, you need insurance! Yes, I know, no one likes to buy insurance, but it can literally be the difference between having a minor inconvenience and declaring bankruptcy.

    We live in a very litigious time, even a minor slip and fall at your place of business could bankrupt you without insurance. If you need help finding a good agent, check with your local trade organizations or fellow business owners.

    9. Start Branding Yourself

    Has anyone ever ask you for a Kleenex or a QTip? We all know what they are because of branding, Kleenex is just a brand of tissue and QTip is just a brand of cotton swab. It doesn’t have to be as widely known as Kleenex or QTip, but you can make your brand a common name within your niche.

    I once owned a manufacturing company that developed a product that was so popular that my competitors started co-opting my brand name for their products.

    If you aren’t sure how to kickstart branding yourself, check out these ways:

    5 Ways to Build your Personal Brand & Make More Money

    The Bottom Line

    Starting a business from scratch can be one of the most rewarding experiences a person can have.

    But do you know what’s even more rewarding? Having a business that succeeds, is profitable and provides a good source of income for you, your employees and their family’s.

    More Resources About Entrepreneurship

    Featured photo credit: Tyler Franta via unsplash.com

    Reference

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