Transcript Security Plan Phases

Chief Executive Officer
of
Diddly Squat
(or So you want to be the boss, are you sure?)
By Leeland Artra
October 11, 2001
1 of 32
Small Businesses
• Represent >99% of all employers
• Employ 51% of private-sector, 51% of public
assistance, and 38% of high-tech occupations
• Represent nearly all of the self-employed, which are
7.0% of the civilian work force
• Provide ~75% of the net new jobs
• Provide 51% of the private sector output
• Represent 96% of all exporters of goods
• Obtain 33.3% of all federal contract dollars
• Are 53% home-based and 3% franchises
American Airlines saved $40,000 in 1987 by eliminating
October 11, 2001
one olive from each salad served in first-class.
2 of 32
Why Are You Here?
You are thinking about starting a business.
By the end of this you should:
• Understand the basics requirements of
starting, running and growing your own
business; and
• Know where to go for more detailed
information
October 11, 2001
There are two credit cards for every person in the United States.
3 of 32
Why am I here?
• On and off consultant for 16 yrs
• On and off Director (Lead) 6 years
• Created and operated consulting, retail sales,
IT outsourcing and services companies
• Raised by a CPA and a computer consultant
• Need some consulting referrals and thought
this would be good marketing
• No one else volunteered
October 11, 2001
Men can read smaller print than women.
4 of 32
What Was Asked For, Legal
• What is required by law to set up and run a
business?
• How you protect yourself from litigation
• How do you patent/copyright/protect processes that
you might like to sell, that may have elements that
are public domain (use publicly available tools).
• Where do you sign up to be a company?
• Consulting contracts - any boilerplate examples?
• Gotchyas of sole proprietorships, LLCs, Corps, etc.
By law, in Thailand, it is illegal to leave your house
October 11, 2001
if you are not wearing underwear.
5 of 32
What Was Asked For, Marketing
• How do you generate leads? (i.e. B2B, B2C,
marketing)
• How to best get your name out there and get
noticed?
• How do you determine price?
October 11, 2001
I never built a booby trap that didn't catch at least one booby.
6 of 32
What Was Asked For, Accounting
• What information do you need to provide to whom
to get a tax number?
• How to keep the books straight, (especially if there
is any software that runs on a real kernel).
• What's the difference between a tax number and a
business license?
• Do you need, or should you have, a separate bank
account for a sole proprietorship?
• Knowledge of everything about taxes, especially
how to minimize them.
• Are there tax differences between working as an
individual and operating a sole proprietorship?
October 11, 2001
It's Production or it's Not Exactly.
7 of 32
Defining the Problem
So you want to be the boss. Why?
• Tired of taking orders from someone who
doesn’t have a clue;
• Tired of rush hour traffic;
• Hate office politics;
• Positive you can make a room full of money to
swim in; or
• Want to make a little “side” money.
If you come up with the right business idea!
October 11, 2001
Chewing gum while peeling onions keeps your from crying.
8 of 32
Advantages of Being The Boss
•
•
•
•
•
•
You’re the Boss
You make the business decisions
Greater feelings of self-worth
Flexible working hours
Higher income and equity
Direct contact with customers, employees, suppliers,
and others
• Opportunities develop your own ideas
• Living by doing something you truly enjoy
• Common cause for the whole family
"How can they possibly understand what we need when they don't understand what we do?"
October 11, 2001
Manager of a credit approval department
9 of 32
Disadvantages of Being The Boss
•
•
•
•
•
Financial risk
Long, hard hours (Spare time?)
Spendable income?
The buck stops with you
Growing successful business means you
spend your time on:
•
•
•
•
Human Resources Issues
Legal & Contract Issues
Accounting & Tax Management
Marketing
"If everything is under control, you are going too slow."
October 11, 2001
Mario Andretti
10 of 32
Take Some Time and Assess
Consider your knowledge related to these three
areas of the business you will be starting:
• Marketing
• Technical skills
• Financial
• Marketing
October 11, 2001
Barophobia - fear of gravity.
11 of 32
Don’t Fool Yourself
Starting, taking over or just adding a little
“side” work with a business you can expect:
• Harder and longer hours;
• No days off or extended vacations;
• No free “Holidays”;
• 70-80 hour work weeks; and
• Little or almost no money.
“Be careful about reading health books. You may die of a misprint.”
October 11, 2001
Mark Twain
12 of 32
Business Ideas
Before starting figure it all out (in writing)
ANY idea can be a profitable business so long as:
• You know how to do it and can do it well;
• You LIKE to do it and will not mind doing it
day after day;
• It has enough appeal to sell on a steady basis;
• It can be sold at a price that covers all expenses,
overhead and profit; and
• You have or can get sufficient funds to get
started and run until profits are available.
Anything worth doing is worth doing for money.
October 11, 2001
Ferengi Rule of Acquisition #13
13 of 32
Initial Business Requirements
•
•
•
•
Planning Preparation
Reserve Funds (at least a years worth)
Courage, Determination & Persistence
Marketable Skills and/or Idea(s) and/or
Product(s) and/or Service(s)
• Clients (they have to exist somewhere)
• “Network” of friends and colleagues
Once you have their money, never give it back.
October 11, 2001
Ferengi Rule of Acquisition #1
14 of 32
Starting Up Requirements
•
•
•
•
•
•
•
•
Required Skills
Plan A
Plan B
An Attorney
An Accountant
A Bank
An Insurance Provider
Licenses & Permits
It takes 3,000 cows to supply the NFL with enough
October 11, 2001
leather for a year's supply of footballs.
15 of 32
Successful Business Skills
•
•
•
•
•
•
•
Your “Product”
Project Planning
Writing & Grammar Skills
Personal Hygiene (seriously)
Dress Selection
Communication & Negotiation Skills
Constant Retraining
Insanity is doing things in the same way and
October 11, 2001
expecting different results.
16 of 32
Legal Issues
By LAW:
• You must apply for a license
• You may or may not need a FEIN
• You may have to file taxes quarterly
• You have a lot of reading…
State of Washington
http://www.wa.gov/dol/bpd/startbus.htm
http://www.wa.gov/dol/bpd/operate.htm
Few things are harder to put up with than the annoyance of a good example.
Mark Twain
October 11, 2001
17 of 32
Litigation & Protection
• An Attorney is the best bet
• Have your own contracts
• Try to use your contracts instead of clients
• Patent / Copyrights (talk to your lawyer)
• Have NDA; or
• If you talked about it to ANYONE you
have 1 year to patent it.
• Treat your business like a business not a
hobby
"99 percent of lawyers give the rest a bad name."
October 11, 2001
Unknown
18 of 32
Structure of the Company
• Just you = sole proprietorship
• All you have is up for grabs
• Not a lot of extra requirements
• Tax benefits are pretty good
• More then one person . . . Partnership, Corporation,
or a Limited Liability Company?
• Your milage will vary, talk it over with your
lawyer and CPA
• Research everything: Bank Accounts, Taxes,
Liability, Securities exchange law, etc.
The purpose of the indentation at the bottom of a wine bottle is to strengthen the
October 11, 2001
structure of the bottle and to trap the sediments in the wine.
19 of 32
Marketing
• Contributing is Marketing
• Reputation is EVERYTHING
• “loyal, honest, trustworthy, prompt, etc.”
• Current customer = 16 x $New
• Leads:
• Get referrals from others
• Recruiters
• Cold and Warm Calls When Needed
• SPAM and die
Keep your lies consistent.
October 11, 2001
Ferengi Rule of Acquisition #60
20 of 32
Sales
• Set your rates correctly (read “36.8%
Overhead or Money, the Bottom Line”, by
Steve Simmons)
• Don’t be afraid to bill
• Don’t work for bad customers
• Don’t take bad jobs
• Don’t expect bills to be paid on time
Never let the competition know what you’re thinking.
October 11, 2001
Ferengi Rule of Acquisition #85
21 of 32
When the Client Doesn’t Pay
•
•
•
•
•
•
Call the manager
Call their accounts payable
Call their CFO / President
Have your lawyer send them a letter
Stop work at first sign of trouble
Find a “collection” agency you can sell the
debt to
Even in the worst of times someone turns a profit.
October 11, 2001
Ferengi Rule of Acquisition #162
22 of 32
Accounting
• Keep everything
• Write all over everything
• Learn what you must have & do
• Get and read the IRS 1040 long form
• Get and read the IRS 1040c (business
portion)
• Little envelopes work great
• Keep 5 years of data (make it a written policy
to destroy old records and DO IT)
Over 2,500 left handed people a year are killed from using products
October 11, 2001
made for right handed people.
23 of 32
Accounting Software
• Find an accounting package and USE it
• QuickBooks is both inexpensive and user
friendly for non accountants. Keeps billing
information, Accounts Receivables, out of
pocket expenses, and recording expenditures is
just like writing a check, in fact you can actually
print your checks direct from the package.
• Peachtree is a little more sophisticated.
• If you have a CPA or accountant ASK what they use
to make moving data back and forth easier.
Right handed people live, on average, nine
October 11, 2001
years longer than left handed people do.
24 of 32
FEIN
• Federal Employer Identification Number
• Tax ID like a Social Security Number for
your business.
• Only sole-proprietorships do not need one
• If you have employees YOU MUST HAVE
ONE
• Get one by filing a SS4
• http://www.irs.gov/pub/irs-pdf/fss4.pdf
The letters KGB stand for
October 11, 2001
Komitet Gosudarstvennoy Bezopasnosti.
25 of 32
Tax Number vs. business license ID
• A tax number is your ID to the Feds, your state
UBI number is just a “UID” for the state
• You business will also get an Unemployment
Account number (this is pretty important)
October 11, 2001
One quarter of the bones in your body, are in your feet.
26 of 32
Separate Bank Accounts
• The answer is always “YES”
• Keeping “company” money separate from
your personal money provides some sheilding
• Cleaner “accounting” records
• Sole Proprietorships can start with a mixed
account
• If your business has a FEIN it needs its own
account
"If you don't have time to do it right you must have time to do it over."
October 11, 2001
Anonymous
27 of 32
Some Excellent Internet Stops
•
Small Business Administration:
http://www.sba.gov/starting/
•
SAGE Best Of Site (has some excellent consulting Articles):
http://www.usenix.org/sage/best.of/best.html
•
Excellent Venture Capital Library for new small businesses:
http://www.abcsmallbiz.com/bizbasics/gettingstarted/intro_gettingstarted.html
http://www.abcsmallbiz.com/bizbasics/gettingstarted/bizplan01.html
http://home.earthlink.net/~fpearce/Craiseho.html
•
Celeste and Peter Stokely are always a good resource:
http://www.stokely.com/breadth.vision.html
http://www.stokely.com/rules.html
http://www.balsamfir.com/documents/bm_main.html
The cruise liner, Queen Elizabeth II, moves only six inches
October 11, 2001
for each gallon of diesel that it burns.
28 of 32
Thank You To The Contributors
Paul English [email protected]
Steve Hastings [email protected]
Robert Miller [email protected]
Leon Towns-von Stauber [email protected]
Bill Wichgers [email protected]
"The average person thinks he isn't."
October 11, 2001
Father Larry Lorenzoni
29 of 32
Quotes
•
•
All the quotes came from my personal collection gathered
from lots of sources.
Some places to find more quotes are:
Witty Wisdom Quotes:
http://www.iol.ie/~taeger/wisdomqu/wisdomq1.html
Online Quotes:
http://www.idynamics.com/quotes/
Witty Quotes:
http://www.angelfire.com/ma/hubpoet/pquote.html
Witty, Thought-Provoking, and Humorous:
http://www.tk421.net/essays/wit.shtml
Funny Facts:
http://www.jokersweb.com/
Avoid fruits and nuts. You are what you eat.
October 11, 2001
Jim Davis (Garfield the Cat)
30 of 32
Bibliography
“36.8% Overhead or Money, the Bottom Line on Consulting”, by Steve
Simmons, ;login:, Volume 21 #4.
“There is light at the end of the tunnel: Profitable Strategies in Online
Retailing” Dr Jacques Bughin, McKinsey & Company and Free
University of Brussels, Avenue Louise, 480, B-Brussels, Belgium ,
[email protected] Michael Zeisser, McKinsey &Company,
55East 52nd Street, New-York, NY, USA,
[email protected].
Various Small Business Documents from the SBA Home: http://www.sba.gov/
“Being Your Own Boss” seminar given by Celeste Stokely at LISA '96
(Chicago, IL, Sept-Oct 1996):
ftp://ftp.stokely.com/pub/lisa96.being.your.own.boss.slides.pdf.
Various articles and references at
http://www.abcsmallbiz.com/bizbasics/gettingstarted/
With many thanks to The School of Hard Knocks.
"Copy from one, it’s plagiarism; copy from two, it’s research."
October 11, 2001
Wilson Mizner (1876-1933)
31 of 32
In Conclusion
Peanuts are one of the ingredients of dynamite.
October 11, 2001
32 of 32