Every business deserves a chance to succeed. But after deciding to open a business, it can be a daunting task to develop, organize and present your products or services without the right resources to help you on your way. But where to begin? Perhaps this checklist will help you.
#1: BUILD YOUR BUSINESS ‘BRAND’ FROM THE VERY ‘GET-GO’.
Your business identity deserves careful thought. The name of your business should convey an immediate sense of what you offer your customer. You’ll want a name that’s easy to remember but not so ‘cute’ that it leaves the impress you are serious about your business.
When you come up with your first choice, do a domain name check and also a trademark check to make sure it’s an original name and that you’re not infringing on the legal rights of someone else who’s already an existing provider and who got there ahead of you.
Having a second or third choice also make sense. After all, if your first choice of business name is already taken, you’ll need to abandon it in favor of another. Brainstorm the names you like with a few other people who are bright and imaginative. Sometimes a twist on the first or second choice names might be the best in the marketplace.
#2: BUILD A WEB PRESENCE THAT CONVEYS YOUR VISION
Build awareness of the existing of your business starting with the World Wide Web. The virtual world is very real, and today most savvy consumers will start looking for you on the Internet before they ever pick up the yellow pages. Of course, that assumes they initiate the idea of doing business with you in the first place.
Most consumers will not be that pro-active. They begin searching for a suitable provider only when they become aware of the ‘need’ you fill. So your web presence must address that from the start.
Too many business enterprises overwhelm their customers with so much information that it’s easy for the customer to get sidetracked. So keep your website clutter-free. Use imagination and simplicity so that your customers enjoy the experience of visiting your site and that makes it easier for them to refer other potential customers as well.
#3: IDENTIFY YOUR CUSTOMER CHARACTERISTICS
You’d be surprised how many business owners think of their customers as some kind of faceless mass of humanity. The most successful business enterprise develop a composite of who their ‘ideal’ customer is, and they plan their entire marketing approach to that ideal customer.
But remember too that it’s rare to daily encounter the perfect or ideal customer. A friend of mine used to tell me that sometimes the maidens have to kiss a lot of frogs to find the prince. If you develop a customer profile as a composite of many customers, you’ll have more flexibility to meet the needs of real people.
#4: ORGANIZE YOUR BUSINESS ENTITY
The most common form of business ownership today is the Sole Proprietor. We typically see that in the brand-new ‘mom and pop’ small business owner who simply gets some business cards, obtains a business license, opens a business checking account and simply ‘opens shop’.
In a Sole Proprietorship you and the business are one-and-the-same. That is, your business does not have a separate legal identity from you – and therefore you are personally and completely exposed to all the risks. On the other hand, operating as a corporation or limited liability company can help to manage and better yet minimize those legal risks.
At my workshops around the country, I discuss the difference in a way that’s down-to-earth and understandable. For example, the use of a corporation makes sense if you intend to have the business continue in perpetuity after your death or if you wish to ‘go public’ (i.e. sell stock in the Stock Exchange). If you intend to ‘stay private’ (which makes sense for most people) a limited liability company (‘LLC’) probably makes sense.
The LLC is by far easier to maintain and manage. It has fewer formality requirements and the trend today in the United States is towards the registration of more LLCs than corporations every year. Given the statistics, I believe that trend will maintain itself and continue over the next several years.
#5: ESTABLISH A STRONG BUSINESS PLAN
It’s surprising but even today, many people still think that developing a strong and dynamic Business Plan is a mostly-academic exercise that has little practical place in the market today. But nothing could be farther from the truth.
A well-crafted Business Plan should be the bedrock foundation of your business. It encompasses your vision, your message, your organization, your marketing, and even your financing. Without a written and specific Business Plan, a capital loan application has little credibility. However, with a Business Plan that is specific and well thought out, lenders have a much better picture of what you have in mind, and frankly, so do you.
You see, most business owners get what I like to call ‘Widgetitis’ – meaning that they get caught up in their widget concept and get so involved in its development that they ‘underwhelm’ potential Lenders when it’s time for the financing to get the business along its path.
#6: WHAT ABOUT AN OFFICE?
Depending on the size and needs of your business, you may want to begin with a Home-Based Business. That means that your personal residence may become what the IRS calls your ‘principal place of business’. In such a case, you can legitimately take deductions for the business portion use of your home. If you identify a specific portion of your home as your working space, then treat that area as you would any other business space. That means having your primary work area there.
Set it up with your computer, internet connection, a fax machine, a dedicated business telephone line, answering service, office supplies and everything else you need to do business. It may require more than one area. For example, you might have inventory that is stored in a specific room or a portion of your garage or even another physical structure on your property.
If you are self-employed, you may be able to deduct certain expenses for the part of your home that you use for business. The use of that portion of your home you wish to deduct must be exclusively business.
If the area (such as a bedroom converted to office use) is not exclusively used for business, the deduction won’t pass muster. However if this area of the home is where your most important business activities occur on a regular basis, and where you spend most of your time doing business, then you are most likely entitled to the deduction. As it says in the One-Minute Tax Coach, if your home-based business in indeed your ‘principal place of business’ then deductible expenses for the business use of your home may include the business portion of your real estate taxes, deductible mortgage interest, rent, casualty losses, related utilities (such as phone and electricity), business or property insurance, property depreciation, business related maintenance and business related repairs. You can’t generally deduct expenses for lawn care or painting a room that’s not used for business.
Documentation is the name of the game so that you can legitimately defend your deductions if need be. It’s surprising how many people overlook deductions they’re legitimately entitled to take, and how many people fail to claim home-based business deductions out of unreasonable wariness born out of fear of the unknown.
When figuring the business-related amount you can deduct use the dollar amount of expenses attributable solely to the portion of the home used in the business. The amount you’ll be able to deduct for expenses attributable to the whole house depends entirely on the percentage of your home used for business. The easiest way to figure this percentage, is to divide the number of square feet used exclusively for business by the total square feet in your home.
Another way to go is based on the number of rooms. For example, if all the rooms are approximately the same size, you can divide the number of rooms used for business by the total number of rooms in your home. Then, you can calculate the business portion of your expenses by applying this same percentage to the total expense.
Also, remember that if your gross income from the business use of your home is less than your annual total business expenses, then your deduction for outgoing expenses for the business use of your home (other than mortgage interest, taxes, casualty losses, etc.) is limited. However, those same business expenses that can’t be deducted because of the gross income limitation can indeed be ‘carried forward’ to the next year subject to the deduction limit for that particular year.