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The Opportunity is NOW

Guidance for Starting a Business

PROFILE OF AN ENTREPRENEUR

A first and often overlooked step is to determine WHY you want to go into business.

From the list below, check the reasons that apply to you.

Do you enjoy being your own boss?
Are you a good leader?
Are you a confident person?
Do you want to improve your standard of living?
Do you adapt well to changes?
Are you a good organizer?
Do you plan ahead?
Do you like to make your own decisions?
Do you have will power and self discipline?
Do you enjoy competition?
Are you a self starter?
Do you realize that many business owners work 60 to 80 hours a week?
Do you have work experience in the type of business you are considering?

The checklist above cannot tell you whether or not you should be in business, but it will give some areas to consider. A “yes” answer should be considered a good indicator and a “no” answer indicates some potential problem areas. You should carefully consider the “no” answers and determine how you will deal with problems that may arise. After reviewing the results of this exercise ask yourself one final question: “Would you be better off working for some else?”

PITFALLS AND OPPORTUNITIES

  • Being your own boss can have many advantages and disadvantages. Take a few moments to examine each statement carefully and think about how it may apply to you.

Opportunities

  • Being your own boss and not having to report to a superior.
  • Having the independence and authority to make your own business decisions.
  • Direct contact with customers, employees, suppliers and others.
  • The personal satisfaction and sense of achievement that comes with being a success, plus the recognition that goes with it.
  • The opportunity to create substantial wealth and job security for yourself.
  • The opportunity to be creative and to develop your own idea, product or service.
  • The chance to make a living doing something you truly enjoy.
  • Doing something that contributes to others, whether it be providing an excellent
    product or service, providing employment, paying dividends to stockholders, or
    doing something else that is useful or that creates value.

Pitfalls

  • In many ways you are still not your own boss. Instead of having one boss, you will
    have many – your customers or the government agency to whom you must report.
  • There is a larger financial risk. The failure rate is high in new businesses, and you may lose not only your own money but also that of your friends and relatives who may have bankrolled you.
  • The hours are long and hard. When you start your business, you will no longer be working 9 – 5. Count on working 10, 12, or even 15 hour days, often six or seven days a week.
  • You will not have much spare time for family or social life. And you can forget about taking any long vacations for the first few years since the business is unlikely to run itself without your presence for any long length of time.
  • Your income may not be steady like a salary. You may make more or less than you would working for someone else. But in either case, your income may fluctuate up and down from month to month.
  • The buck stops with you. If a problem arises, there is no boss you can take it to and say ‘What do we do about this?” You are the boss and all the responsibility is yours.
  • As a business grows, the amount of activity now associated with the primary business objective will increase. You will spend more time on personnel, administrative and legal matters and less doing what you may have wanted most to do in your business.
  • Increasing legislation and litigation make owning a business risky. You can work a lifetime to build a business only to have it lost because of a lawsuit or a new law or regulation

THE BASICS

Identifying the Market

Remember, no matter how good you think your product or service is, what the customer thinks is what really counts. And, even if your product or service is well-liked, you need to be sure that your customers will buy from you often enough, and in large enough quantities to consistently generate the revenues needed to support and maintain your business and make a profit.

  • The product or service
    • What evidence is there of a need for the prospective service or product?
    • How will you price it?
    • Why is it unique?
    • Why will customers prefer your product/service over the alternatives?
  • The customers
    • What kinds of people have a need for your product/service?
    • Is the population of prospective customers large enough to support your business?
    • How often will the typical customer use your product or service?
    • Is the customer base growing or shrinking?
  • The competition
    • Who are your competitors and how large are they?
    • Where are they located?
    • How do they price their products/services?
    • How are their operations similar or different from yours?
    • How many similar companies were opened last year?
    • How many similar companies went out of business lost year?
  • Location of your business
    • Is the location properly zoned for your type of business or service?
    • Is there adequate parking available for customers and employees?
    • If customer traffic is important to your business, is it adequate in the proposed location?
    • Is there room for expansion in the future?
    • Is the property well maintained?

You can determine the answers to these questions through market research that may involve
talking to potential customers and future competitors or looking at census data.

WHAT FORM WILL YOUR BUSINESS TAKE?

There are four major legal forms of business organization to meet the different personal and
business needs of business owners. Listed from the simplest to the most complex they are:

  • The sole proprietorship
  • The partnership
  • The corporation – C corporation and S corporation
  • The limited liability company (LLC)
  • Sole Proprietorship
    • Most common form of business ownership
    • Owner runs the business
    • No shareholders
    • Inseparable from owner
    • Advantages
      • Quick, easy and in-expensive to set up.
      • Sole ownership of profits.
      • One owner has control and decision making power.
      • No separate taxation.
    • Disadvantages
      • Unlimited owner liability.
      • Difficulty in raising outside capital.
      • Business may dissolve when owner dies.
  • Partnership
    • Traditional form of business ownership for professional organizations like legal and accounting firms.
    • Owned by two or more people.
    • A written partnership agreement is essential.
    • Inseparable from partners but can have debt and property in its name.
    • Advantages
      • Ease of formation.
      • Taxation as individual partners.
      • Flexibility in decision making.
    • Disadvantages
      • Unlimited partner liability, also liable for partners’ acts.
      • Relative difficulty in obtaining large sums of capital.
      • Legally dissolves upon change or death of partner.
  • Corporation – C Corporation
    • Separate legal entity created and operated with the permission of the state in which it operates.
    • Can sue or be sued, pay taxes, borrow and repay money.
    • Can have one owner or many owners.
    • Articles of incorporation are filed with Secretary of State.
    • Advantages
      • Limited liability for investors
      • Continuity of life
      • Easy transfer of ownership
      • Greater access to capital
    • Disadvantages
      • Can be costly to set up
      • Double taxation of corporation and investors
      • Extensive government regulations and required reports
  • Corporation – S Corporation
    • Major differences between C and S Corporations.
    • Shareholders limited to 35.
    • Only one class of stock permitted.
    • Shareholders are taxed individually.
  • Limited Liability Company (LLC)
    • Relatively new form of entity in the U.S.
    • Separate legal entity, but not perpetual .
    • Advantages
      • Limited liability.
      • Unlimited number of owners.
      • Easy to raise capital.
    • Disadvantages
      • Can be costly to set up.
      • Due to its newness as a form of business ownership, the law regarding the LLC is still evolving.

THE BUSINESS PLAN

Your Business Plan is the most important document you will ever put together. It provides a road map to help guide your business as it grows. In it you establish benchmarks and a set of checks and balances to keep your business under control. It will safely guide you through the turbulent waters of constant change.

It will also serve as an instrument to raise capital and obtain financing. It is your representative at the bank and as such will provide answers to the bank loan officer and the credit committee.

The following is an outline for the business plan. The elements are flexible and can be changed or altered to fit specific situations.

Business Plan Outline

  • Introduction and Executive Summary
    • Business description
    • Product or service to be offered
    • Market potential
    • Management and ownership
    • Amount and purpose of the proposed financing
    • Loan retirement
    • Financial summary
  • Section 1: The Company
    • Description of the company
    • State the company’s goals and objectives
    • Company history (if applicable)
    • Company objectives and strategies
  • Sections II: Amount of Financing Needed
    • Amount the business needs to borrow
    • Use of the funds
    • Payback period or Services
    • Describe the product or services
    • Describe any patents, trademarks or royalty agreements
    • Need for manufacturing and engineering (if applicable)
  • Section IV.- Marketing Strategy
    • Industry
    • The current status and prospects for the industry
    • New products and developments, new markets and customers
    • Market
      • Market size and history
      • Seasonal fluctuations and growth potential
    • Customers
      • Demographics and size of customer base
      • Basis for purchase decision
    • Competition
      • Type of competition in terms of location, size, reputation and market share
    • Strategy
      • Define market strategy
      • Current and projected market share
      • Product pricing and profitability
      • Advertising and promotion plans
      • Selling methods
      • Service and delivery
  • Section V: Operations
    • Plant location(s) and description
    • Cost and quality control
    • Production process
    • Labor force
    • Capital equipment requirements
    • Sales forecasts
  • Section VI: Management
    • Organization chart
    • Management team, duties, responsibilities, skills
    • External advisors and relationships
    • Board of directors (if applicable)
  • Section Vii: Financials
    • Latest balance sheet and income statement for past two to three years.
    • Profit and loss and cash flow forecasts by month and quarter for first year, and by year for years two and three.
    • Forecasted balance sheets at year end.
  • Section Viii: Proposed Financing
    • Amount of proposed financing
    • Use of proceeds
    • Payback and collateral

HOW WILL YOU FINANCE YOUR BUSINESS?

The need for capital is common to all businesses, both large and small. However, small businesses often have a more difficult time attracting investment capital. A major cause of business failure is inadequate financing. It is important that the business owner look carefully at the needs of his/her business and develop the documents necessary to convey these needs to investors or a commercial lender.

How much money will you need to start your business?
One assumption every business owner can be assured of is that it will take more money than
anticipated to start the business. Be sure to take into account the following:

  • Initial expenses
    • Advertising and promotion
    • Beginning inventory costs
    • Supplies and furnishings
    • Renovation and/or remodeling
    • Licenses and permits
    • Signs
    • Furniture and fixtures
    • Deposits (electricity, water, telephone, gas, lease, etc.)
    • Monthly expenses
    • Salaries and wages
    • Rent
    • Utilities
    • Advertising and promotion
    • Supplies
    • Taxes
    • Interest
    • Maintenance
    • Miscellaneous

It is advisable to have working capital on hand to cover the first few months of expenses until the business begins generating income to cover these expenses.

Where will you get the money to finance you business?

  • Personal resources
    • Savings, stocks, bonds
    • Family, friends
    • Credit cards
    • Home equity loan
    • Loan against cash surrender value of insurance
  • Equity capital
    • Partners
    • Public stock offering
    • Sell part of the business to a venture capital company or angel investor
    • Bank loans
    • U.S. Small Business Administration
    • Finance companies
    • Certified Development Companies
    • Local revolving loan programsConventional lending sources

HOW DO GOVERNMENT AGENCIES AND REGULATIONS AFFECT YOUR BUSINESS?

There are certain government regulations that you must adhere to. Among the things
you need to do are:

  • Building Permits and Inspections:
    • Zoning clearance (if any construction takes Place)
    • Building permit (if construction or demolition takes place)
    • Health inspection (for any food service business)
    • Electrical inspection (if additional lines needed)
    • Gas inspection (if additional lines needed)
    • Sanitation inspection (if on non-municipal septic system)
  • Licensing:
    • City privilege license
    • State business license
    • State income tax registration
    • Federal tax registration
    • Unemployment insurance regions (businesses with one or more employees for more than 20 weeks per year or pay wages over $1500 in a calendar quarter)
    • Workmen’s compensation registration (businesses with five or more employees)
    • Incorporation registration (business wishing to incorporate)
    • MS Secretary of State Business Services Phone: (800) 256-3494
    • Franchise tax registration
    • Alcoholic beverage license (if alcohol sold on premise)
    • Surety bond (if applicable)

FEDERAL REGULATIONS

Federal Employee Identification Number (FEIN)
Before hiring anyone in your business, you must first obtain a Federal Employee Identification Number (FEIN) which will be used to identify your business payroll and income tax returns. An application form SS-4 may be obtained by contacting the IRS at 800-829-1040 or by visiting the Small Business Development Center (SBDC) nearest you.

Employee’s Withholding Allowance Certificate (IRS Form W-4)
An employee must fill out and complete this form for his employer when employment begins. This form guides the employer in determining how much federal income tax to withhold from wages. The Internal Revenue Service “Employer’s Tax Guide, Circular E” provides federal incometax witholding tables. Further information may be obtained by contacting the IRS at 800-829-1040 or by visiting your nearest SBDC.

Social Security Taxes (FICA)
A n employer must deduct half of the required social security tax (FICA) from wages paid to employees. The employer pays the other half of this tax and remits the total amount to the United States Internal Revenue Service when withheld federal income tax is deposited. The total amount of FICA taxes paid is reported quarterly on Form 941. The IRS ‘Employer’s Tax Guide, Circular E’ has social security tax table for employees. Further information may be obtained by contacting the IRS at 1 -800-829-1040 or by visiting your nearest Small Business Development Center (SBDC).

Immigration Reform and Control Act of 1986
The Immigration Reform and Control Act of 1986 requires that businesses hire only American citizens and aliens who are authorized to work in the United States. If you employ anyone to perform labor or services in return for wages, you must complete an Employment Eligibility Verification (Form 1-9) for each employee within three days of the date of hire to verify that the employee is eligible to work in the U.S. and documentation has been verified. A Form I9 may be obtained from the Small Business Development Center.

Occupational Safety and Health Act of 1970
The Occupational Safety and Health Administration (OSHA) enforces federal safety and health standards for business and industry. OSHA’s standards apply to all businesses with one or more employees.

WHAT INSURANCE DO YOU NEED?
The importance of proper insurance is often overlooked by the small business owner. If used correctly, insurance can help reduce the uncertainty under which your business operates. Insurance can help keep your business operating under adverse circumstances and help improve your credit rating. Talk with a qualified insurance agent to discuss the needs of your business.

    • Insurance checklist:
      • Fire
      • Worker’s compensation
      • Disability insurance
      • Key-man insurance
      • Group life
      • Group health
      • Automobile/truck
      • Crime insurance
      • Business interruption
      • Retirement income
      • Rent insurance
      • Business life

Remember, your local Small Business Development Center is available to help you through
this process and to continue to provide assistance after your business is in operation. Their
assistance is free.

Filed Under: Business Development, Curated, Leadership, Pathways to Wonder, Small Business Solutions, Strategy & Women's Coaching Solutions, The Opportunity is NOW

Why does spiritual development matter in our personal and business life?

Mitchel Groter Interviewed by John Ellington of Moments of Clarity Press

24 Jan 2011

How does our spiritual development relate to our personal and  business life?

Many people I know and work become perplexed when the word spiritual or spiritual development is mentioned in the context of their professional or even personal life. I have been advised I not mention the S word when I am talking to a new potential client.  I have chosen to bypass that bias. I don’t think I can support the need to comparentalize who we are into little boxes and cages and deny the simple truths like, “your handshake is your contract” and if it doesn’t mean anything all the contracts and agreements your lawyer draws up will not protect you from being burned in a business deal.

If we live long enough we will experience a betrayal in a personal and business relationships. These things will happen. Spiritual Development is the alchemy that makes living through these life experiences valuable on many levels and reinforces what I heard Jean Houston say,  “all things human this is part of our human homework.”

It isn’t important that we are able to define our spiritual life in linear terms or be able to describe it all in words. What is important is a sense of awe. And this can come from experiencing a sunset, a sunrise, focusing on the perfectly formed fingers and fingernails of an infant or the feeling in your heart when your experience compassion or empathy. It is grace to allow the mystery of creation to infuse our body, mind and spirit.

How do we define spiritual development so it fits into our life and doesn’t cause confusion?

A sense of awe doesn’t feel relevant at first. To experience the sunset, you have to leave work. To watch the sunrise, wake up early. What awe can do for you is keep you present. And being present allows you to make the choice not to displace your frustrations and impatience on an unsuspecting barista at Starbucks or resist the impulse to be the first driver to make it to red light. It brings the precious awareness that you really aren’t listening to a coworker or a friend and need to shift your awareness and bring your best to that moment or decide to tell the truth when spinning your wheels.

These are often experiences of the divine within me that that altered my experience, changed my neurochemistry and give me a new pair of glasses to look at the choices, and how I choose to behave in the myriad of difficult life transactions and interpersonal scenarios.

Words, sounds and images can be rich and valuable ways to explore, express and experience the mysteries of spiritual energy.

There are different dimensions to our human experience that become exposed as we enter the dark room and start allowing ourselves to experience a change in heart and risk working and living from a place of honesty, integrity and justice. This doesn’t suggest that negotiating and making agreements to get things done magically eases the challenges of satisfying each party’s self-interest. What it does suggest is that resisting the temptations to manipulate, obfuscate and spin our responses to get what we want will help us avoid the inevitable negative consequence of strained and broken relationships. It also drastically reduces the possibilities of building and co creating successful and profitable professional and personal outcomes.

A big lesson learned. There are many facets to penetrating the beauty of a diamond or the various dimensions of spiritual development.

I am reminded of a powerful lesson I learned from my greatest business mentor Lee Golinello. I was selling high digital media systems and storage to Nickelodeon Studios. At the time it was a leading edge shared network solution from an innovative technology company that was the forefront of bringing this technology to marketplace. My client was Nickelodeon’s Larry LaFave. He was the VP of Engineering and a very brilliant broadcast engineer who also had real business acumen my other client was their gifted VP of Production and Post, Chris Silveira.

In the course of the pre-sales process, I arranged for demos and a simulation of his existing environment to test out the new-networked storage system. It seemed to work and met the testing and mission critical success criteria we and developed which would serve as the key condition for satisfaction.  With my team we did as much due diligence and testing as we could. Larry was the VP of Engineering for last three Summer Olympics decided they wanted to become an early adopter. We set realistic expectations and he knew there would be some challenges and technical problems but the manufacturer assured him they would support him with us being the first three levels of support.

Our team integrated and installed the system into a post-production team working on a new TV series. It worked well for about two or three weeks and then it started (as new technology will) to develop strange problems that required support and troubleshooting. We solved the initial issues and then new ones developed that we needed the software and hardware engineer who designed the solution to address. The Manufacturer stepped up and sent an engineer from California and two weeks later and more problems developed. The technology company balked at sending their engineers again unless Larry paid them and reimbursed them for all their travel expenses. Larry blew a gasket and called to tell me what happened. I told him we were in support of his position and do our best to facilitate a solution. We were as unsuccessful as Larry was in getting a reasonable response.

This went on for about 4 weeks until I met with Larry, Chris, General Manager, and their General Counsel. We reviewed the facts, minus blame, minus interpretations and minus assumptions. The next day Larry sent me a copy of the scathing letter they sent to Technology Manufacturer. To net it out, the letter said, “back up a truck to our loading dock, pack up all your crap, send us a refund check and never even attempt to sell us or group at Viacom even a paper clip.”

The Manufacturer still refused to accept accountability and negotiate.

The Business Theater – Act 1: Let the blaming begin

They accused me of incompetence and our company for misrepresenting the capability of their technology poorly servicing Nickelodeon. They  continued to draw the hard line ( driven by fear) and refused to comply with the good folks at Nick request to divest themselves of their stuff and issue a full refund.

The Business Theater – Act 11: let the war of the $450.00 dollars per hour lawyers begin

“And they roared a terrible roar and gnashed their terrible teeth”

Larry and Chris were justifiably upset and stressed. Post-production deadlines were missed and a host of other negative consequences were piling up. After the last of a series of difficult meetings with Larry, Chris and the executive team at Nick, Lee called me into her office and said “ Mitchel, we did the best we can to resolve their technical issues and try to persuade the Technology Manufacturer to do the right thing. They have refused and made it our problem and positioned us as the scapegoat.  I have decided the only ethical thing we can do to make this right and preserve our relationship with Larry and Nickelodeon is to refund them all the money they paid for the hardware, the installation services and this also includes your substantial commission.” Ouch…. I had already spent the commission money…Ouch…. This was a substantial six figure transaction…Ouch-Yes this was spiritual development for me and sometimes it hits you right in your pocketbook.

Larry dumped the gear and two weeks later invited me for a cup of coffee at the studio. “I spoke with Lee after she mailed me the check for what we paid you. She told me it included your commission. This was a hard situation and I want to give you a large order for new local storage docks. I guess we keep it simple and use a few terabytes of removable storage. Send me a quote and I will fax you the PO.”

He didn’t rehash the situation he looked into my eyes. “I want to thank you and Lee for not allowing greed to break our business relationship.”

While I felt a surge of excitement knowing I would make a good commission on the sale, something more valuable happened. It was another experience of the inherent goodness in life in people. It emerges in a flow of divine energy when simple honesty and justice is becomes the choice in a business or personal relationship.

This changed my neurochemistry and give me a new pair of glasses to look at the how I would conduct business in spite myriad of difficult transactions with difficult people.  It taught me not be victimized by mine or anyone’s security fears.  It takes courage to have our old programs for happiness dismantled. I don’t always remember but I know in the core of my soul that feeling safe has nothing to do with whether people, places or things are fitting into my movie and reading the lines I have written for all the players.

Filed Under: Curated, Executive Development, Important Conversations, The Opportunity is NOW, Transition & Transformation

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