Are you thinking of starting a business in 2018?
Here are some pointers to help you along the way. I have started a lot of businesses. Some have been a success, and others barely made a profit. There are a lot of things to consider before jumping right into getting incorporated. One big mistake I’ve made was not having a clear business plan before starting. When my husband and I started our first business, it was a dog training business called The Doggy Guru. We did great at first, but as the business grew my husband could not keep up with the demand, and we eventually had to shut the doors. Now, you might be thinking if you were growing, why would you have to close? We were growing in customers, but still not making enough money to hire additional trainers, and that caused him to only be able to take on so many new clients. What ended up happening is my husband got burnt out within only a few short years, and decided it was time to move on. If we would have had a set business plan, we would have been prepared for the spike in clients and knew how to deal with that. Just jumping head first into owning a business will be a sure way to fail, it may not happen at first, but over time without a clear guideline of where you want to go with your business, you end up getting stuck, scared, and lost!
After that, we learned that we needed a clear goal and business plan, so our next business was a great success. We started a commercial cleaning company called Matos Clean. I had a business plan, we had rules and guidelines for employees, and even had a lawyer who helped with the paperwork. This business felt different going in because we knew we had all our ducks in a row. Businesses saw how professional our paperwork was, and we got hired early on with some big companies. We even got a contract with an apartment complex that gave us steady work. What we didn’t plan for was a bad employee. Yeah, we went through all the proper channels and background checks, but still, you never know if a person is going to be a good employee. We were cleaning a big bank, and we had just hired a new guy. A really sweet older man and he and my husband got along right away. During one of the routine cleanings of the bank, this new guy stole money! Yep, he stole money from every single donation jar in the bank. Now, because this was a very large bank there were jars in every office and on most of the counters. There are camera’s everywhere, and needless to say, the next day we got a call from the police, asking us to meet with the bank supervisor. We were terrified and didn’t know what to expect until we saw the camera footage. We were embarrassed, devastated, and also grateful the bank did not press charges on us. Instead, they asked us to pay back what was taken from the jars, and since it was donations they really had no idea how much it was, so they gave us a number, and it pretty much bankrupted our little business. I don’t tell you this to scare you, instead, I tell you this to prepare you. We hired the wrong person and that untimely was our demise. You may do everything right and by the book, but there is always going to be something unexpected that pops up no matter what business you have, so have a little money stashed away for those incidents, just in case. I just hope that never happens to you!
Here are some tips that I’ve learned along the way by owning businesses. This info is based in Florida, as this is the only state I’ve ever started a business in, so be sure to check your state’s guidelines, and county licenses needed before going any further with a business plan!
1. Paying customers- Before you ever even think about getting incorporated be sure you have a product or service that people want. If you don’t have clients already, then you may be wasting money by starting a business. If you have a product, test it by selling in on Ebay, or Facebook first. If you want to bake cakes, sell them to friends and family to be sure you can actually make a profit. If you’re offering a service, get a portfolio of jobs, or gigs you have done so that you will have references once you start your business. Ultimately, you don’t want to spend money on getting your licenses if you don’t already have interest in your product or service. With our business Sunshine Breeders, we were selling the worms long before we started our LLC. The reason we had to incorporate, is that we started selling the worms to local stores, who could only pay us if we had a business checking account. In order to get a business checking, you have to have a registered business.
2. Business plan – I know I touched on this earlier, but it’s vital to have a set-out goal or plan for what you want for your business. Starting a business just because you have customers is not going to last long term. Don’t be too anxious, patients is a blessing sometimes. You need a clear idea of where you want your business to go, how much money you expect to make, if you want employees, or what your end goal is for this business. Having these ideas are going to help you focus on them, and help make those goals happen, it’s also going to keep you on track for what you need to change if you missed the goals in the first year. I can’t stress enough how important this is when you are thinking of starting a business. Also, a great idea is a vision board or journal for your business goals. If you want help with writing a business plan feel free to email me. SheenaDiane@gmail.com
3. Should you get an LLC– This is a question I get asked a lot and it’s one that’s honestly hard to answer. Currently, our business is an LLC but when we had our cleaning business it was an S Corporation. Here is the definition found on www.legalzoom.com “A limited liability company (LLC) combines elements of a partnership, sole proprietorship, and a corporation. Consider your type of business, personal assets, and liability risk when deciding whether to form an LLC. what does LLC mean? Limited liability means that its owners, also called members, are usually not personally responsible for the LLC’s debts and lawsuits. If an LLC files for bankruptcy, the members do not have to use personal money to pay the company’s debts. If the LLC faces a lawsuit, the members do not risk losing their home to cover a settlement”.
4. What is an S Corp - Here is what an S Corp is – this was taken directly from the IRS website: “S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level. To qualify for S corporation status, the corporation must meet the following requirements:
• Be a domestic corporation
• Have only allowable shareholders
o May be individuals, certain trusts, and estates and
o May not be partnerships, corporations or non-resident alien shareholders
• Have no more than 100 shareholders
• Have only one class of stock
• Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).
Whether you get an S corp, C corp or LLC really depends on what you want out of your business. I suggest speaking with a business lawyer, or Business advisor on the correct one to choose. There is also Sole Proprietorship and that is where you act as the business using your own social. However, I was advised against that being if you ever get sued or go in debt all your assets like your house, car, etc. become the businesses and you can lose everything you own in your name. If you are incorporated as an LLC or S Corp then the business acts as a separate entity and your personal assets cannot be touched!
5. Marketing – One thing I had to learn the hard way, to have a successful business of any sort, you have got to learn to market it. Going back to the Doggy Guru days, I would have spent all day long marketing for my husband, and it paid off because again we got so much business we had to turn people away. I had to learn the hard way on what worked and what didn’t. You have got to have some sort of online presence so that people will buy whatever it is your selling. This does not necessarily mean you need to run out and buy a website right away. Places like Facebook, Instagram, and even Twitter can act as your website until you start making enough money to put back into the business. If you are not good at marketing but have high hopes for your business, I would suggest hiring someone to market your business for you. It really is going to make or break your business. It’s the difference between having friends and family as customers, to growing into a big enough business that you have customers for years to come. Social media is really the best and most cost-friendly way to market. If you need tips on this, check out Gary Vaynerchuk, he is literally the master of social media, and he has taught me so much more than I ever would have learned on my own. https://www.youtube.com/watch?v=d3w3YvhbHVA
6. Knowledge is power – I say this a lot but it’s so true. If you are going to brand any type of product or service, you have to be knowledgeable about what the people want. If you are not reading about your craft and learning all there is to know, then what makes you stand out next to the other guy selling something. There are no original ideas. We are all fighting for someone to spend their money on whatever it is we are selling. If you are not an expert in your craft, then I’m going to go to someone else who can answer my questions about the product or service. You have to know everything there is to know about your business. If you don’t know it, then research it. Get the answer and memorize it!
7. Customer Service – This by far goes such a long way. For instance, I also sell Scentsy, the scented wax, but there are literally hundreds of people in my area selling Scentsy. So, why would you buy from me? I strive to give great customer service. I will meet you wherever you need me to, I will take time out of my day to speak with you if you have questions, and I always give thank you cards, or gifts when you purchase from me. I go above and beyond for my customers and they know that when they book a party with me, they are going to get lots of goodies in return. Another example of this is our phone company. Note, that I am not being paid in any way, shape, or form to plug T-Mobile, but I’m going to use them as an example. We have been with T-Mobile for over 12 years. Do you know why? Because their customer service is amazing. I can't tell you the number of times they have replaced our phones or given us a discounted phone. They may not have the best cellular service, nor the best data plans, but we would not go anywhere else because over the past 12 years T-Mobile has given us the best customer service possible. No, the customer is not always right, and yes, there will be times people will try to take advantage, but the truth is, keeping the customer happy makes everyone’s life a little better. Without good customer service, it’s going to be hard to keep people coming back.
8. Taxes – This is one of those things that I have no clue about, but, it’s also something I didn’t think about when starting our first few businesses. When you are a business owner, the taxes that come out of your check in a regular job no longer happens. You have to manually deduct the taxes from your income. What helped me was having two bank accounts. I had my main business account, and I had my tax account. I actually set up a checking and savings together and used the business savings for taxes only. This way when it was time to file, I would not get a huge tax bill that I had no clue how I was going to pay. Another suggestion I can give unless you are an accountant yourself is to hire a CPA to help in this department. The last thing you want is to not file your taxes correctly and get the IRS after you.
9. Files – Be sure you keep all your receipts going out and coming in. A huge help to me was getting Quickbooks. Yes, it is a bit costly. I want to say it cost about $200, but in my opinion, it’s worth it to keep everything organized and filed. I get sidetracked really easily, so having a program like this really keeps me accountable. If I don’t file a receipt, then I won’t have the correct amount on my budget paperwork. Definitely look into purchasing a program like Quickbooks to help you keep everything in one place, and keep all your sales in order. You will need this at the end of the year when filing your taxes or when filing your business report. I also use a filing system with folders. You can set up one folder for income, and one for business expenses.
10. Florida – Because I live in Florida I register my business name through Sunbiz.org. Depending on where you live you will have guidelines to follow. Also, depending on the county you live in you might need a county license in order to do business in your area. I say do all the above before paying to get incorporated, let getting an LLC or S corp be the last thing you do. The reason I say this is because you don’t want to drop $150 bucks if you’re not truly ready for the long haul in your business. There are so many little steps you will learn along the way. You will make mistakes, but learn from them and keep moving forward. Once you register your name on Sunbiz.org then you will need to get a tax ID number. You can get this by going to IRS.com. It’s pretty easy, you just fill out the form with your new business info that you get from Sunbiz, then you get emailed your tax ID or EIN. With this number, you can open a business bank account, and have a business PayPal. If you are not sure where to find info for your state, call your local tax office. They can direct you to the right locations, and answer a lot of your questions.
I hope that my experiences can help you in yours. I want to wish you a very prosperous 2018, and all the best in starting your new business! I am always glad to help, and love hearing from you so feel free to shoot me an email below, or find me on social media! Instagram, Pinterest, Youtube, Facebook, Twitter.
Check out my podcast on starting a business: https://anchor.fm/sheenawahm?at=2125452