How to Organize Your New Business: the Nuts and Bolts

Soon you will find yourself deeply involved in reaching your market, analyzing customer needs and gain the attention of promotional ideas imaginable. But first there are a number of basic organizational steps you should complete.

Just enough stories in newspapers and magazines on the success of new businesses that started in a “money” you think to do so. In fact, several monthly magazines devoted to the presentation of low cost home business ideas that are guaranteed winners. ”

In our experience, very few new businesses are viable started running less than $ 1000.00. A recent survey by the Department of Computing magazine found that average reader spends about $ 5000 to start his business. It should be clear that companies managed by cash fast – often just when sales start to come into play

Preparation for the assessment of their financial situation

The first step in preparing for the examination of their financial situation is to sit with his family and to analyze where your money goes each month. Start with the first major expenses such as mortgage or rent, car payments, utilities, insurance, food and school expenses. These categories probably represent more than 60% of the total costs for your family each month.

Next add important, but also postpone expenditures, such as clothes or new furniture, a vacation or go to the movies or eating out. At the time that is done it is likely that in 15 to 20 major expenditure in the family budget. Put the total category of a piece of paper and add them to a grand total. Make sure each family member understands that the money is going each month.

Finally, see what you can cut the budget. But beware, leave a job (or lose), and then start a company will put his family under tremendous mental stress. Do not expect to suffer much pain in order to reduce the family budget.

Most of us would be lucky to cut 5% of the budget. Once an agreement on a monthly budget, it is time to review what sources of income. The most common are: your spouse’s salary and bonus, investment interest and dividends and rental income if the property. Become a difficult question: How reliable are these revenue streams? Has your spouse’s employer announced layoffs? Is the return on investment that can increase or decrease over the next twelve months?

Subtracting all the family income than their income (which fail to remember) of the monthly cost is reflected in what I call the “burden of businesses.” This is the dollar amount that vour the economy should create, if eventually the family budget is to continue its agreed level. Each month that its sales are not sufficient to meet this burden must borrow from – yourself, your credit cards, home loan or their relatives. This rapidly aging.

The second area of personal finance should be carefully evaluated its debt. Who should? How much? What percentage of the debt could be paid in over a year? Remember, you will not be working a regular job. Realistically, if the credit card debt is $ 400 per month minimum payment, you will have a very difficult to pay their phone bill of the company and the purchase of gas for your car.

Consider also what you own that you might turn into cash or used as collateral for a loan. The house is the most commonly used personal guarantees, but remember that what is at risk when using a home loan.

Estimating Startup Costs

Initial costs are one time expenses for equipment, furniture, computers, rent deposit, stationery, phone connection, insurance premiums, office supplies, and initial advertising. Be cautious here, it’s easy to spend a couple of thousand dollars before you realize it. Before you buy anything ask yourself: Can I use it? Do I already have something that works? Can something for her? If you are starting with a home office, of course, save on rent deposits and moving expenses.

If you are going to open a store, it is essential that research that is needed inventory, supplies and what is the lowest price you can get. You may also be facing a serious investment in building renovation, fixtures and carpeting and painting. The average startup costs for a store, including inventory, run about $ 75,000.

If you plan to make a product for sale will have to buy raw materials. Do the same research as the owner of the retail business does. Calculate the minimum investment to produce the desired sales for the first few months. Also, consider what other tools, equipment or vehicles of our company may require. A typical start manufacturing can cost more than $ 100,000.

Business Expenditure on exploration

For most small businesses, the staff of the owners of compensation is by far the largest operating expense of the company. This is his contribution to the burden of business. ” But there are many other potential costs faced by professionals. Among the most common are: rent, utilities, telephone charges, fax, supplies, software and repair, insurance, accounting fees, automobile expenses, dues and subscriptions, travel and entertainment expenses and sales promotion. Some businesses need a new employee from the outset, it would have to add in the wages and withholding taxes.

To find the cost of what your company will have to pay to speak with owners of similar businesses, through magazines and newspaper articles and trade associations, just to name a few. Also apply some common sense: Take what seems normal that the costs of my business type? I suggest you add 20% to estimate your monthly business expenses.

To find out what the magnitude of an initial capital of your business needs, take your “burden on business” and multiply by three. Add in the beginning of a one-time costs. Multiply the monthly cost by three companies and add to the other two groups in costs. The total is known as “seeding” – the money they have better access to the door before you open your new business, you will not be fooled, the new companies are very hungry – for money. Try starving and perishing!

Collect the name of the company

Up to this point, you have probably only about his new business of your family and yourself. But now is the time to prepare to talk with the outside world. The first step in the communication of all the wonderful things that can give your business is to create an identity for that by carefully selecting the company name and address.

I have long believed that there is no such thing as the perfect name for a new business. After all your customers are buying heavily in the beginning. However, a trade name cleverly selected goes a long way to make your business more memorable. Here are some tips for selecting a company name

* Keep short – no more than four words

* Make sure you can be easily delivered

* Use your own name or one that says you do your business

* Check the yellow pages to avoid a name that is confusingly similar to an existing company

* Make sure it looks good as a business card as you do on a piece of paper. One way is to use a graphic artist to draw the name card size.

Note that some companies are not only legally register their names, but they also mark. Trademark is a legal technique made available by states and the federal government to give the right to a name if it can be shown to the public who used it before anyone else, to receive national protection must submit a registered trademark of the U.S. . through the Trademark Office (the Department of Commerce). This is much more expensive and time consuming. See a lawyer before taking this step.

Selecting a Business Address

Now you need a business address to go along with his legal name. While you have been researching the cost of having to start thinking about where you locate your business office. Is it in your den? In an office building? A store? Or in an industrial building?

The simplest and least expensive is to use your home address as your business address. But before you decide to do this remember the following tips on how to choose a direction.

* Analyze you wish to sell. Who think they are less professional if they see an address on your business card?

* Are there potential problems if zoning your city or town is on your home business?

* Will your suppliers or customers regularly corning home? enough parking space so as not to disturb their neighbors?

* Can easily receive UPS, Federal Express, etc. at home?

If you do not find at home, what are your other options? There are three basic alternatives:

PO Box # 1. I do not like because they are used by scam artists, too, can not get to the box 24 hours a day and customer service in the Post Office is less than great.

# 2: Private Mailbox Store: A little more expensive than PO boxes but offer many more services to enterprises such as shipping of all types, fax, photocopies, passport photos, office supplies, to name a few. The largest number of stores are Mail Boxes Etc. outlets emerging everywhere. Costs range from $ 12 – $ 16 per month for a mailbox.

# 3: office suites of shared services: Many office buildings are traditional areas with the creation of small offices that share services, such as reception, mail, fax, copier and conference room. Rentals start at $ 400 per month, but some buildings offer a shortened version, known as the identity on the programs that keep your home office, but the rental of your mailing address, they have a receptionist answer your phone line and your business meet with clients in his conference room. Costs start at $ 75 per month.

Collect a legal form of the Organization

When opening a business, your life becomes more formal as they are now subject to laws and regulations. One of the first legal requirements they face is deciding how to organize the company from a legal point of view. There are three main ways to do this:

# 1: Owners only – one owner or husband and wife. All business will benefit in your tax return. You are personally liable for all debts and legal disputes. Too little regulation by the government. Over 70% of all small businesses are owned, often because it is easier, faster and cheaper to organize legally.

# 2: Partnership – Two or more owners join together to invest in and run a small business. Legally similar to a property in which each partner is personally liable for business debts and disputes. In addition, each partner is bound by the actions of other partners, even if they do not know about them. In our experience, it is difficult to hold together a partnership, because it is rare that two (or more) people share the same values, grow at the same pace or risk seeing the same. We strongly urge to review a written partnership agreement (available at office supply stores) before you talk seriously about joining.

# 3: Corporation – A lot of entrepreneurs who think they need to be a corporation. But in reality, few new businesses must be incorporated. The first step is realizing that your life becomes more regulated, if incorporated. We also estimate that it costs $ 700 – $ 1000 more per year in accounting and legal bills to be a corporation. However, there are many opportunities for tax savings for companies. The second step is to decide whom to organize society (incorporators). The third step is to decide if it is to function as “plain vanilla” society ( “C” company) or an “S” corporation (requires approval by the IRS). For the next steps, see “Register” below.

No matter what legal form new company has, in some branch of government (or more) wants to know about it, but keep in mind: before attempting to register legally, you must have selected a business name and address.

How to register your company

Most proprietorships and partnerships and corporations to use a name other than the name of the owner’s birth certificate. This name is known legally as a fictitious name, assumed name or DBA (doing business as). The county in which you live requires that the registration of this name of course. The procedure is generally as follows:

* Call your County Clerk’s office and it is assumed that an application for registration of names and ask how the fee.

* Fill out all forms with the legal name of the company, its official address, your real name dry your home. One of the ways may have to be notarized in order to see the accompanying instructions.

* Usually ships form one more time and keep the shorter form. Include a check to our Secretary of the County of the registration fee.

* Take the shortest of any newspaper in the county (call first of its kind to get a notice) and place a notice for three consecutive weeks. The newspaper will give you proof that the ad ran.

* Submit proof of your ad placement County Clerk, immediately.

* In three to four weeks wilt receive a certificate of registration.

The registration of a company is more involved than the assumed name registration. Here is the procedure commonly encountered. Which may vary in your state:

* Call your Secretary of State and request name registration companies.

* Have two or three options for writing your name. Ask if the name is available. If not, go to the next and the next. Hopefully one of the three available.

* While you have them on the phone, ask for two copies of the registration documentation known as the Articles of Incorporation (or similar name).

* Use a lawyer or one of the Centers Small Business Development to help fill the articles of incorporation. They are quite easy, but the section on the issue of shares may be a bit difficult. Check how to how to calculate the rate of incorporation.

* Send two copies of the articles with a certified check or money order for the rate of incorporation has been made to the Secretary of State at the address in the instructions.

* In a couple of weeks you will receive official notification of the incorporation. After this time if you use your company name must be terminated by one of four suffixes: “Inc.”, “Corp.”, “LTD” or “Co”. Place the certificate in a safe place. You will need a set of effects, but what is more important to prove that in order to open a corporate checking account.