Ready to Start? Take a Deep Breath!
Startup Organizing: Simply because you have an idea for a business, it does not mean you can start one. You have to get organized and structure your thinking on many parts that make up the whole:
- who owns the business,
- how do you make it happen,
- where’s the best place to do it,
- who does what, when,
- what’s the best use of time,
- how does the product or service get distributed,
- how do you record progress/measure success,
- what legal/tax structure will you use,
- what are and how to get the missing skills,
- what are the ways to deal with liabilities, and even,
- what do you have to do to get a business bank account?
The questions will be specific to you and your business, but sit down now and work out your own list, even if you do not yet have answers. Here is the kind of checklist In suggest you should build:
|yourself||time management, home/work life, delegation|
|legal structure||sole proprietor; partnership; cooperative; limited co; corporation|
|ownership||type, percentages (who gets what/when)|
|money||equity, loans, grants, revenue, cash-flow|
|banking /terms||operations, pricing, discounts|
|skills/staffing||yours, colleagues’, contractors, outsourcing|
|priorities/scheduling||pre-start, launch, leads & lags|
|premises/equipment||own, lease, share|
|materials/inputs||sourcing, financing, timing|
|measurement||margins, variances, management/financial accounts,|
|SWOT||Strengths, Weaknesses,Opportunities, Threats|
The last item is a SWOT analysis. You may have used this tool when you prepared your business plan, but now it is worth using again, now that you are implementing that plan. Successful businesses calculate risks and prepare contingency plans. Here is a place to be very honest and make sure that the SWOT is based on knowns, not aspirations.
An even better idea than simply using your own, or indeed my SWOT process, I suggest you go over to Canvanizer, where you can use their excellent SWOT in the cloud, either in the do-it-yourself mode or have a group share in doing the analysis. It’s free, simple and works like a charm.
Do It Yourself or Get Someone Else to Do It?
Entrepreneurs often tell me that their first port of call after thinking that they want to start a business, is an attorney and/or an accountant. It is not a bad course of action, but it is likely to be an expensive one.
My lawyer’s advice has most frequently been, prepare to do it yourself and then check with me (there is plenty of software and internet-based help). I have come across an excellent site that offers real good help with startup law. It’s called myRight and well worth a visit to get you on your way.
In the same vein, rather than a Certified Public Accountant, start with a qualified bookkeeper.
Bookkeeping always seems to create fear for entrepreneurs without a finance background. The fear is something you can deal with quite easily. A good place to start your own bookkeeping is with QuickBooks. In fact the easiest place to start is to find a local bookkeeper who is a Certified QuickBooks ProAdviser. The Startup Owl is an authorized Quick Books Affiliate and if you click the link to the left you can quickly (!) access this wonderful fount of knowledge and products.
Sometimes using an outside contractor makes more sense than learning to do do something yourself. On the other hand, it can also be important for you to learn how to do something. Be hard on yourself in deciding which is the most effective. If you go to a QuickBooks ProAdviser, you can always start off with the one you select to do more of the works and as you get to understand the system, you will gradually be able to ‘fly solo’.
There are services you can buy–often on line–that will give you a short-cut in time and money. Try Nolo, for example for free legal information, books and software as well as legal forms you can use.
On the web you can search ‘personal assistants’ and find many services you can pay by the hours. There are new services being set up all the time–small scale versions of BPO, or business process outsourcing. One of the newest I have found is MatchFounders that will connect you to others looking for or offering startup skills. One of the biggest and best is freelance outsourcing networks Elance. If you click on the button, it’ll take you a potential set of skilled people all over the world, or right round the corner.
A seemingly grueling area is the field of patents, trademarks and copyrights. But if you take a deep breath and take it slowly, it is not too tough and initially not an expensive pastime. A good place to start might be Nolo. In the US, the Patent Office is a great help to novices on patents, trademarks and copyrights. The website is a great help, and for example you can file a provisional patent for only $100 if you are a ‘small entity’ (half the standard fee). But here is a good offer to help smaller startups and businesses in remote locations: a free trade mark application program. Once your application is submitted it will be reviewed and you’ll be notified by email, within 5 business days. If you are selected to receive a free trademark application our attorney will file your application with the USPTO and respond to any non-substantive office actions. When your certificate is issued it will be sent to you and you’ll be notified you when the time comes to renew your registration. Hats off to Perry Clegg.
If you incorporate an LLC, you will need to keep a minimum of statutory records. I recommend keeping your company in a box. A box file where you keep all the important or official papers, like company registration. A very convenient way to do it is to buy an inexpensive Limited Liability Kit and Seal from Bizfilings. Venture Founders has one. There are most legal forms also available free at docstoc.com.
You have important choices to make on incorporation. In summary they are:
Sole Proprietorships/Sole Traders: you are fully liable as an individual and normally your revenues are taxed as personal income. There is no capital separate from the individual. The least amount of bureaucracy of all forms, though in some countries (e.g. France) the formalities are nonetheless somewhat burdensome. In the US, if you ‘do business as’ or DBA for short (i.e., you use a trading name that is not your own personal name), then you will need to do a (simple) DBA filing with the State or local jurisdiction (you’ll need it for a business bank account).
Partnerships: there are various forms of partnership in different countries. There can be two or more partners, generally collectively liable and taxed either on a personal or corporate basis. Partnership types vary by country, but can include limited partnerships.
Cooperatives: some countries have the cooperative structure available. This structure type has no shares.
Limited Liability Companies: the entity is separate from you and is designated differently in different countries (examples are: in the US—LLC; in UK—Ltd; in France—Sarl; in Germany & Austria—GmbH). In some European countries there are specialist limited company types for different sectors as well as mixed private/public (state) companies. Limited companies have capital in the form of shares, are controlled by members or managers and, as the name implies, have limited liability. In the US, profits are taxed as your personal income and thus you avoid double taxation. Venture Founders LLC was set up online at the Secretary of State’s corporations division in my state within a week of application for $75. Each state has its own corporations division and most have help available online and by phone.
Public Companies or Corporations: these will tend to be larger entities with more members and/or those seeking considerable amounts of capital investment. The legal requirements, particularly on disclosure, are more onerous. the designations in the different countries include: in US—Corporation or Inc; in UK—PLC; in France—SA; in Germany & Austria—AG, but watch out: in Switzerland an AG includes limited liability companies.
Whichever route you choose (in the US), you will need an Employer Identification Number from the IRS. You will even need one if you decide not to incorporate (not a good decision). In the US a non-incorporated business will need at least a DBA (Doing Business As) registration in the state where it is located. A guide worth scanning, at the very least is the IRS Tax Guide for Small Business.
Another number you will probably want (in the US) is your NAICS (North American Industry Classification System) number. Go to the US Census Bureau site and search for the keyword that best describes your business. For example, mine is 541611 for ‘Business Management Consulting Services’.
By and large, I suggest most people wanting to start a business should incorporate directly via the website of the Secretary of State’s office of the State where they want to establish their new business. In most states, it is an easy and inexpensive process. If you have any doubts, you can always tell your attorney and get his ten cents worth, but since you can almost always make changes later, I would suggest you ask the helpful staff at the Secretary’s office as a first step.
To help you decide which way to go, a good place to start is LLC or Corporation? How to Choose the Right Form for Your Business. If you opt for a LLC, the guide Form Your Own Limited Liability Company is a good place to start, then you can use Your Limited Liability Company: An Operating Manual. These all come from Nolo and you can find related titles on taxes, leases and other aspects of running the business. There is even LLC Maker with which you can create an LLC or upgrade your business to a LLC.
If you want to become an expert quickly, then do the short online course called Startup & small business law: business registration & more; it will only cost you $20!
Managing any project can be tough. Founding a venture is the toughest of the tough. There are, however many tools that can help. Critical Path Analysis is one of the best.
If you use simple project management tools, it will make the task much less daunting. The approach I have taken is to use two methods on line. First, create a spreadsheet using Google Docs. You can use it solo or involve your who team by giving them access. What it helps you do is to chart who does what when. By the way, there is no cost to using Google Docs and it’s all in the Web Cloud.
Above is a screen shot of a GANNT chart data entry screen. A GANNT chart is a type of bar chart that illustrates a project schedule. Gantt charts illustrate the start and finish dates of the tasks and a summary of the project elements. It sets out the order things have to be done and who is to do them in a bar chart form. The one illustrated has no data in it – I just set it up. The system can be linked to a spreadsheet in Google Docs and shared with others in the same way. The small company that produced the software–Viewpath–is brilliant (based in WA). The cost is very low – under $20 a month.
Since both Google Docs and Viewpath keep the data in the web ‘cloud’, there is nothing to lose or file.
Entrepreneurs are often seen as lone swashbucklers, but the best are real team leaders, who can:
- be clear on strategy
- create and maintain urgency
- complement their own weaknesses
- delegate with accountability.
In other words, it’s about building a social architecture that can not only be aimed at goal achievement, but also on creating the conditions in which people want to deliver of themselves and to meet the objectives of the organization.
Almost any startup that seeks to get financed institutionally will need to show a strong team. There is plenty of research to back the notion that new venture success often depends on the founding team collectively, rather than just the lead entrepreneur alone.
Choosing the startup team is critical. Appointing other members of staff is a hazardous occupation. It is important not to hire when you do not need to and when you do to hire that you have planned on the right people. If you want to find people, you could try Startup Hire, which covers the whole of the US and is a place that attracts people wanting to work in a startup environment.
Preparing Yourself for the Challenge
To start a business, you are going to need high levels of focused energy and productive discipline. And not a little stress, unless you work on yourself.
Think about the ambitions and realities of your life in the four domains of
- your work and the business
- home and relationships
- community and society
- mind, body and spirit.
Examine and improve on the overlaps, conflicts, integration and authenticity of the domains so that you can operate optimally.
Possibility: allowing the possible is a natural talent of the entrepreneur. It is interesting that many entrepreneurs have been mould-breakers. Discontinuities or paradigm shifts are frequent in today’s marketplace. In ways of doing business, too. The entrepreneur has to be awake to the art of the possible, not the impossible. The way my startup did business in the eighties was considered to be an impossibility, but that did not intimidate me. Also, impossible thinking will help you stay open.
Neuroplasticity: a natural concomitant of being an entrepreneur is that you will be working your brain on many levels: creativity, learning, intuition, deduction, calculation, and emotion. Make sure than you don’t get one-tracked. Neuroplasticity is the brain’s ability to reorganize itself by forming new connections throughout life, and you need as much of it as you can get. It has been described as, “one of the most extraordinary discoveries of the twentieth century.”
Meditation: whatever your stage of spiritual development, meditation, you may like to know that brain research is beginning to produce concrete evidence for something that practitioners of meditation have maintained for centuries: mental discipline and meditative practice can change the workings of the brain and allow people to achieve different levels of awareness. Leading neuroscientists and quantum physicists discussions with the Dalai Lama led to much research on the positive link between meditation and neuroplasticity.
Wellness: no lecture is necessary on the importance of wellness. Diet, weight, exercise, drinking plenty of water, improving the functioning of the immune system are all important and need not bite heavily into the working day. No more than meditation. You can devote just minutes a day, but you need to fully intend to it. I do ten minutes of Qi Gong (chi gung) and 45 minutes of mindfulness meditation a day. The discipline is what keeps me at it. Just like taking a tablespoon of cod liver oil night and morning to improve my faltering immune system!
Your vision and dreams are not enough to carry you and your team. Your personal qualities may be inspirational, but you have to deliver more than personality traits. Your dissatisfaction with the present in a given, or you would not be starting a business. You will need to use both vision and personality together to inspire others in your team and partners.
In addition you are going to have infinite patience with a world that does not respond as you’d like. You need to adapt as the world around you delivers unfavorable conditions. As an entrepreneur you will undoubtedly have persistence and the ability to learn. Where are you going to find inspiration for all these wonderful things?
Developing ambidexterity for both action learning and adaptation is not as easy as it is to say. One of the places that you can learn such things is in nature. The Center for Nature & Leadership established by my former colleague Dr Beverly Winterscheid, is one place where you can experience competency-based leadership development within a community of fellow entrepreneurs. CNL is dedicated to empowering change agents to create values-driven change in themselves, their businesses and communities, using a model of citizenship, not consumerism.
What we learn from nature is about interdependence, not exploitation. This leads us to think about creating shared value, rather than capturing value for ourselves. Changes in the natural world show us just how we can re-establish balance and community. This is why so many startups are as much about changing the world for the better rather than perpetuating imbalance.
Personal Time Management
Self-assessment. Remember as you think about organizing tasks, you will need to begin with yourself. There is a mass of help out there, but you need to use a time management process that suits your personal style. Before you start getting a grip of managing your time better than you have done in the past, it is vital to know where you are right now.
Time management systems. Memorable stuff is always happening, but where do you file it all? In Evernote. I do. With free and premium versions, it allows you easily to capture information in any environment using any device or platform that’s most convenient, making the information accessible and searchable at any time, from anywhere. A bonus is that you can add Web Clipper to capture web pages or selected parts of them.
Goal setting. When you think about setting your own goals and managing your time successfully, it is important to balance and integrate the ones you set for your work, home and relationships, community contribution, as well as those for mind, body and spirit.
Whatever your planning system, it will all start with GOALS. Again a Web search will reveal a myriad of choices of methods. Why not get help? I suggest using Goal Enforcer to help you with tools to define, maintain, track, and achieve your goals. There’s a list at Quantified Self–you’ll find all sorts of other interesting inexpensive ways of tracking health and other facets of your life there. Examples I found include Goal Buddy and 42 Goals: take a look.
Meetings: Reflect on the real cost of meetings, especially once your business is up and running. The benefits of face time are huge in building (or destroying) relationships, but money leaks out of meetings, too. Vital processes are: planning, managing, participating and recording—even for informal ones. Have fun and learn in the sandbox of effectivemeetings.com and try their Cost of Meetings Calculator.
Measurement–Hard & Soft
Numbers: An organized attitude to measurement is an imperative. It’s fairly obvious that you need to keep up to the minute (I mean almost literally to the minute) figures on income & expenditure and cash. Even if your accounting is simple, like records in an Accounts Journal (take a look at NetMBA’ note on General Journal Entries to see what I mean), you must keep a handle on what’s going on. The basic set of books is described in Preparing the Financial Statements. You can see the Financing page for more on small business finance.
Sales: Data on sales and sales forecasts will keep you on track for your growth targets. In a matter of days you can lose the thread and the end of the month may be too late. At the simplest level view your actual sales against budget or forecast (variances). You can start with the figures that you prepared for the small business marketing plan or the business plan Income Statement, preferably expanded to give detail on individual products, services or market. Then you can manage by variances (real-life vs. plan) and ask yourself why things have not turned out as planned and what corrective action you can take.
I suggest you use some form of customer relationship management, keeping detailed and orderly information about your potential and actual customers and the actions you take to secure orders. Try Free CRM—CRM Software for Small Businesses or free Personal Edition CRM from salesforce.com, but otherwise be sure to keep track of sales potentials, suspects and prospects at the very least, so that you can monitor your activity and pipeline. If not you are going to find that when a sale is done, you suddenly have to start from scratch, the repeated filling of the pipeline is essential. See Savvy Marketing for more.
Soft data: As well as the hard data, you’ll want to keep track of the ‘soft’ stuff as well. It is harder to measure, but start by recording matters like: feedback you receive on your products or services both directly and indirectly; attitudes of your colleagues and their comments on you; things that are changing in your marketplace; new products in similar markets; trend data that you read about (inflation rates, consumer sales, the housing market) since though these may not have a direct effect upon your business, they may change attitudes and behavior that do impact on your ability to trade. A good free monthly trend newsletter is available from Trend Watching. Another excellent source is Springwise and its network of 8,000 spotters who scan the globe for smart new business ideas, for entrepreneurial inspiration. There is a mass of resources available online. Take a look.
Timeliness: In both the case of hard and soft data, you will need to apply your judgment and take timely action. Easy to say and hard to do.
Take a look at a couple of my articles: