Small Business - Where to start

[CNCRob]

Hi,
A co-worker and I have been playing around with the idea of starting our own small business. This would just be a part time thing and we don't have any plans of qutting our day jobs any time soon, nore do we plan on getting rich with it. Just something for us to do on the side, in our spare time. I was wondering for those of you who have done it or know anything about it; What steps should we take, as far as the business side of it goes. I have did a little bit of reading about it and here's what I have found out we need to do so far. Talk to a lawer, Get insurance, Get a businness license (not really in that particular order). Is this some of the things you would do? and/or is there any thing you would add or subtract? Is there anything else we should be conserned about? I am also interested in how you file your income and sales taxes. I know every case is a little differen't and the state and local laws may also be a little different, I am just looking for some general information. For those of you who have done it before, what steps did you take? The type of business we are thinking about is making small furniture items and case goods. Thanks in advance - Robbie

[ger21]

You may need a builders license if you'll be installing built-in casework. Not sure, though. And hire an accountant to do your taxes. They're not that expensive.

The hardest part will be finding the work, and especially finding people willing to pay you what it's actually worth. Several times I've priced things for people who expected the price to be less than 1/2 what it actually was.

[Geof]

Do you have any community colleges or places that might have a program of course for starting your own business? Make sure you check your city zoning; it might be fine to have a hobby workshop but running it as a business may not be permitted. Also even though you do not plan on getting rich make sure you keep your financial records as if you were. If you do get successful and the tax auditors come by nice organized records are a good thing to have. Like ger says you will find nobody wants to pay the real cost of anything; my advice is don't compromise on quality or price; do top notch work and price it accordingly. In ten years time it will be much better if people refer to you as that guy rob, sheese he is expensive but he is so good you should go there.

[tekno]

become an LLC. it will help protect both of you if something goes wrong.

[NC Cams]

Who is going to be the "BOSS"????

That is the toughest thing to get over when you have a partnership, especially if the parties are both strong willed and intelligent.

The thing to do is to first write/formulate a FORMAL business plan. Have it reviewed by a mutual friend who IS a successful small businessman. They can provide you more do's and dont's than ANY business course you'll ever attend. Keep in contact with them as their experiences can be QUITE valuable in dealing with the problems that you will encounter - surely, they've been there and done that before.

Tom Peters wrote a lot of successful business books such as "In search of excellence". In a seminar, he once stated to a class of MBA's words to the effect '...if you took the money you spent to go to this college and went into business and lost it all, you'd learn more than you will from this school...'.

An LLC will not protect you if you allow personal finances to become intermingled with the business or if you "blurr" the lines between the business accounts and your personal ones.

No matter what you figure the cost of your business to be, it will end up costing you more... Your friendship will end at some point after the business gets going as there will be financial and business challenges and opinion differences that will come between you.

If either of you can afford to do it, be the sole proprietor. Otherwise, find a way to have one guy "own" the business and then pay the other guy for his services as an outside contractor in an agreed upon manner. Fortunately, I did mine that way and didn't have to lose the entire business when my partner's business folded and the IRS went after him....

Finally, keep in mind that MOST small businesses fail within the first 1-2 years. Only invest what you can afford to lose in time, money and "soul".

Good luck....

[fyffe555]

Find an accountant that deals with small business and if possible who has knowledge in your industry, even if he's a little more expensive than the others - could save you a lot later. Ask him about corporate entity options, I'd suggest you look at setting up an S Corp.

A decent accountant should guide you on tax requirements and filing and any other issues like tangible property and how to by plant or consumables. Watch out that you do income tax filings correctly - biggest mistake in most businesses, you have to file for fed, fica and local and state as required for BOTH employer and employee. Get that wrong and there's a big bill at the end of the year.

On the other hand if you run an S corp and pay according to the tax tables, owner employees can pass back both income and losses for the business against thier personal tax and in the first few years at least may get thier entire irs for that business refunded.

Other than that it's get a business name, set up the corp and/or register the business name, get an occupational licence from the city, get a contractors licence if you'll be installing and off you go. Maybe a business phone and some advertising budget too. Not difficult.

Rule 1; assume you'll actually make half or less of what you currently predict initially.
Rule 2: once you've got the ducks in a row, accountant etc, Just concentrate on getting money in, watch the cash flow and keep the costs and receivables down.
Rule 3: then think about why people use you and try to give them more value added over the competition. Quality, custom solution, local attention or percieved value for money are always attractive to a small business customer.
Rule 4: As Ger21 says , Plan for customers to think things should cost less than they do and figure out your business model and points of negotiation.
Rule 5: try and enjoy it.. ..

[CNCRob]

Thanks for all the advice, Lots of good tips guys. I have a couple new questions, I found web page on the state website with information on starting a new business with some of the general laws and regulations on it. I came to a part about business name registration, it stated that you must file a business name with the register of deeds in every county you intend to do business (http://www.nccommerce.com/servicente...BLIO_NOTES.pdf. page 6).
I was wondering like if I sold to stores in other counties would I have to register the name with every county that the store was in? That one is kinda interesting because what if they came to me? Or if I sold at flea markets would I have to register for every county the flea market was in? And what about mail order? I assume you would only have to register it at the county you sold the item in and not the county where you sold it to? The zoning has me a little concerned also, I am zoned R-2 so im not sure if I can start a business here or not. Thanks again for the help guys.

[diarmaid]

Hi,
I've been researching this since beginning down the long road to starting my fabricating business next year. Your probably in a better position than me thus far as you already have at least your workshop!

There are a lot of useful sites on the internet for general and specific info. I have a list of some sites below for you to look at. Some are specific to Ireland but will give you an idea so you could find the equivalent services in your area, such as business registration. Others are Irish sites but the information is universal and very useful. Others are USA based. There are business registration service companies here that will sort everything out for €300. A lot cheaper and easier than a lawer. Incidentally my brother in law is an accountant and he told me that its a lot cheaper than that €300 and he'd do it for me, but everyones not in this position and to remove the hassle that price is ok I think. Some of the links below will help wherever you are.

Business Plan:

http://www.planware.org/gchannel.htm?index=3

Company Formation:

http://www.companysetup.ie/companyfo...formation1.htm
http://www.cro.ie/

Business Startup:

http://www.accountingnet.ie/channels...nt/startup.htm
http://www.startingabusinessinirelan...nformation.htm
http://www.setupsmallbusiness.com/
http://www.businessownersideacafe.co...ness/legal.php

Really Good and Interesting Free Startup Story:

http://www.sherline.com/business.htm

Im setting up as a sole trader. As opposed to a LLC (Limited Liability Company), or a partnership etc.

I have useful info on the different types of company advantages/disadvantages. I'll type it up and post it later as a text file attachment.

What type of insurance are you thinking about. For example: Is public liability really necessary if your selling furniture in your part time over the internet?

[carlnpa]

Some good ideas have been posted.

The most important thing IMHO is to actually get some business now. The way you envision the business today and what it develops into may be quite different, and will influence all the subsequent decisions you make.

Your ability to do field work with a partner should be tried in the real world before the formal paperwork, again IMHO.

If you live in a commonwealth state and are married joint assets are largely shielded from suits.

As far as zoning goes don't hang out any signs, and don't tweak the neighbors with noise and smell, otherwise ignore zoning until they cease and desist you.

Run yourselves as sole proprietors for tax purposes. If you need a simple name call yourself " Your Name Consulting" or something using your name, no registration required.

Forget about business names and name registration until its certain you will succeed.

Stay away from lawyers initially.

Try to do business with people you know, if you get a bad feeling about a job just don't accept it.

Make sure you have clear payment terms like:
30% payment (or material costs) when material shows up
progress payments
10% final payment

I could go on.

HTH

[CNCRob]

Originally Posted by carlnpa Some good ideas have been posted. The most important thing IMHO is to actually get some business now. The way you envision the business today and what it develops into may be quite different, and will influence all the subsequent decisions you make. Your ability to do field work with a partner should be tried in the real world before the formal paperwork, again IMHO. If you live in a commonwealth state and are married joint assets are largely shielded from suits. As far as zoning goes don't hang out any signs, and don't tweak the neighbors with noise and smell, otherwise ignore zoning until they cease and desist you. Run yourselves as sole proprietors for tax purposes. If you need a simple name call yourself " Your Name Consulting" or something using your name, no registration required. Forget about business names and name registration until its certain you will succeed. Stay away from lawyers initially. Try to do business with people you know, if you get a bad feeling about a job just don't accept it. Make sure you have clear payment terms like: 30% payment (or material costs) when material shows up progress payments 10% final payment I could go on. HTH

Hi,
I was wondering about that, if you use your own name does it have to be your whole name(like first and last) or can it be just the first, or first and middle?

[carlnpa]

I am just using my first and last name no middle initial, the bank and customers are all ok with it.

[Geof]

Originally Posted by CNCRob Hi, I was wondering about that, if you use your own name does it have to be your whole name(like first and last) or can it be just the first, or first and middle?

I second carlnpa's advise on ignoring zoning; I am just reluctant to be the first to suggest ignoring regulations. Quite happy to do it myself but never related to safety or taxes.

I have a comment about using your name. If you are wildly successful and you have the opportunity to sell your business the name goes with it. There was a very nasty case in my area a few years ago where a well respected personally named business was sold, the new owners traded on the reputation of the founder, ripped a lot of people off and ran the business into the ground. Then the lawsuits started and the defendant of course was the busines with the original owner's name still attached. The poor guy was destroyed socially and emotionally because no one knew he had sold out and was not responsible.

It is very difficult to change the name of a business and maintain momentum once it is established and growing. Think about all the positives and negatives about using your name for the business. I personally, cannot think of any positives.