Starting a Business

by Johnny B.Paul

If you’re like thousands of other graduates, programmers or other

creative professionals out there, at one point in time you’ve considered
starting your own business. Unlike most, you’ve gone against common
sense and decided to open shop for yourself. And not just freelance
full-time, mind you, but file for the company name, get some
stationery, and wade through the legal mumbo-jumbo. Maybe even get
a real office with a water cooler. This article offers real-world advice
from the trenches of a small start-up, and is applicable to all of those
who want to start a business.

Write a Business Plan

The most important thing you can do to prepare for starting and
operating your own business. Developing a business plan requires a lot
of time and energy, but it’s invaluable for one primary reason — it
forces you to come to terms with your business idea. You must decide
how you will generate income, what your expenses will be, who your
competitors are, and most important, WHAT YOUR BUSINESS DOES.
This may seem obvious to you now, but write it down. Think about it.
What sets your business apart? What is that you offer that others
don’t? What’s going to put you ahead of the competition?

Beyond the mental exercises, a good business plan will give you a
much better chance of getting a small business loan from a bank than
walking in and saying, “I like marketing and maybe a can open a shop
or something. Gimme money.”

A few years ago, new age business rhetoric said forget the business
plan and just run with it. Obviously, that didn't work out so well, so if
you go that route, God bless you. The business plan exists for a reason.
There are libraries of books written on them and huge websites
devoted to developing good ones. Some resources:

• http://www.sba.gov/starting/indexbusplans.html
• http://www.businessplans.org/
• http://www.businessplanarchive.org/

Take a few weeks and develop a strong and thought-out plan. Give it to
friends, co-workers, even family to read. Your business will be
immeasurably stronger because you took the time for this step.
Funding
This is a pretty involved topic, and enough books and articles have
been written about it to make for years of boring bathroom reading.
Advice in a nutshell: start the business with your own savings or
borrow from a bank. I highly recommend the former or a combination
that includes it, since it makes you pinch your pennies a little more. If
you go the bank route, make sure the business plan is polished to a
high shine.

There is one Golden Rule: Don't borrow money from family or friends.
99% of the time, you won't be able to pay them back. The amount is
irrelevant; Rs.1,000 or Rs.1,00,000 can quickly create bad blood.

Get an Accountant
In starting your business and maintaining its future financial health,
there is no greater ally than an accountant. He or she (or they if you go
with a firm) will be able to give advice on innumerable aspects of your
new venture. They can advise on what type of business entity to start
with, setting up bank accounts, a means of invoicing and collecting,
and more. Most importantly, they also guide you on paying taxes
properly and punctually.

Unless, you are really, really strapped for cash, hire an accountant who
is not a family member. While it may be tempting to get a family
discount, it is better to have an unbiased viewpoint about your
finances, and also better to keep your family’s nose out of your funds
in general.

Start with a Partner

If you can, start the business with a partner. This person should be
another fanatic with a level of experience equal to or greater than your
own, but with a different skill set. If you’re the God of Process, your
partner can be the Overlord of attracting clients. Having two Process
Gods will make for some lacking attraction work when needed. And for
the record, once again, it will be better if this person isn't family.

“But why a partner?” you ask. “I'm a darn good designer, and I'm really
really gonna do this right.”

A partner will keep you on your toes. When you want to buy that
Rs.20,000 machine, he or she should question why. If you want to do a
promotional work, it should be a group effort to get the best results. If
you start to slack off, he or she will be there to remind you of business
priorities. No one can do everything, and two complementary skill sets
create an asset that cannot be reproduced when flying solo. Make use
of the synergy.

About Your New Office

When you start a business, the option of setting up an office outside
your home has dramatic pros and cons that must be weighed carefully.

Good:

• You have a place for clients to visit if they are local.

• Reinforces good image (see below). Proper presentation goes a
long way, and making your office appear as if you’ve been in
business for years (you didn't tell them you were a start-up, did
you?) helps build client trust.
• You can write off all office expenses (rent, repairs, phone, etc).
This will affect your bottom line drastically.
• Gets you out of the house. Having a real place to go to work
makes the business more real, and forces you to take it that
more seriously.

Not-So-Good:

• Money out the window. Renting an office costs Rs.250-Rs.10,000

a month, not including the initial deposit. This is a lot of money if
you have a thin or inconsistent client base.
• Requires additional expense. You will need to get a fire inspection
and a certificate of occupancy, not to mention additional phone
lines, Internet connection, furniture, etc.

Setting up an outside office for a new business is a case-by-case

situation, and depends almost entirely on start-up money and cash
flow. Some businesses truly require a place to host clients (ad
agencies), and for others it’s not as important (data conversion). Weigh
the advantages carefully against capital, because being locked into a
lease without a means to pay is no fun.

Retain a Good Paper Trail

Make sure to keep a solid paper trail with clients, and that means a
real, physical file with hardcopies of proposals, contracts, invoices,
time sheets and anything else you can think of that relates to the
project. This also includes all financial records, bank statements,
receipts, deposit slips, etc.

And please, when you sign a contract with a client, make sure you
have a copy with BOTH signatures. Seems like an obvious thing, but
you'd be surprised. Don't do any work without one, because legally,
you will have a very hard time forcing a delinquent client to pay
without one.

Part of maintaining a solid paper trail is having a good invoice system

ready to launch at a moment’s notice. Make sure your invoices arrive in
the client’s mailbox while the project is still fresh. Every invoice should
clearly mark the amount to be paid and terms of payment (30 days,
etc.), and clearly indicate any additional fees resulting from delinquent
recompense.

If payment is late, don't be afraid to call the client. Sometimes they

just misplaced the invoice. Other times they don't have the money and
are trying to slink away. Sometimes, “the check is in the mail.”
Regardless, the business that does not call to get paid won't get paid!

Start Small, Conserve Loot

Consider working from your house/apartment to start, especially if you
have clients that will never visit you, or if you live in an expensive
metropolis (Chennai, Bangalore, Delhi, etc). Keep your expenses down!
Don't buy a new 100 port EPABX with auto welcome if your current
phone can be used to answer all calls, or a truckload of networking
equipment for two computers. Be cheap! You’re going to need the
start-up capital down the road, so don't drain it on frivolous
expenditures. (And yes, the die-cut business card with the metallic ink
counts as a frivolous expenditure.)

Don't Undercharge, but Be Flexible

If there’s only one thing to remember from this article, it should be this
point. Proper pricing is the one thing that keeps the business alive, on
multiple levels. When you charge appropriate amounts for the work,
the client will feel like they hired the right people; when you
undercharge, the client will know this and take advantage of you by
demanding similar rates in the future.

If you give every client a discount just to get the job (and this will be
tempting, especially in the beginning), you'll find yourself working
sixteen-hour days and not being able to pay the bills. Undercharging
hurts the industry in general as well; undercharged clients come to
expect and request absurdly low prices.

Separate Personal and Business Finances

Nothing much else to say about this. It will save you innumerable
headaches come tax season.

Marketing
Even the most reliable clients have dry spells, so make sure you are
constantly putting your company’s name in the marketplace. Word of
mouth is the best, but getting truly fresh work usually requires
spending money.

The Importance of Image

The importance of maintaining a positive image in the eyes of your
clients and potential clients cannot be overstated. Know your firm’s
identity so you can project that identity to the customer.

The visual identity is critical. Get business cards, letterhead, and

envelopes. Design a good logo or pay someone to do it if you’re not a
design firm.

Dress the part. When meeting with a client, look like someone who’s
come to do business, not some clichéd black-turtleneck half-shaven
professional who’s gracing them with your presence half an hour late.
It sounds exaggerated, but it happens all too often.

Make the office welcoming. If you entertain clients, keep the office
clean, organized and hospitable. Make good coffee. Purchase
comfortable chairs. Make sure they have a place to park.

And the End

If you still decide to start a business, there’s nothing more I can say
except good luck.

You’ve got to have the “fire in your belly,” or you will fail. There are
long hours, hard work, and incredibly frustrating and stressful times
ahead. But the rewards — being your own boss, being able to work on
a variety of projects, feeling that proverbial sense of accomplishment
— these are all very real results.