Welcome To Startup Students

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.

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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.

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In light of the disastrous fire situation in California, I thought it would be good to once again bring up the crucial importance of document storage.If you’re like me, especially since the stolen laptop debacle, you keep all your important papers in a sturdy filing cabinet and obsess over backing up your hard drive. No? Well, then I suggest reading this.

However, planning for a potential disaster goes well beyond storage. You need an action plan. What happens to your business in case of injury or death? Does anyone else have the keys to your filing cabinet or safe? Again, you might know the method to your storage madness, but would someone else?

Here are some tips:

• Store and file your information in multiple locations. For your harddrive, utilize DVD’s, external drives, online storage centers, or a combination of all three. Photocopy important documents and compile a list of stored contents; then place in separate locations.
• If you have yet to do so, start collecting relevant documents that would be crucial during an emergency such as banking, insurance, incorporation, and medical papers.
• Organize – then create a list of the contents of your filing cabinet, safe, and harddrive so that you can easily pull the needed information when time is of the essence.
• Create multiple copies of personal documents such as birth certificates, etc. that may be required by government entities in times of disaster. Keep in mind that copy machines may not be available when disaster strikes.
• Inform one or two individuals about the contents and whereabouts of your critical documents in case you are unavailable.
• Once your system is in place, its paramount that you maintain it. Dont wait til the end of the year to do it all again – instead remain aware of what documents should be added.

Generally, we don’t think about these things until it is too late. Take the initiative now to get your things in order. Class dismissed.

 When Virgin Records founder Richard Branson dropped our of school, his headmaster offered these parting words, “Congratulations, Branson.  I predict you will either go to prison or become a millionaire.” So what does that have to do with?  Nothing really, but I thought it was fairly interesting.

At any rate, as an entrepreneur, you will soon find that you simply cannot do it all yourself.  You’ve got to surround youself with the right people – but still maintain to stick to your guns.  Here are some sure-fire keys to success:

• Hire highly motivated individuals.  But be sure they’re motivated for the right reasons.  Those who are self motivated make the best candidates.
• As you surround yourself with great people, be sure to help them become even greater.  A little karma goes a long way.
• Create, maintain, and update as needed your vision and mission.  This creates a sense of clarity outlining your future direction.
• Create, maintain, and update your company values.  A strong corporate culture from the get-go (and then sticking with it) is often overlooked.
• Now that you have the right people on the bus, don’t let them get off!  Be sure to offer appropriate merit based rewards.
• As you grow and expand your business (and your personal knowledge), it would be a great idea to share the wealth.  Offer unique opportunities that allow your employees to garner more experience, but remember to keep your culture strong.  Now that you have highly experienced employees, you surely will want to hang onto them.
• Offering financial rewards is key, but did you know that offering praise is actually a much better motivator?  Make a point to always celebrate success, even if it’s relatively minor.

Class dismissed.

1. Reducing expenses is the quickest way to increase cash flow.
2. Effective networking requires planning and targeting the right contacts.
3. Good recordkeeping will save you time and money at tax time!
4. Use your business contacts and business counselors for perspective and advice.
5. Always be prospecting for new clients!
6. Qualify a client before you do a sales presentation.
7. Can you clearly convey why a client would WANT to do business with you.
8. Objections are an opportunity to educate your client on your product or service.
9. People are led, things are managed.
10. Business education needs to be an ongoing process! Attend a seminar this week!
11. Ask for referrals from everyone! Even those who don’t buy…yet.
12. Tradeshow expenses are wasted if you do not follow up on the leads.
13. Take the time to do it right the first time!
14. Customer service is not an expense, it is a competitive advantage.
15. Build your team of advisors and use them!
16. It is cheaper to keep a good customer than to find a new one!
17. Don’t make a rule that you do not intend to enforce!
18. Think globally and creatively…at least once a week.
19. A goal without a time frame is a wish.
20. Hold yourself and your employees accountable.
21. You must take time for yourself.
22. You can only burn a candle at both ends, half as long!
23. Share your knowledge with your employees!
24. It will build a stronger team.
25. Reward great performance.
26. Sometimes you need to count to 50 before you respond to people.
27. Share your vision.
28. Developing a system allows you to repeat your success.
29. Writing a business plan proves it wasn’t an accident!
30. Investment in education is investment in your future.
31. Be an expert at what you do, and then hire the rest.
32. Write down answers to the top 5 objections you receive… and then practice the answers.
33. If starting a business was easy, everyone would be an owner.
34. Lack of start-up capital is the leading cause of new businesses failure.
35. Ask yourself once and hour, “Is what I’m doing right now making me money?”

As mentioned, I’m interning at the Disney Entrepreneur Center in Orlando, FL. The E-Center is a public/private partnership dedicated to the development, growth, and success of small businesses. At the center, we have a big flat screen in our entryway that shows news, videos, etc. of things going on in the center. At any rate, one of the things displayed on the screen are the quick one liner business tips written by our Director Jerry Ross. – some of which you just read.  Class dismissed.

It’s been a while. Here is why:

• Internship (30 hours per week)
• Two classes
• College football season tickets
• Pro football season tickets
• My ice hockey league
• 192,837,490,823,749 other things

It’s been really tough juggling everything, but I will have you know I’m working on a killer post for late this week. It’ll be so big it might not even be navigable.

Today, however, I’m going to take a few minutes and talk to you about the first branch young entrepreneurs generally shake on the money tree. That is, friends and family along with any other fools willing to get on board. An example of a “fool” would be someone not in tune with the market or industry such as your dentist, mechanic, or mailman.

Don’t get me wrong, these individuals are a great way to go and often times make much more sense than aplying for commercial lending or an SBA guranteed loan. However, obtaining money in this manner often leads to strained relationships and in some cases can rip families apart. Personally, I’d like to avoid that and I’m sure you would too. Below are some tips to consider when approaching these individuals for startup cash:

• Put it in writing. Every last detail about repayment and usage of funds should be included.
• You are running a business, so make it a business loa – not a personal loan.
• Things happen – natural disasters, emergencies, etc. Be sure to add provisions that cover these types of things.
• Have a business plan? Make it required reading for your lenders. If you don’t have a plan then either:
  • Go write one
  • Or B, thouroughly discuss your company’s goals, ambitions, and forecasts.
• Create a continuous dialog and discuss potential problems, fears, and issues that are taking place on both sides of the field.

Again, sorry for not being around. Don’t hold it against me. Remember, just like you I’m a student entrepreneur, with the keyword there being student. Class dismissed.

I haven’t talked too much about financials, and I don’t really plan on doing so today.  I would, however, like to wet your taste buds with some tips on forecasting.  Remember, forecasting is in all reality BS.  Projections can only take you so far but they do help you when setting goals for your small business.

• You are better off selling yourself short than throwing out unrealistic numbers.  Be factual and conservative with your estimates.
• You arent going to go from making $10,000 to $10 million.  It just isnt going to happen unless something truly astonishing happens in your business or your market.
• Quantify your projections and dont just pull them out of a hat.  Make clear and concise assumptions.
• Back those assumptions up with a written list of your reasoning.  Pro forma financials will take your far.
• Utilize industry specific data and not just general data such as census publications.  Contact your local or university library for assistance in tracking down this type of information.  For those of you in school or who are stupid rich – try IbisWorld.
• This goes back to the above statements, but it’s important.  Your projections are going to be suspect if your sales or profit margins are higher (or lower) than the industry average.
• As you progress, compare your forecasts to actual results and determine what went wrong (or right!).

Yes, this was a bit “schoolish” but you are Startup Students!  Class dismissed.

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Today I have a list for you of some great ways to save money as a small business. This is especially useful for those of us trying to bootstrap the next great startup. Without further adieu:

1. Consider having your customers pay up front or require a deposit. This works especially well for larger ticket items or service providers.
2. Pay for your purchases on credit and don’t pay them off immediately. Of course you don’t want to get into serious debt right off the bat, but cash is very important to have on hand in the beginning.
3. Consider leasing your equipment. Laptops, furniture, transportation all come to mind.
4. Be frugal. Easier said than done but by keeping an eye on your spending you are more likely to survive.
5. Don’t splurge on an office right away, there is nothing wrong with working at home. I do it, so should you.
6. One man’s trash is another mans treasure. This goes both ways – sell off your old dilapidated equipment and buy others’ gently used byproducts.
7. Shop around. This goes hand in hand with being frugal I suppose, but next time you need something dont just hop in the car and buy it. Instead, do a little research on the internet to locate the best price first.
8. Make sure your liquid cash is not sitting idle. Put it to work for you and earn some interest.
9. Consider trading your goods or services with other small businesses to save money and benefit both of you.
10. I could write a whole post on this one and I just might some day. Get ready, it’s good. Never Buy what you can Lease, never Lease what you can Borrow, and never Borrow what you can Steal.

Class dismissed.

When pricing your product or service, you should put some thought into the strategy you utilize. Are you going to undercut your competitors? Would you rather target the upper echelon? Maybe you just want to price with the market. It really depends on what you are offering, but here are some different strategies you could employ.

• Penetration Pricing
  • This is when you want to quickly get some traction in your market by offering a lower (and sometime insanely lower) price. Benefits would obviously be the quick market penetration. But be careful, you dont want to undercut yourself out of business!
• Skimming Strategy
  • This is somewhat opposite of penetration pricing. Do you have a relatively new technology that nobody else is offering? Why not “skim” off the customers who are willing to pay more in the beginning. Once demand from the early adopters falls, you can then lower your prices.
• Follow The Leader
  • Sometimes it makes since to just follow the crowd and price your product competitively. Obvious products here would include commodities.
• Variable Pricing
  • Do you sell cars or real estate? Do you own an eBay business? If so, you are already using this strategy. Variable pricing involves negotiation and bargaining between your sales staff and the customer
• Flexible Pricing
  • This works well for service based companies. Do you have government clientel? Then add a couple zeros to the price tag. Have a scaled down solution for commercial use? Drop the price and gaing some market traction.
• Price Lining
  • If you’ve ever been to the Dollar General you are familiar with this strategy. All the products are offered at the same price. Obviously, this method is easy to manage, but you might get stuck due to its lack of flexibility. Times might get tough in times of inflation or an unstable market.

Hopefully this will help you grasp the basic ideas and maybe even assist you in finding the right strategy for your small business. Class dismissed.

Let me start by saying I didn’t write this, I saw it on one of the blogs I subscribe to and thought it would be a great addition for my readers.  In it’s entirety, here is the article:

The next couple of weeks will bring many students back to school. This time is bittersweet for many. There is the foreboding of classes and homework balanced with the enthusiasm of a fresh start. What if you could keep that “fresh start” feeling all semester long?

Here are the top 10 ways to keep your enthusiasm high after returning to school:

1. Get your books early – One of the most hectic times of each college school year is that crazy few days in the college bookstore before the semester starts. Who needs it. Get your books early. If your professors haven’t posted them online, call the bookstore and see if they have a list. If still no luck, give your professor a polite e-mail stating you’d like to get your books early so you can prepare for the class. Ask which books you need to buy.
2. Skim and review before class starts – Review is one of your best weapons against challenging exams. Since you have your books early, spend a few hours skimming and reviewing each one. Familiarize yourself with the table of contents, summaries, bolded text and sidebars. Get the edge.
3. Do not change your diet – eating more or less can change your concentration, energy level and ability to stay alert. Presuming you are satisfied with your current mental chemistry, avoid changing your diet. P.S. Studies show 75% of college freshmen put on 7lbs their first semester – keep lean and mean.
4. Decide your main goal – Do you want straight A’s, B’s ? Before you can get anywhere you have to know where you are going beforehand. Choose before the semester starts what grades you want and write it down. By putting it in writing, you are setting an agreement with yourself – after that, all you need to do is not break that agreement. 😉
5. Decide why you want to make A’s in your classes – why do you want to be a good student? Write up a list of reasons and then hang them in a prominent location in your living quarters. When the going gets tough and you don’t feel like studying or going to class, review this list. Add to it if you can. Reasons are what keep enthusiasm high.
6. Keep your exercise program going – Hopefully, since you are reading this blog, you have adopted an exercise program. Going to class is no excuse to stop. Stick with it for increased self-esteem, concentration and enthusiasm for learning.
7. Sit in the front row – Studies have shown sitting in the front row is an easy way to improve your grades. Why? You hear better, you have more interaction with the professors and there is no possible way to doze if you are in the front row. So choose the front row and win.
8. Reward yourself after small accomplishments – When you get an assignment or test deadline, right then and there, decide on a reward for completing it successfully. I am not saying you have to get an A. Instead a small reward for simply getting through. Some ideas: A new video game, a toy, tee shirt, DVD. Pick something just for you and do not buy it until you finish your assignment. The fun reward will carry you through to the finish line.
9. Make a habit of studying at the same time every day – Humans function better at different times. When do you study the best? Early morning, afternoon or evening? Work on finding that out and then make a pact that you’ll study at that time every day. This works because 1 you’ll be in your zone naturally and you will be developing a habit of high quality study at that time of day.
10. Get enough sleep – Staying up late at night watching TV, goofing off or drinking might be fun at the time, but leads to excessive tiredness during classes. It’s tough to be enthusiastic if you are dead tired. So pick a time your fun and serious side can agree on, then stick to it. Set a reminder on your cellphone or computer if you need to. Just get some sleep you look tired.

Brad Isaac is a lead software programmer and blogger. You can read his motivational strategies every day on his goal setting blog, Achieve-IT!

Again, just to be clear – I didn’t write this one and I encourage you to check out the contributing author’s blog.  Class dismissed.