The Startup Checklist, Part 1

4 ‘must-do’ steps for success

By Samuel Bethea

Key Takeaways

• Most entrepreneurs have tremendous passion and energy, but you can’t wear 10 hats forever.
• Be honest with yourself about which business functions you do best, and which would be better to let others handle—a business coach can help you decide.
• Running a venture without a business plan is like driving a car without a steering wheel. Have the plan only in your head does not count.

One of the first major decisions that any entrepreneur must make when starting a new enterprise is how to fund the business. Early stage companies usually cost twice as much as you think to fund and involve A LOT more hours than you ever put in as a salaried employee.

And you wouldn’t have it any other way!

Using your own money to fund your business has advantages and disadvantages. One advantage is maintaining control, but the disadvantage of using your money is make sure you always having the right amount of money to fund the business adequately. We learned in our earlier post that 85 percent of small businesses fail NOT because they weren’t good ideas—they fail because they weren’t funded correctly.

Starting a business is VERY hard work, but the owner’s passion if generally sufficient to overcome many of the challenges early on. But is that passion and energy sustainable?

Here are four key steps that you should follow to ensure that your new venture is sufficiently capitalized and that you are spending your time and energy in the right areas of your business:

Step 1: Write a Business Plan

Many small business owners start their ventures with a business plan. Unfortunately that plan is written in their heads only. No one else can see the plan and they can’t refer back to it. In many cases, the new business started as a result of work that work they entrepreneur did as a hobby or may have performed for another business as an employee before learning enough to go out on their own.

Running an enterprise without a business plan is like driving a car without a steering wheel. You may know where you are going, but without the right mechanism you have no means of steering your car in the right direction. A business plan is a roadmap that gives you long-term direction, financial planning guidance, a sales plan, and a strategy for managing your vendors, employees and customers to achieve optimal results.

Your business plan allows you to integrate all of your ideas into a document that condenses your thoughts into action.

Step 2: Get Business Assistance and Training

Operating a small business requires you to be knowledge about many, many business functions including law, accounting, finance, marketing, sales, and operations.

Most entrepreneurs become business owners because they have a passion for an idea and understand the basic operation, but they can’t be expected to be experts in all business functions. In order for your business to grow and thrive, you need to get support from other areas and points of expertise. That’s not a sign of weakness—it’s good business sense.

A business coach can be very helpful for entrepreneurs who have strong operations knowledge, but who are not proficient in other business areas. The benefit of a business coach is that he or she can point you in the right direction and connect you with the types of services that you will need to be successful in the kind of business you are starting. Your coach can also give you a true objective opinion about what you should spend time doing yourself and what you should outsource to others.

When choosing a business coach, make sure you select someone who is well rounded and who has the right background for your business and right temperament for you. If nothing else, your coach should have a Masters of Business Administration (MBA) degree. That will ensure they have mastered all of the primary business functions and can assist you in putting together a solid business plan.

Step 3: Choose a Business Location

Location, location, location. Where you decide to locate your business is important for many reasons. If your business is a retail- or customer-facing business, it will be important to find a location that’s convenient for your customers, is near workers who have the skills you need and which the right zoning requirements for the kind of business you are starting.

It is also important to have easy and safe access to your business in a neighborhood that allows access to the needs of your employees.

Step 4: Finance Your Business

As my mother used to say, “There are many ways to skin a cat” and there are as many ways to fund a business as there are ways to skin a cat.

Business funding generally falls into two big buckets–conventional funding and unconventional funding. Conventional (or traditional funding) is the type of financing that you get from a bank, venture capital fund or research grant. These types of loans are good for people (and groups) who are well established, have better than average credit, and who have a long history of credibility in their field.

For those who do not meet all of the requirements for conventional (i.e. traditional financing), unconventional funding can be an excellent way to finance a business. With unconventional funding, there are many ways to get money including: unsecured loans, unsecured credit cards and term loans from unconventional lenders. Much of the lending that results from unsecured money is based on your business’s performance if you are already operating or it is based on your business credit if you are just starting out.

At The Rosewood Groups, we specialize in helping entrepreneurs and business owners secure unconventional funding. We can place you in the correct funding program ranging from our Financially Free program that helps with personal and business credit, to our unsecured term loan access for those with good credit, collateral or cash flow, to our cash advance program for those who are in business and who need to expand, make payroll, or want to stock up for a seasonal push.

In Part 2 of this post, we’ll explore how to choose right type of corporate structure, the right name for your business, the right tax and incorporation forms to use and understanding the rules and regs you must follow as a bona fide employer.

The Rosewood Groups can assist you and help you build a business plan that points your company in the right direction.

Samuel Bethea is President of The Rosewood Groups, a small business development company, helping small business with cash flow and growth by assisting with financing and business planning. Contact us at 307 215-8410 | www.therosewoodgroups.com

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The Startup Checklist, Part 2

4 more ‘must-do’ steps for success

By Samuel Bethea

In Part 1 of this post we discussed the importance of a business plan, getting the right assistance and training, choosing the right location and putting the right financing structure in place. Here we’ll explore how to choose right type of corporate structure, the right name for your business, the right tax and incorporation forms to use and understanding the rules and regs you must follow as a bona fide employer.

Step 5: Structure Your Business to Fit Your Level of Protection.

Having the right business structure allows your enterprise to ride in the correct vehicle. Different business structures have different checks and balances that are based on the destination of the business. For instance, the S corporation has a tax structure that is oriented towards a business that expects to become an investment grade business, whereas an LLC has very good legal protection for the owner, but has a tax structure that is closer to being a sole proprietor in terms of how it is organized.

Step 6: What’s in a Name?

A business name is important for two reasons. One reason is finding a name that is catchy and sticks with your customers, and the second reason is that the IRS likes to know how to reach you. Learn which tax identification number you’ll need to obtain from the IRS and your state revenue agency.

The name that you choose should match your web address, so you might want to look for support in this area in order to align your business name with your website, and other business directories.

This alignment is necessary when it comes to ensuring all of your information is aligned correctly with the Dun & Bradstreet and the business credit reporting agencies.

Step 7: Register with the Federal Government for an EIN and with the Secretary of State for Tax Purposes

Step 8: Keeping the Car on the Road

It is important to understand all of the regulations that keep you operating legally. However, many small business owners have never been responsible for the number of employees who end up working for them. It is essential to understand all of your obligations as an employer for collecting taxes, having the correct license and having the right insurance coverage.

All businesses, no matter how unique, fall into standard categories as far as the government is concerned. Some require a license, and others do not. Be sure to check which business category your enterprise falls under at the North American Industry Classification System (NAICS) code or the Standard Industrial Classifications (SIC) code.

Small businesses have the same regulations for managing employees, as large companies do. Collecting payroll tax and ensuring a safe and problem-free workspace is a requirement that must be enforced.

The more details you can iron out in advance of starting your business, the smoother the launch and early growth stages will be. Most entrepreneurs have tremendous passion and energy, but no one can wear ten hats forever without a few falling off. Take the time to sort out which functions you feel comfortable managing yourself and which would be better to farm out to outside experts or skilled new employees.

The Rosewood Groups can assist you and help you build a business plan that points your company in the right direction.
Samuel Bethea is President of The Rosewood Groups, a small business development company, helping small business with cash flow and growth by assisting with financing and business planning.
Contact us at 307 215-8410 | www.therosewoodgroups.com