Helpful Business Tips

If you are anything like me , you like your business but hate selling to people.  I am not a natural salesman and have to remember that if I don’t sell my services, my business will close and I am back working for somebody else.  Well Brad Sugar’s on Entrepreneur.com talks about techniques to use your self and to work with staff (if you have any) to help close more deals.  Not sure this will help get me over my dislike of selling, but with practice i believe it will make it easier and help me close more deals.

I recently was at a chamber event for the first time and of course had to describe my company.  I had not practiced my “elevator speech” about my company so I bonked it.  An elevator speech is a speech of about 15 to 30 seconds that describes your business and what you do.  I have repeatedly talked in this column about focus on your business and be able to tell people exactly what you do.  When I actually had to practice what I preached, I flubbed it, bonked, booted, committed the big S. So I had to go back to the drawing board and review what I needed to do.  First I went back through Guy Kawasaki’s “Art of the Start” and his previous log posts.  Then I reviewed some websites to work on the pitch.  Dale Kurow’s website is a good one to review to help you (and myself).  Remember, everybody you meet is very busy just like you, you only have a limited time to make an impression. Use those 30 seconds to their fullest.

There are basically four types of entities that can be selected for a company: sole proprietorship, corporation, partnership and Limited Liability Company (LLC).

Sole Proprietorship- This is the simplest form of business entity. No additional paperwork is required for formation, just start a business and go. The taxpayer would fill out a schedule C on their tax return and that is essentially it. This type of entity however has no liability protection and the taxpayers assets can be at risk in the event of a lawsuit.

Corporation- For tax purposes there are two types of Corporations a C Corporation and an S Corporation, named as such because that is where they are explained in the IRS Code (Chapters C and S). A C corporation is taxable as a separate entity unto itself. The advantage of a C Corporation are certain liability protections for the owners. The C corporation falls short in that it has a double taxation problem in that the corporation pays tax and then the shareholder(s) (you) pay taxes on the dividends that it pays you.

An S Corporation is treated as a flow through entity which simply means that the corporation does not pay taxes, the income flows through to the individual owners to pay the income tax on. This is a simple election that happens when the Corporation is formed. Advantages of an S-Corp are: protection of a C corporation and income taxes are paid at the individual level.

Corporations can be complicated due to the rules that have to be followed to maintain their status, such as annual meetings at which minutes are taken (even if there is only one shareholder, etc.)

Limited Liability Company (LLC)

LLC’s are entity’s that were originally created in Wyoming and now are available in most states. The LLC allows liability protection similar to a C Corporation, but the flow through advantages of the S Corporation. The “owner” of the LLC simply completes a schedule C on their individual tax return to pay the tax on the income generated by the LLC. Advantages are that it makes tax preparation easier usually, you don’t have to pay to have a separate return completed, and liability protection. The disadvantages happen as you become larger and add more owners to the situation, which you then have to file a partnership return and each individual pays tax based on the income from a k-1 and all income is subject to self employment taxes.

Partnership

This form of business is similar to the sole proprietorship (except in the case of a Limited Partnership, but even then somebody is on the hook). Partnerships should have an agreement on percentages of ownership and profit percentage, and particularly a written way out of the partnership. This helps to take the emotion out of the business. Of course this is not totally possible, but if there is no partnership agreement then expect nothing but bad things to happen.

Entity selection is very important so talk with your accountant or attorney to help you through the decision process.

When entrepreneurs first start their businesses, more likely than not they are looking to start it out of their home.  This does have several advantages, rent is already a sunk cost because you have to have somewhere to live  and you really can’t beat the commute.  The disadvantages are fairly big though, constant distractions from family or the overriding desire to clean the house, etc.  The Wall Street Journal recently posted an article to give some helpful hints on how to not only cope with the distractions but also make your “office” more productive.  Bootstrapper also just recently just posted a list of 100 productivity tools (most of which are free), to help on the productivity side.  Take a look at these to help turn your home office into a productive workplace to help you keep overhead (the great killer of all businesses) down as you start your business.

While I know this is a overused cliche’, it is one that I feel rings truer than most. You will never have all of the data that you need to make the perfect decision (if there is such a thing). A business owner must seize the opportunity when it becomes available (using the other cliche’, if it seems to good to be true it probably is). Mindtools has some useful free tools and examples to help you with your decision making process. Analysis paralysis will stop the best company in its tracks. Use the information you have, weigh the risks and go for it.

A recent Wall Street Journal article highlighted business plan contests. These contests are put on by organizations and lead to access to potential loans and prize money. The four highlighted in the article were; Silicon Valley Boomer Venture Summit, Wisconsin Governor’s Business Plan Contest, WPI venture forum, and Make Mine a Million $ Business.  If you have a chance take a look at these sites.  It not only talks about the contest, but they also talk about what makes a good plan, interviews with business owners and entrepreneurs, and other good information,to help you out. We have a great business plan template at our home website. As always if you would like some help send us an e-mail at info@cascadebusinesssolutions.com

A recent blog entry by Tim Berry at entrepreneur.com really helps explain the importance of cash flows for your business.  While profits are nice it is cash flow that actually makes your business tick.  Cash is still king and needs to be managed and watched even more than profits.  While accounting profit are nice, they don’t actually pay the bills.  Only cash does.  Robert Kiyosaki of Rich Dad Poor Dad fame, made his fortune talking about the importance of cash flow and how it makes your business successful.  Agree or disagree with his philosophies, his talk about cash flow does make some sense.  So remember to focus on cash flow the true life blood of your business.

Brandweek had a recent article about the worst line (brand) extensions for 2007.  This article shows the importance of your brand and not trying to get too crazy with your ideas (Hooters Energy drink, Precious Moments caskets,what where they thinking). Another great line about the Trump Home rug collection:

“Trump rug collection?” asked Ries. “For the head or the floor?”

Remember to look at what your company represents to you and focus on that for your brand. By focusing on your brand you can increase your client base and your bottom line, those are always very good ideas.

I just recently finished a book by Chip and Dan Heath called Made to Stick basically a book about why some ideas will stick around long after the initial presentation of them.  I think this is a great book for the entrepreneur who is looking for new ideas to help get their product or advertising campaign some legs.  Check out the website if you have an chance and definitely pick up the book (figuring out how they did the duct tape thing with the cover alone will make it worth it).

I came across a recent article in the Wall Street Journal about websites for people to bounce ideas off of each other with regards to startup ideas. Intuit sponsors two of these sites Iwilljuststart.com a site that helps you get focussed on starting your new project and offers a contest for winners to receive 40K and 10k in professional services. Jump Up is the other site that is a social networking site for entrepreneurs. This site helps get you some of the resources you need and connects you to other people starting a business. I really like this site as it helps you not only find other people in your field, but can help you meet up with the professionals that can help on the business side of your idea. Ideablob is a networking site to help you find other small business owners to bounce ideas off of. The extra cool thing about this site is that it has a contest for 10K a month for your ideas. Last but not least is a offering from Bank of America, this site focuses on connecting entrepreneurs with others and gives good advice on starting a business and other interesting links.