This is Jeff Rose from goodfinancialcents.com.
Today I want to talk to the entrepreneurs and all the wannabe business owners out there.
If you're wanting to start a business, a small business, I wanted to give some tips on how
you can go about doing so.
I got a little bit of a taste of this whenever I left my old brokerage firm and cofounded
Alliance Investment Planning Group.
We became small business owners and it really opened me into a whole new world that I really
wasn't accustomed to.
Having been on the W2 employee side for basically all my life and now becoming a 1099 independent
contractor and having to manage some of the day-to-day items that come along with being
a small business, it was a learning experience.
Luckily, I had a good CPA to help me along the way, and I had some partners to walk through
some of those issues.
Hopefully, some of the tips here that I can share will give you some insight as far as
if you are wanting to become a small business owner yourself.
The first thing you'll want to consider is how is the business going to be set up.
What I mean by that is are you going to be a sole proprietor?
Are you going to be a partner, partnership, or is it going to be a corporation?
Those are some things you'll have to find out.
Obviously, if you're a solo shop, you're going to be a sole proprietor.
The other things you'll want to also consider is do you want to form an LLC?
An LLC is above my expertise.
I just know that limited liability corporation means that I should have some protection in
the event that something was to happen to our business.
You'll want to consult an attorney, someone that is a subject matter expert in that to
better assess that.
It is something that if you're forming a business you might want to look into the additional
cost that forming an LLC will do.
We did that with our practice here, and I'm actually looking to do that with Good Financial
Cents, actually forming that into an LLC and some other things as well.
Something to consider, but by going the LLC direction obviously there is additional cost,
so these are some of the things that you'll want to consider when it comes to starting
your own business.
Another thing that you'll want to look at as far as starting your business is what's
going to be your location.
For a lot of small businesses this is huge.
You always hear the phrase, "Location, location, location!"
For us this was very tough initially because we came from an office that was a newly built
office, newly constructed and it was beautiful.
In the town that we reside in there wasn't a lot of available office space, especially
at very affordable prices.
Being a financial planning firm, we knew that we had to have something that was somewhat
respectable.
We looked around and we actually found a shared office space that allowed us to rent out five
offices and it had a shared conference room, bathrooms, and a secretary that was part of
the building.
Initially it made it very, very affordable until we could find our now current office
that you see here.
That was neat to find that, but it was also an emotional strain trying to find that right
office.
So location, are you going to rent?
Are you going to buy?
Maybe you live in a place that allows you to build, much like a small area like ourselves.
The other thing is maybe you can just work out of your house.
That can also be a very feasible option for you.
One of my best friends is a photographer and starting off he didn't have an office.
He didn't have a location.
He actually would meet with people at a restaurant or a book store for their initial meetings
as far as working out the contracts to do their photography.
Now, as his business has grown he now has his own studio, but it took some time to get
to that point.
You don't want to start off too big.
I had another friend who is a chiropractor, and he worked for another chiropractor, ended
up starting his own business and went out and bought a very nice building, a lot of
equipment, which I will talk about here in a second.
I want to say within six months he went under.
He basically spent way too much initially and as a small business owner you have to
watch that.
You can’t go out too crazy and just start spending a lot of money.
You want to consider location.
You obviously want to have a good location, but you also have to look at what cost or
what price that will be to you.
The third thing that you'll want to consider when starting your own business is your equipment
and as I mentioned my chiropractor friend, he went out and bought the biggest, baddest
equipment that existed.
He was spending tons and tons of money.
I didn't really understand the chiropractic practice, so I just assumed that's what he
needed.
Then, after he went under I had some other friends that are chiropractors that basically
let me know that he spent way too much.
For our business we didn't need a lot as a financial planning practice, but we needed
printers, computers, desks, filing cabinets, faxes, phone lines, computer networking.
All those things we had to take into consideration.
As you're looking to start your small business you'll want to do a quick inventory of the
things that you need and the things that you can maybe do without.
That is some things that you'll want to seriously sit down and do because I know with us I was
so used to, at our old office to where I had everything provided for me.
We had this commercial grade shredder.
We had all the little office things that you would need like a paper cutter, three-whole
punch, staplers; just all those little things that were always provided for us.
Now as our own business owner we had to go out and buy it ourselves.
You become a little bit more cost conscious when you're looking at these items and you
basically start to realize what the things are that you can do without to try to save
you some money to have more money in your pocket versus paying out for unnecessary expenses.
Another thing you'll want to consider as a business owner is marketing materials and
the way that you're going to go about marketing advertising.
With us being a new financial planning practice, we were kind of lucky in a sense because I
had clients that were hopefully going to follow me whenever I switched my firm so we weren't
necessarily starting from the ground up.
We still felt we needed to have some stationary, obviously business cards, envelopes, some
brochures that just talked about our new firm and what we offer, how we differ from where
we came from.
That was some up-front costs that we had to consider.
On the marketing side or the advertising side we actually didn't do a whole lot.
Like I said, we benefited from the fact that we already had an existing clientele, but
if you're a brand new business that is something you have to consider.
Are you going to do Yellow Pages?
Are you going to build a web site?
Are you going to do ads on Facebook?
Are you going to hire someone to maybe handle your social media campaign?
Obviously, as a new business owner that is probably going to be you, so you have to make
sure that you're expending your efforts appropriately.
As a new business owner, obviously you don't have a lot of money coming in so by using
some of these free tools like Twitter or Facebook you can really get your name out there, but
you have to make sure you're not putting too much time in there because you need to make
sales or generate revenues to keep
that business going.
If you're
in the process of wanting to start
a business
but you're not quite there yet, one piece of advice
I can tell you is to try to start generating a client list or a potential customer list
before you even start your business.
You can do this by collecting email addresses, names, phone numbers, etc. so by the time
that you get ready to launch your business you've got this database of potential customers
or clients or advocates of your business that they can share with people about your new
business that you've started and help get that word out there.
The big thing about having your business be successful is word of mouth.
In a small town, big town, wherever, word-of-mouth marketing is huge.
It's priceless.
I won’t say it's easy but it's cheap.
The whole thing is telling as many people your story and how you can help people and
how you can benefit them.
By creating that list before you go actually start your business that is such a huge advantage
to where you don't have to start from scratch and get all that information out there.
I hope these were some helpful tips for helping you start your small business.
Being a small business owner, I will tell you at times it's a challenge but I wouldn't
have it any other way.
When I made that transition, it has been one of the best and most rewarding things of my
life, and I could never see myself going back to being a pure employee of some big outfit.
I admire small business owners for taking that risk, for taking that leap of faith and
to following a passion or a vision or some dream that you have.
I wish you the best of luck.
If I can be of any resource to you, feel free to drop me a line here at goodfinancialcents.com.
I look forward to sharing more information with you and catch you next time.
Take care.
The opinions voiced in this material are for general information only and are not intended
to provide specific advice or recommendations for any individual.
To determine which investment(s) may be appropriate for you, consult your financial advisor prior
to investing.