Welcome To Startup Students

Entrepreneur Magazine has a great article on the top five fears of entrepreneurs. But why stop at five? I’d like to expand the list to 10 common fears I hear about during my work as an executive coach.

First, Entrepreneur’s top five fears of entrepreneurs. They are:

1. Fear of Failure: “Without a doubt, an entrepreneur’s biggest fear is failing–understandably, because 95 percent of all businesses fail within the first five years. When you’re starting with those kinds of odds, it’s OK to be a little freaked out.”

2. Economic Uncertainty: “Five years ago, the economy may not have been of forefront concern for a startup entrepreneur. But today, businesses big and small, young and old, are worried about what the declining economy means for them.”

3. Being your own Boss: “As a small business, especially during the startup stages, there’s very little stability and security. Unlike traditional employment, you probably don’t have an office, employees, benefits or a paycheck. And what you definitely don’t have is a boss, someone guiding you along.”

4. Consuming Your Life: “The idea of not having any time for yourself, neglecting your family and giving up your social life can be terrifying.”

5. Staying Afloat: “You need money to start up; you need money to operate; and you need money to grow. Throw the dismal economy into the equation–when people are spending less and it’s taking longer for small businesses to get paid–and money is even harder to come by.”

Why stop at five? Here are five more:

6. High-Wire with No Net: When you have been in your own small business and survived the early years that weed out most startups, you have the fear that you can never turn back to “the devil you knew” (i.e. traditional employment). The struggles of entrepreneurship make you forget why you left corporate America in the first place and your memories become revised to dwell on how easy and happy it all was “back then.”

7. Losing Ground to the Jones’s: Even though your business may be getting more profitable every year, you look at your old car in the driveway and the Jones’s new Lexus and feel that if only you’d stuck to being a corporate (fill in the blank) you’d have new toys, too.

8. The Merry-Go-Round Stopping: Your business is cooking, but you worry that somehow, someday, and soon, the phones will go silent and no one will want what you sell anymore.

9. Stuck in Third Gear: You know how to cruise at 40 MPH but you need and want to do 90 (this is metaphorical). You fear you will never break through the wall of your business being merely “okay”.

10. Emperor Has No Clothes: And the big-daddy of all entrepreneurial nightmares–you dream that you’re walking down the street and suddenly you discover that you forgot to put your shorts on. Perhaps if you act natural no one will notice. Lots of entrepreneurs think everyone else is smarter than they are and live in fear of the world finding out their secret.

I could go on. So could you, so let’s have it: five more entrepreneurial fears from the front lines.

Oh, you were waiting for some advice on how to cure yourself of all these? How’s this: You can’t! Not completely, anyway. And I don’t think you’d want to. Fear is a great motivator. Ask anyone who owns a business if fear helps them get up in the morning and do what has to be done.

Contributing blogger Mitch York coaches executives who are evolving into entrepreneurs. Find York — and his personal blog — at www.e2ecoaching.com.

I was scouring my favorite small business blogs when I came across an interview with Raj Jaswa, an entrepreneur from Arizona. It was a quick interview, but packed with great advice, so I would like to share it with you. Enjoy the excerpt below:

Question: Given your experience and the entrepreneurs you’ve observed, what are the fundamental attributes of a good entrepreneur?

Answer: Entrepreneurs need to develop three skills, and they are very learnable:

First is networking. You have to learn to connect with as many people as you can. Be committed to building your Rolodex.

Second is education and learning. You have to really like learning and reading random stuff. Become knowledgeable, not in depth but on the surface, because you’re going to be working with everybody.

Third is accessing mentors and people you can learn from. The fewer bad decisions you make, the better chance your company has.

Question: What does the economic slowdown mean to entrepreneurs and Silicon Valley?

Answer: Boom times are bad because it can be hard for entrepreneurs to get access to engineering talent, space and people who will listen.

No recession lasts forever. It’s a business cycle. It cleans out bad habits and practices, and then you have a much better environment.

Question: Where do you see the emerging opportunities for innovators and entrepreneurs?

Answer: Opportunities come from seeing problems around you and in your lifestyle . . . that you would like to do something about. Instead of doing it as an employee or a volunteer, do it as a company. I recommend the book Built to Last. General Electric, Sony, they all started because the founders wanted to build a company.

That’s all for today, class dismissed.

Okay Startup Students, let’s get right back into the swing of things. As you begin you new venture adventure, the “little” things can become lost as you attempt to adhere to your grand vision. One such thing you really shouldn’t overlook is maintaining the naming rights to your product or service. Trademarking is a simple process that can potentially save (or cost) you millions in the long run. We’ve all purchased aspirin, cellophane, nylon, or a thermos, and of course ridden an escalator. But, did you know that each of those began their storied lives as a brand name?

Here are some benefits to trademarking your brand name:

• If your copyright is infringed, you now have the right to sue in federal court.
• By the same token, you limit your ability to be sued.
• You will have evidence of ownership, and sometimes your name is your most valuable asset.
• Your registration can be filed with U.S. Customs Service to prevent importation of infringing foreign goods – that is huge!
• You will be able to have a small “tm” placed after your logo or design to signify that this is your trademark and that others can not use it. This adds a sense of professional to your clients.

Overall, it’s simply a good idea to do so.  For more information, or to get the ball rolling with TM registration, visit the USPTO.  Class dismissed.

I had the opportunity to chat with serial entrepreneur Mike Michalowicz over the phone this evening, and really enjoyed hearing his insights on small business and more specifically young entrepreneurs.  I asked if he was interested in contributing to the Startup Students community, and he offered up the great article found below. Enjoy!

Mike Michalowicz, Serial Entrepreneur

I recently received a notice congratulating me on donating a gallon of blood. I quickly did some research on Wikipedia and learned that the human body has slightly over a gallon of blood pumping through it. Clearly, if I gave a gallon of blood in one sitting I would be a goner. Shoot, even if I only donated one third of my blood (approximately 3 pints) in one sitting I might suffer some tough consequences. But since I donate one pint of blood at a time, my body hardly misses it and I can donate as frequently as seven times a year without missing a heartbeat (pun intended). My blood donations have quickly piled up and in a very short time I have given a gallon.

We’ve all heard that cash is the lifeblood of our business. I think it’s hard to argue otherwise. Shouldn’t we treat our money like our business’s blood? Just like a medical emergency, a business in need of fiscal attention often requires an infusion of capital.

Medical needs sometimes can be predicted and sometimes can’t. Regardless of the timing, with a pool of easily accessible blood reserves the chance for survival dramatically increases. Sometimes our business problems are predictable and other times they blindside the living crud out of us. Regardless of the timing, with a pool of easily accessible cash the chance for business survival dramatically increases.

That’s why you need to regularly “donate” business cash flow to your reserves. The best method is by taking your profit first. What do I mean by this? Every time money comes into the business, and I mean every time, a percentage is automatically transferred into a separate account. Just like a pint of blood, a healthy business will hardly feel it being withdrawn. I like to call this reserve the Profit Distribution Account (PDA).

How much money can be transferred to the PDA without threatening the health of the business? Most stable companies should be able to post a profit of 10% to 25% after all expenses. So trying starting with a low threshold, maybe 5% of every inbound dollar goes to the PDA. Over time slowly increase the percentage and monitor closely to see if your business gets woozy. Once you have consciously (more often subconsciously) adjusted expenses and cash outflow to sustain your PDA withdrawals, you will quickly accumulate a tremendous cash reserve. Be cognizant not to stow away too much money too quickly. Just like donating blood, the rapid drain of cash exiting from business operations will cripple or kill your organization.

Should tough times come upon your company, and they often do, you now have a source of funds that you’ve built up. The PDA’s dinero reserve will see you through these times. On the bright side, as these funds grow they will ultimately be in excess of any imaginable rainy day needs. At that point you should take portions as an equity distribution. Trust me, it’s a real nice way to reward yourself for running a healthy business. There is a nifty little process I recommend on how to do this, but I’ll save that for another article.

If you’ve never given blood, I strongly encourage you to do it. There’s no question it saves lives. If you don’t currently donate to your company’s PDA account, I strongly encourage you to start. There’s no question it saves companies.

Author

Mike Michalowicz’s passion is making small businesses BIG and doing it fast. He was founder and former President of Olmec Systems, Inc., which he sold in 2002 through a private transaction. He subsequently co-founded and served as Co-Managing Partner of PG Lewis & Associates, LLC. There his leadership helped bring it to national prominence in three short years. The company was subsequently acquired in a public transaction in 2006.

Michalowicz was recognized as New Jersey’s Young Entrepreneur of the Year by the SBA in 2000, Young Entrepreneur of the Year in 1999 by the MCCC, and is a 2004 graduate of MIT’s “Birthing of Giants” Entrepreneurial Program. Michalowicz has been highlighted on entrepreneurial topics in Inc. magazine, the New York Times and other periodicals.

A graduated member of YEO (Young Entrepreneur’s Organization), Michalowicz has a BA from Virginia Tech in Finance and in Management Sciences. He is married, has three children and lives in NJ.

I’d like to start off with a quick anecdotal story. There were three frogs sitting on lily pads. Two of them decided to jump off into the murky water. How many frogs remain perched on their pads? One you say? Guess again!

There’s still three frogs sitting there. Why? Because they didn’t take action. They decided to jump off the log, but never followed through.

How many times have you decided to increase sales or network with potential customers? And of those times you decided to do so, how often did you actually take action?

Enjoy the following 82 ways to market your business, but don’t forget to take action and actually put them to use!

1. Stand Out – Especially when working online, you only have a few seconds before users hit the back button!
2. Smile – Did you know that, even over the phone, you facial expressions can be detected?
3. Stay Current – Read blogs, books, newspapers, magazines and discus your findings with clients. (”I agree, in fact I read an article about that this morning!”)
4. Record a memorable voice mail message
5. Develop A Reward System – Reward loyal customers with discounts, gifts, or free consultations.
6. Integrity Matters – Integrity is one of the top qualities of successful entrepreneurs.
7. Use layman’s terms
8. Be consistent. If a campaign works, stick with it.
9. Package Pricing – Clients find this more appealing than an hourly rate.
10. Press Outweighs Advertising– A carefully written article or press release will outperform an advertisement every time.
11. Define Your Niche
12. Build It And They Will Come – I’m not saying don’t plan first. But at he same time, don’t let your competitor beat you to the punch.
13. Sell the Value – Nobody cares how your product is made. But they do care why it brings value to them.
14. Action Words Sell – But don’t overdo it.
15. Ask Questions – Engage your customers, competition, associates, and mentors.
16. Anticipate – Have answers ready for frequently asked questions.
17. Include links to your website and blog in voice messages
18. Public Speaking – Go read “I Can See You Naked” and then solicit networking groups for speaking opportunities.
19. It’s about YOU – Take I out of the equation and focus on the customer.
20. Resolve Issues Quickly – If a customer has a bad experience, they’ll tell at least 10 people. Take action and resolve disputes immediately.
21. Get feedback – And engage customer’s as to how to correct any issues.
22. Don’t over-promise, over-deliver
23. Dress for the success
24. Be relevant – Don’t sell a truck to someone who needs a bike.
25. Respond Immediately – Take the time, best if within 24 hours, to get back to customer emails and phone calls.
26. Network – Groups such as local Chambers of Commerce, BNI, and Industry Associations offer a great ROI.
27. Show passion – People respond in kind and generally buy from those they like.
28. Stay Organized – keep a contact database.
29. Be Concise – Your customers don’t have all day.
30. Collateral – Keep your marketing materials simple and to the point.
31. Get Their Attention – Create catchy headlines and memorable quotations.
32. Know Your Competitors – Learn how/what/why they do and then beat them at their own game.
33. First Impressions Matter – So make the best of it!
34. Don’t Compete on Price – Instead, focus on creating value for your customer.
35. A Great Team – A great idea with a poor team will lose out to a great team with a poor idea.
36. Develop Your Pitch – Have a 15, 30, 60, and 120 second elevator pitch ready at all times.
37. Give Back – Community involvement makes good business sense, and good karma sense!
38. 80/20 Rule – Listen 80% of the time and only talk 20% of the time.
39. What’s Your Brand – What do you think of when you see Mercedes? Or when you see the “Can you hear me now?” commercial? What do you customers see when they hear your name?
40. Don’t oversell, over-educate
41. Remember Your Marketing Courses – Product, price, and placement still matter!
42. Freebies – Sometimes they work better than offering a discount.
43. Podcasts – Along with webinars and ebooks are great ways to infer credibility.
44. Develop A Mailing List – Then send out a monthly newsletter.
45. Testimonials – Your current clients owe you one if they are satisfied.
46. SWOT – What are your Strengths, Weaknesses, Opportunities and Threats?
47. Say Thanks – Show clients you care.
48. Have Fun – Let your creative juices flow when marketing.
49. Socialize – Use every social occasion as a networking opportunity. Have your business cards ready if someone asks for one.
50. Model Your Product – If you’re a web designer, have an amazing web site.
51. Brainstorm – Dump all your ideas, then refine them.
52. Focus Groups – As simple as using something like surveymonkey.com
53. Self Publish – Writing a book will infer credibility.
54. Call To Action – Tell people what you want them to do.
55. Clients Have Needs – Find a way to fulfill them with your product or service.
56. Take Care with your spelling and grammar
57. Get a Lawyer – It’s worth the money.
58. Timing is everything
59. Gather Collateral – Cut Out memorable advertisements and figure out why they work. Then combine them to create your own.
60. 3rd Time is the Charm – People usually won’t make a big purchase until they’ve heard about it three times.
61. Don’t Make It Up – Nobody expects you to have all the answers – so don’t pretend to.
62. Wrangle the Web – Social networks can be a great source of prospects.
63. Direct Mail – Postcards produce results over envelopes.
64. Business Cards – Keep it simple and easy to read. But make it stand out at the same time.
65. What makes you the best? Determine your unique competitive advantages
66. Relationships Matter – Develop strong relationships with your customers
67. Blog – Create an industry focused blog to gain credibility.
68. Follow up – Contact everyone you network with and mention an anecdote from your conversation.
69. Cold Calling – Click here for a sample script
70. Holiday Gifts – Show customers you care by sending out a promotional piece for the holidays.
71. Go With Your Gut – Your first instinct is usually right.
72. ROI – Don’t spend what you cannot recoup.
73. Diversify – Just like in the stock market.
74. Plan For Success – Because it just might happen!
75. Educate Yourself – Attend college courses, or engage your local SBDC.
76. Outsource – www.elance.com
77. Become A Mentor – Help another small business or even a child.
78. Referral Networks – America is still a good ole’ boys club.
79. Google Matters – Invest in Search Engine Optimization to assure you come up first in Google.
80. Find Another Market – What else can your product or service be used for?
81. Engage Complaining Customers – If they care enough to complain, they are worth trying to save.
82. Attend Tradeshows – Networking opportunities abound at these.

While Startup Students attracts a wide variety of entrepreneurs, it’s a safe assumption that a good chunk of you are still in college.  As an entrepreneur (and current college student myself) I’ve developed a number of strategies for balancing school, business, and life – all within the comforts of your dorm room or apartment.

Below are 41 tips for running a business on or near campus.  If you’d like to add a tip, don’t forget to leave a comment!

1. Space is generally limited in an apartment, bedroom, or dorm.  Try reorganizing your room to create a cubicle of sorts so you can accomplish your work related tasks in a good environment.
2. Construct a whiteboard like I did to organize your thoughts.
3. Get a mailbox at UPS.  I wouldn’t go with a PO Box – a Suite at UPS costs about the same and holds more credibility.
4. Make friends and use their abilities.  Associate with graphic designers, accounting majors, techies, socialites, and thinkers.
5. Situate your desk to provide minimal distractions.
6. Your space is limited now – but it won’t always be.  Consider purchasing modular furniture that will allow for future growth.
7. Place your bed on risers to allow more room for storage.  As your business grows, so will your filing and storage needs.
8. Get an 800 number that forwards to your dorm phone and cell phone.  This is an instant credibility boost and inexpensive.
9. Maximize your space by maximizing your school resources.
10. Invest in a laptop as opposed to an immobile desktop.
11. Throw out that CRT monitor (you know who you are) and get a flat panel.  Your desk space will thank you.
12. Hire your roommate to keep the place clean and quiet.  Outsourcing is key to juggling the busy life of an entrepreneur.
13. Speaking of outsourcing, consider sites such as elance.com for a variety of your operational and technical needs.
14. Don’t rush!  Leaving college isn’t all it’s cracked up to be, or so I’ve heard.
15. Construct a cable management system like I did to save space and reduce clutter.
16. Make friends with your Accounting professor.  Especially handy come tax time.
17. Pay students to hand out flyers for your product or service.  Beer counts as payment.
18. Use an appointment book or scheduling software to maximize your time.
19. Develop a routine for work, school, and fun.  But leave time for unexpected projects or rush orders.
20. Join campus organizations and clubs.  Not only will this relieve stress but they offer great networking opportunities for well beyond your college years.
21. Offer your services or products to your college at a reduced rate if you are just getting started.
22. No need for a fancy printer when you can use the one’s at your school’s computer lab.
23. A simple shower curtain and some engineering can turn a corner into a cubicle.
24. Hand off data entry or entry level graphic design work to fellow students.  Again, beer works as payment.
25. Spend time in your school library, sometimes you forget what a great resource it is.
26. Get out of the dorm and set up office at a coffee shop on occasion.
27. With a dresser and an extra curtain rod, your closet can now become your office.
28. A college campus makes a great place for meetings.
29. Online businesses take up little space.  Perfect for the dorm bound student.
30. Maximize space by utilizing your walls.  Calendars, important documents, filing bins, etc can all be placed on the wall to save space.
31. Go wireless.  The less wires, the more desk space.
32. Use chalk to advertise your business on sidewalks.
33. Take a full load of courses.  For me at least, it seems like the more I have to do – the more I get done.
34. When you go out, casually reinforce your need to network.  Don’t come right out and ask your friends to buy your product, rather it’s a good idea to plant the seed.
35. Get a copy of your roommate’s schedule, and find times where you can get work done quietly.
36. Attend events held by your dorm hall, they usually offer free food.
37. Utilize drop shipping companies to limit inventory.
38. Advertise directly to your University’s alumni.
39. Don’t let your grades suffer, if for no other reason than success breeds success.
40. Consider starting or joining an entrepreneur club on campus.
41. More than anything else, enjoy your time in college and maintain a healthy balance of activities.

Class dismissed.

Whenever you develop a new product or introduce a new service, it’s always a good idea to take the time and put together a solid press release.  This document can be sent to past clients, current prospects, and to a variety of free press release distributors and wire services.  A quick google search will locate a number of these services.

Instead of going at it blind, why not use the template below by Brian Solis?  The template is organized to look like a press release, but is full of tidbits of advice on how to assure PR success.

FOR IMMEDIATE RELASE

(My keywords are throughout the release – with an emphasis on the front-end)

Press Release Example Demonstrates How to Convey Your News without Using Excessive Words or Relying on Hype

In a Perfect World – Sometime in the Near Future – Brian Solis (note how I’m not putting how I am a leader here, nor should you) drafted a new outline for wire-ready and static online press releases to help PR and communications professionals tell a more meaningful story in a way that helps convey the true value of the news – without insulting the people who read it.

This new template can include a list of bullets (note wire services cannot incorporate bullets, only dashes), quotes and links:

— Press releases can tell a story to customers that specifically demonstrate why the news is valuable to them

— These releases can include SEO (search engine optimized keywords) to improve their pickup by Google and Yahoo search and news pickup

— Traditional releases can also complement Social Media Press releases and blog posts simply by linking to them

— The difference between a traditional release, new media release, and a social media release is intent, media, socialization, and distribution

Or, the press release can be written as an article you wish to see as if you’re telling, not promoting, a story. Basically it can deliver more information as to why this information is important, how it’s different and to whom it benefits and why. The key about this paragraph is that it needs to be honest and it must demonstrate that the writer indeed analyzed the pains and needs of the market they’re trying to reach.

A supporting paragraph, in this case, is going to help round out the story. In this case, usage examples will help strengthen the story and potentially inspire people to take action. These releases can be used in a variety of ways such as traditional wires, free wires, static Web pages and in blogs. They can be written for journalists, bloggers, and analysts as well as the very people we’re hoping to reach.

(Provide genuine and interesting quote that says something other than “we are excited…”)Brian Solis of PR 2.0 weighed in on the world of press releases, “Some journalists prefer to cut and paste from a well written press release while others simply need the facts without the spin. However, what’s new here is that you can have a variety of flavors of each press release to tell a story in different, genuine ways for journalists, bloggers, and customers in different markets. Just keep them interesting and relevant.”

Links are now more important than ever:

Blog: www.briansolis.com

Website: www.future-works.com

RSS Feed: https://feeds.feedburner.com/Pr20

Market background: https://del.icio.us/briansolis

Artwork: https://www.flickr.com/photos/briansolis

Or if the link is too long, simply input it into www.TinyUrl.com and get this shortened

format in return: https://tinyurl.com/3ctn2s

About This Outline

What you should not to do here is repeat information. It’s already been said above, and if this is to cross the wire, why pay for the extra words. Say something that fortifies the company’s stance in the market to offer perspective on the information that you are presenting however. It should also provide a bit more details about the company facts, market and histry that stand aside from the news and support the story.

# # #

Also, include some traditional and new media formats for contacting you more effectively.

Contact:

Brian Solis
PR 2.0 / FutureWorks
408-428-0895 Ext. 101
brian [at] future-works [dot] com
LinkedIn: https://www.linkedin.com/in/futureworks
FaceBook: https://tinyurl.com/38su7l
Twitter: https://www.twitter.com/briansolis
Vcard: https://tinyurl.com/3242wm

In the second part of The Complete Guide to Business Formation we will discuss Limited Liability Companies along with Corporations.  From there, you will have the opportunity to leave comments about what type of business you want to start and I will gladly help you determine which method of formation works best for you! 

By the way, if you missed Part 1, click here.

Let’s start off with a basic understanding of the types of corporations.  A corporation is a legal entity that keeps personal assets of the shareholders from the firm’s assets.  As you can see, this is a big step in the way of limiting your liability as opposed to sole proprietorships and partnerships. 

A Limited Liability Corporation (or Company – the terms can be used interchangeably with this type of formation) is an organization owned by the “members”.  With an LLC, the corporation’s assets can be seized; however they have no recourse against the shareholders’ personal assets.  The great thing about an LLC is that earnings can be taxed at the personal income tax rates of the members.  By the way, my company, Brett Adams Design is an LLC. 

A Subchapter-S Corporation provides limited liability for shareholders plus corporate income is taxed like personal income to the shareholders.  This is a great choice for a number of business types and may provide positive tax treatment, but does involve additional paperwork compared to an LLC. 

Now that we understand the types of corporations, let’s take a look at some reasons why incorporation makes sense for most people: 

• You limit your personal liability
• By placing Inc. or LLC. at the end of your business’ name, you clearly upgrade your image
• To have the opportunity to channel some heavy expenses
• It guarantees continuity, even after your death, if set up properly
• You can offer internal financial incentives
  

At this point, between parts 1 and 2 you should have a basic understanding of the different types of entities.  Below, I’ve put together a list showing some of the associated attributes for each entity type including liability, capital sources, firm lifetime, and taxation. 

• Proprietorship
  • One owner, with a short amount of time to set up and low cost
  • Unlimited liability
  • Most equity capital will come from the owner
  • Life of the business parallels life of the proprietor and transfer of ownership is difficult
  • Taxed at one’s personal tax rate
• Partnership
  • Two or more owners, with a moderate startup time and cost
  • Unlimited liability
  • Capital sources include other partners, family, and friends
  • Life is determined by the partners and again, transfer of ownership is difficult
  • Taxed at partner’s personal tax rate
• Corporation (C)
  • One or more owners, with a high cost and time to set up
  • Liability is limited to shareholders’ investments
  • Capital investments may come from venture investors and common stock shareholders
  • Business life is unlimited and ownership transfer is easier
  • Corporate taxation; dividends subject to personal tax rates
• Subchapter S Corporation (S)
  • Less than 75 owners, with a high cost and time to set up
  • Liability is limited to shareholders’ investments
  • Venture investors & Subchapter S investors can supply capital
  • Unlimited business life and ownership transfer is moderately difficult
  • Income flows to shareholders; taxed at personal tax rates
• Limited Liability Company (LLC)
  • One or more owners, with a high cost and time to set up
  • Liability is limited to members’ investments
  • Equity capital sources include venture investors and equity offerings to members
  • Business lifetime is set by the members, transfer is difficult
  • Income flows to shareholders; taxed at personal tax rates

Again, please feel free to comment with the type of business you are interested in starting and I’d be happy to offer my opinion.  Class dismissed.

This is the first part of a multi part series that I should have started long ago, and I apologize for not doing so.  This is more of a refresher course for some of you, but I feel it’s important to have this chronicled for those new to entrepreneurship.

When creating the next great startup, at an early stage you will come to a crossroads and must choose how to form your business.  Which option you choose will have a number of ramifications and each will be discussed in detail over the coming days.  There are four types of business formation methods that can be considered (although I wouldn’t recommend a couple of them).  Your choices are:

• Sole Proprietorship
• Partnership
  • General
  • Limited
• Limited Liability Corporation
• Corporations
  • C corporations
  • Subchapter S corporations

When deciding which is best for you, keep in mind some of the following:

• Will I be conducting any business internationally?
• Are there any tax implications?
• What liabilities must I be aware of?
• Might I be faced with litigation at some point in association with customers, employees, or other businesses?
• What are my plans for future growth?
• What types of relationships are present with potential partners?
• Do I have a grasp on my capital requirements?
• What is my exit strategy?

While pondering those questions, lets take a further look into proprietorships and partnerships.

A sole proprietorship is a business venture that is solely owned by an individual.  That person is also solely liable for any of the venture’s possible liabilities.  This means that you have a personal liability to pay off anything not covered by your assets.  Honestly, there are very few situations where this type of formation makes sense.

A partnership is a venture that is owned by two or more individuals.  Like the above, each owner is fully liable.  When we talk about a limited partnership, the limited partner is only liable for his/her capital investment. 

When considering a partnership, consider the following questions:

• Who will maintain management and control?
• What resolutions are in place in case of dispute?
• Consider the financial and time contributions of each partner.
• What occurs in the eventual dissolution of the partnership?
• Can we add new partners?

Again, I don’t think I would ever recommend this type of formation either, but you do tend to see these – especially with professionals such as doctors and lawyers.

In the coming days we will discuss the other types of formations including corporations and LLCs along with suggestions on which type would be best for your type of business.  Class dismissed.

Note: Welcome to Startup Students. If you enjoy this post, don’t forget to Stumble, comment, and subscribe to the RSS feed!

In the web development business, and many other small businesses it’s tough to stand out from the crowd. Designers are a dime a dozen these days, especially with the advent of outsourcing services such as ELance.

Personally, I’ve relied on top notch service and client referrals to maintain a steady income. Things are going quite well, in fact I’ve reached the point where I must turn down work on a regular basis.

Yet recently I have been looking to grow. Hiring another developer does’nt quite yet make sense, because the number of jobs I’ve turned down doesn’t quite justify the expansion. However, I just finished reading a fantastic book on cold calling entitled “Cold Calling Techniques That Really Work”- and by following the techniques I feel I’ll be able to sustain enough business to justify hiring additional developers.

There are five basic elements to the successful cold call:

1. Get the person’s attention. But not using a cheesy introduction.
2. Identify yourself and your company
3. Give the reason for you call
4. Make a qualifying/questioning statement
5. Set the appointment

Below, I have included some time tested scripts that can be used when making your calls:

• Initial Contact
  • Good Morning Mr. Adams, this is Brett from Brett Adams Design LLC. The reason I’m calling you today specifically is so I can stop by and tell you about our latest web site implementation (or service, or product, or program) that increases traffic and click-thru sales (or whatever applies to your business). I’m sure that you, like (name of previous client) are interested in increasing site traffic.
  • Generally, you are given a positive response by the prospect at this point.
  • That’s great Mr. Adams, let’s get together. How’s this Thursday at 2:00?

As I mentioned, lots of my business comes from referrals or third-party endorsements. But the great thing is that there is a script for those scenarios as well.

• Referral Script
  • Good morning Mr. Adams, this is (insert brief commercial about your business). The reason I’m calling you to today is that Mr. Smith just suggested I give you a call to set up an appointment. I wanted to if Thursday at 2:00 would be okay.

What tends to make these scripts successful is the fact that they generally require a positive response. You aren’t giving them the option to dance around or avoid your request. I’ll be implementing these strategies heavily in the coming weeks and I will keep you updated on the success.

Here are some tips, in no particular order, when cold calling:

• The object (for me at least) is to set an appointment. I’m not looking to close a sale over the phone, I’d rather sit down face to face and explain the value of choosing my services over those of the competition.
• No matter how good you are, sales is still a numbers game. 1/3 of your clients will fall into your lap, 1/3 won’t say yes no matter what, and the other 1/3 can potentially be convinced – and that is the portion that matters when it comes to being a successful cold caller.
• Practice your script, you don’t want to sound as though you are reading off of one, but it’s vital that you do in fact have one.
• People respond in kind. Think, feel, act, and sound positive and you will elicit positive responses.

Somewhat long post today but I hope you enjoyed the lesson and can utilize these techniques to grow your student startup! Class dismissed.