| t you with the title, didn't I? Chances are, you | | | | flimsy, verbal contract. In addition, make sure you |
| don't want your business to grow slowly. No, you | | | | have purchase order, or a signed contract for any |
| want fireworks, and a little animated line that | | | | invoice you issue. Properly documented |
| shows profits going through the roof. | | | | transactions can save you thousands in legal fees, |
| That's all well and good, provided this is your third | | | | and lost profits. Again, accountants and lawyers |
| or fourth successful business. If this is your first | | | | are people you don't want to see in the |
| business, you may need to take it slow. Why? | | | | "expense" column every month. |
| Because there are mistakes that are waiting to | | | | What about hiring employees?... |
| bite you. You may not be properly prepared to | | | | This can carry a huge, legal burden, depending |
| handle what is coming down the pipe, even if it | | | | upon their legal classification. As a small business, |
| something grand, like a $100,000 contract. | | | | your best bet is to hire a 1099 contractor, rather |
| With this in mind, I'm going to lay out a couple of | | | | than a full-time W2 employee. Why? Hiring a W2 |
| mistakes to avoid, and a few systems you will | | | | employee immediately makes you responsible for |
| need in place. | | | | paying equal parts of Social Security and Medicare |
| Common Capital Killers... | | | | tax. Depending upon the number of employees |
| The first mistake everyone seems to make, is | | | | who are classified as W2, you may be required to |
| their need for an office. Unless you are selling a | | | | pay for workman's compensation insurance, along |
| product that requires a fair amount of foot | | | | with Unemployment insurance premiums. In some |
| traffic, do not go out and lease, rent, or | | | | cases, it is not legal to classify workers as 1099. |
| otherwise procure an office outside of your | | | | There are 20 questions that the department of |
| home. | | | | Labor asks to qualify someone as a contractor. If |
| Multiple friends of mine have done this very thing, | | | | you have any questions, you should call the US |
| and it has eaten into early profits. If you have an | | | | Department of Labor, before hiring for a position. |
| office, then you will want a phone system. If you | | | | What about advertising and a website?... |
| have a phone system, then you will need to | | | | Both of these sections go hand in hand. Start by |
| purchase internet service. Occupying an office is | | | | getting your company listed with Google, Yahoo, |
| an easy way to spend $700-$1100 a month for | | | | and Bing Local. You'll have the upper hand when |
| which you will get nothing in return. If you have a | | | | someone searches for "rocking chairs in Boston". |
| spare bedroom, with some decent used office | | | | Post pictures of your product, company, hours of |
| furniture and lighting, it will be more than sufficient. | | | | operation, and services. It's simple, and easy. |
| In the beginning, it won't be a huge inconvenience | | | | If you want a website, I would recommend a |
| to meet a client at their office. They would | | | | service like Dreamhost(at $10 a month for |
| probably prefer that you come to them. | | | | hosting), and installing Wordpress. For a theme, I |
| The second mistake I see is a problem along the | | | | would recommend Thesis, which is infinitely |
| same line. People immediately feel the need to | | | | customizable. If you aren't comfortable with |
| upgrade their transportation, at the worst possible | | | | setting up something of this nature, then call a |
| time. This is especially tempting to people who are | | | | local web design firm. It shouldn't cost you very |
| in sales. Never spend good money on image | | | | much for a basic website, and it will be a |
| maintenance. Your business is young. | | | | worthwhile investment. |
| If you already have a car payment, buy a | | | | Stay away from the Yellow Pages. In most |
| magnetic panel that has your business phone | | | | cases, it is not worth the investment, either from |
| number and name, and stick it on. In some cases, | | | | a web standpoint, or in return on investment |
| that may qualify you to write off some, or all of | | | | spent. If you are going to spend money, spend it |
| your car payment as advertising. Check with your | | | | on a service like Google Adwords, where you can |
| accountant on that one, as certain guidelines have | | | | track your return on investment. |
| to be met for consideration as a legal deduction. | | | | Yes, if you want the most profitability in this area, |
| Accounting and Legal considerations... | | | | you will have to learn how to use such systems. |
| Speaking of an accountant, you should have a | | | | There is no path around it. The business will grow |
| good one, and use him as little as is humanly | | | | faster, if you learn how to use the internet as a |
| possible(at least in the beginning). If you can, learn | | | | marketing system. |
| to use a basic invoicing/accounting program, like | | | | With regard to offline advertising, do it in ways |
| Quickbooks. That will save you a fair amount of | | | | that cost you little or nothing. Barter services with |
| money. If you aren't great with books, or have | | | | a print shop for flyers. Talk to a local pizza |
| more complicated financial transactions, then you | | | | company, and see if they will deliver your flyer |
| may need to hire a part-time bookkeeper to | | | | with their pizza (for a small fee, of course). Be |
| enter transactions, and make sure everything is | | | | creative, be imaginative, and expand the definition |
| ship-shape. | | | | of your business and how it relates to customers. |
| Legal issues are another fun area. Whether or not | | | | What About Customers... |
| you hire a lawyer will depend a great deal on the | | | | Ah, yes. Revenue generation. This is why I call it |
| industry you are in. I would recommend | | | | growing your business slowly. Unless your business |
| LegalZoom for standard legal documents. Basic | | | | is in a huge growth area, the first client is going to |
| contracts, scope-of-work documentation, and | | | | be the hardest to get. The second will be a little |
| non-disclosure agreements are pretty standard | | | | bit easier. On from there. While you can get leads |
| from state-to-state. Do buy a template from | | | | more quickly through the internet, the easiest |
| someone like LegalZoom. Don't download the first | | | | way to get a new customer is a referral from an |
| free one you find, and modify it for your | | | | old customer. Do quality work, sell a quality |
| purposes. You never know what you are missing | | | | product, provide a quality service. |
| in the fine print. While legal fees can kill you, they | | | | Oh, Come On... |
| can also keep you from unnecessary lawsuits and | | | | Yeah, I know,you signed up to hear some |
| expenditures. Pay for it now, or pay for it | | | | buzzword from the business gurus. Some Jedi |
| later...with interest. | | | | mind trick that will make everyone pay you good |
| With regard to keeping legal records, I prefer to | | | | money. Honesty, quality, and thrift will make your |
| converse via email, rather than verbally. In this | | | | business grow. There are no shortcuts. So listen |
| manner, I can have a written record of the | | | | up, take the advice to heart, and prepare to |
| conversation and agreements, rather than a | | | | grow...slowly at first, and then exponentially. |