Top Business Start-up Secrets

Don't let your startup dreams die because you're overwhelmed or unsure of what's really involved in getting started. We've simplified things for you by going straight to the experts to find out their top tips for startup success, so you can master the process step by step.
Eg. Writing Your Business Plan. A solid plan can help you start off strong and stay that way. Now get started...!

1. Writing Your Business Plan
A solid plan can help you start off strong and stay that way.

2. Finding Your Target Audience
Choose your target customer, then take aim in the right direction.

3. Choosing a Name
Here's how to choose your handle with care.

4. Should You Incorporate?
Select the right legal structure for your company's operations.

5. Finding Advisors
Team up with advisors who are willing and able to help.

6. Searching for Funding
Don't let lack of funding put the brakes on your startup.

7. Finding a Location
The right location increases your odds of winning the business game.

8. Equipping Your Business
Set up your startup with the right tech tools.

9. Protecting Your New Business
Minimize your risk with business insurance.

10. Hiring Smart
Invest in your business's future by hiring well.

11. Getting the Word Out
How you spread the word is as important as the word itself.

12. Selling Like a Pro
Get out there and show 'em what you've got--literally.

13. Managing Your Business Finances
Money is the lifeblood of your business, so keep close tabs on it.

14. Smart Tax Tips
Doing taxes right can save you money in the long run.
Got a (Business) Plan?
A solid plan can help you start off strong and stay that way.
Writing a business plan is one of the first steps you should take toward startup, well before you launch your business. "A lot of businesses fail to write a business plan at all until they get in a jam," says Linda Pinson, author of Anatomy of a Business Plan: A Step-by-Step Guide to Building a Business and Securing Your Company's Future. "They need money or a strategic partner: They come across a requirement for [which they need] business planning, and all of a sudden they're panicked."
A business plan will serve as your guide to decision making during the life of your business, starting with the question of whether to start in the first place. The second use of a plan is to satisfy lenders and investors, virtually all of whom will require a written business plan before approving a loan or making an equity investment. Plans also serve as a means of communicating with potential partners, allies, vendors, employees and even customers.
1. Before putting pen to paper, research resources and tools that can help. In addition to books, software programs can automate the task.
2. Back up your concepts with numbers. Keep in mind, a business plan is both qualitative and quantitative. "A business plan is not just writing about what your vision of your business is," Pinson says. "It's interpreting it in financial terms that you can measure." That means you'll need some numbers--as precise and accurate as possible--in addition to verbal descriptions of your plans.
Start by writing the conceptual part, then move to the financial part. "Interpret those concepts in terms of dollars," says Pinson. For instance, starting with an idea of how frequently you'll advertise, how large the ad will be and where it will run, you can find out how much it costs. This will give you a number to plug in for advertising costs. Says Pinson, "The conceptual or text part of your plan has no validity without the financial part."
3. Be realistic when making projections. "One of the most frequent errors made when writing a business plan is over-estimating revenue and under-estimating expenses," Pinson says. Improve revenue estimates by narrowing your target market down to a realistic niche, then interpret revenue and expenses in terms of that market, Pinson advises. Start by identifying potential customers, then slice off those who aren't ready to buy, can't be marketed to effectively, can't afford your solution or don't consider it a need.
4. At minimum, include monthly cash-flow projections for the first year. "Cash flow is the critical issue," Pinson says. Also prepare an overall projection of profit and loss for three years, as well as a projected balance sheet. Calculate the break-even point at which sales will cover costs. Research financial ratios specific to your industry, and look at published industry-specific ratios to make sure your assumptions are realistic. Says Pinson, "If grocers make a one-half-percent profit and you're [projecting your] grocery store [will have] a 28 percent profit, you'd probably better rethink your projections."
5. Pay special attention to marketing. First, develop goals. Second, do a market analysis, including identifying target markets, researching competition and assessing market trends. Then prepare a marketing strategy, including your approaches to sales, promotions, advertising, PR, networking, community building, customer service and other marketing channels and tools. Develop a plan to implement that marketing strategy, and include benchmarks to see if what you planned actually happened.

Right on Target
Choose your target customer, then take aim in the right direction.
Open the doors to your business, and it's easy to think of the whole world as your oyster. Why focus on a target market and exclude all those other market segments with which you could be conducting business, right?
"A big problem for many small businesses is that they are so desperate and so grateful for anyone who buys from them, they don't go the next step and ask who they should be doing business with," says Lisa Fortini-Campbell, adjunct professor of management at Northwestern University's Kellogg School of Management in Chicago and founder of market research and consulting firm The Fortini-Campbell Company.
Targeting the right prospects can mean the difference between success and failure. Before taking a scattershot approach to building a customer base, consider these tips:
6. Don't assume. Fortini-Campbell, who is also the author of Hitting the Sweet Spot: How Consumer Insights Can Inspire Better Marketing and Advertising, says that too often, small-business owners assume they know what their customers will want before doing their homework. "If you want to launch a catering company and think it's only about serving good food, but your customers really want all the trappings that come along with having someone serve them--such as the dishes and the table décor--you're going to lose business if you're not prepared to deliver that experience," says Fortini-Campbell.
She says that since your future customers are currently buying from other places, you should use your competitors as a research tool. Make note of not only what your competitors are selling, but how they are marketing and selling their products and services. "All your future customers are out there buying from someone else now," says Fortini-Campbell. "What are they buying? Who are they buying from? What can you learn about what others are doing?"
7. Find the perfect match. "The most important thing a small-business owner can do is figure out what kind of customers will help them get to the goal. Who are the most strategically valuable people to them?" says Fortini-Campbell. "Do you need a lot of people who buy a lot, or people who buy across an entire service line?" Is your ideal customer a business or an individual? Affluent or middle-income? Is he or she local, or does geography not matter? Identify as many traits as possible so you can organize your business to keep those customers coming back.
8. Identify different segments. After you've outlined whom your best customers will be, recognize that you may have more than one profile, says Fortini-Campbell. For instance, the catering business we mentioned may find lucrative market segments in cooking and presenting elaborate holiday meals for affluent families, as well as providing simple, daily heat-and-serve meals for busy working parents.
9. Use free market-research tools. "The internet is a wealth of information," says Fortini-Campbell. "Search on any topic and you will find websites, blogs and discussion rooms on everything imaginable." In addition to the great number of books available on market research and targeting customers (including her own), she recommends checking out the free market-research resources available in your state, county or municipal economic development offices to see which market segments are growing in your area.
10. Service, service, service. "More small businesses lose customers [due to] poor service than bad products," says Fortini-Campbell. Your business's most important marketing tool is the way you conduct sales and service customers. Every time you do work for a client, you are marketing yourself, she says. When you do that well, customers pay you back with loyalty and referrals.
The Name Game
Here's how to choose your handle with care.
Every business needs a name, and picking a cool, memorable moniker is the name of the game. But hiring a naming firm or advertising agency to help you can cost thousands of dollars.
It's possible to name the company on your own--if you know how to do it. Start with a pen, some paper and a very perceptive ear attuned to everything going on around you. "You want to have a checklist," says Marcia Yudkin, founder and "head stork" of Namedatlast.com, a Goshen, Massachusetts, company that will brainstorm 10 potential company names or tag lines for you for about $1,000. Here's your quick check-list for mastering the name game:
11. Think marketing. First, decide on the advertising that will drive 90 percent of your business. Will you rely primarily on print ads, signage at your location, word-of-mouth, the internet, Yellow Pages, radio or some combination thereof? "Depending on your answers to these questions, certain criteria become very important," Yudkin says. Overdone alliterations, foreign words and domain names with hyphens are the kiss of death for websites and radio ads, where spelling and easy pronunciation are critical. If your business will be driven by the Yellow Pages, an old trick is picking a company name that starts with A, B or C so your ad will be placed toward the front of its section. But not every business can be named Aardvark or Abba, so you'll have to get creative.
12. Scan the competition. Compiling the names of local competitors offers a starting point for differentiating yourself. Do your competitors' names really fit the target market? Are the names too traditional while the customer is hip and cool, or vice versa? The answers will tell you what doesn't work, which can help you narrow your list of possibilities.
13. Get brainstorming. "Do a brain dump of every possibility that comes to mind," says Yudkin, who asks her clients to think of company names in other industries and why they like them as a brainstorming exercise. Think of buzzwords that appeal to your potential customer and that the competition isn't using, and consider the result the customer wants from using your product or service. Yudkin chose Namedatlast.com, for example, because it focused on the result of using her naming service. "There aren't as many companies using those kinds of names," Yudkin says. "They do tend to stand out."
14. Check for negative connotations. Names clients have brought up to Yudkin, such as Cobweb Design, Goosechase and Wild Weasel, may sound clever, but they can leave potential customers with an unsettled feeling about your product or service before they even try it. Consider every word on your list for negative meanings, and ask friends and family how different words strike them. Scratch potential offenders off your list. If you're creating a website, ponder your company's name in a global marketplace so you don't offend an entire country.
15. Check for trademarks. More than one business owner has come up with a company name and put it out there, only to receive a cease and desist order that forces him or her back to the drawing board. "Before you commit yourself in any way to commissioning a logo, putting up a website, making signage and so on, make sure the name is legally available," Yudkin says. Save yourself a big headache by visiting the U.S. Patent and Trademark site at www.uspto.gov, where you can search for registered trademarks. Also visit www.yudkin.com for additional tips on naming your business.
Continue learning: You should be well on your way to an amazing name by now. But before you commit, make sure you haven't made one of these eight mistakes.

To Inc. or Not to Inc.?
Select the right legal structure for your company's operations.
Start the process of selecting a legal structure for your startup by asking yourself which legal jurisdiction you want to set up in. "Some people talk about Delaware, some people talk about Nevada, but the short answer for a small business is: Stay at home," says Leonard DuBoff, a Portland, Oregon, attorney and author of The Law (In Plain English) for Small Business. Incorporating in Delaware or Nevada may make sense for companies with lots of investors, but you'll have more control and convenience if you legally base your startup where you are actually located. With this decision made, use the following tips to help you settle on a legal structure:
16. Consider your appetite for liability. The various legal entities all offer entrepreneurs different protections against liability. A corporation or an LLC offers you the best protection against being held personally liable for actions by employees or others. But, DuBoff notes, no form of organization completely shields entrepreneurs from personal liability. "If you are driving and rear-end my car, whether you're driving for yourself or a corporation, you're liable," DuBoff says. The type of business entity you choose won't change that. The entity affects your liability for the acts of employees, partners and contractors. A sole proprietorship provides no liability shield. A partnership makes you liable not only for your wrongful acts, but for those of your partner as well. If you don't have employees, contractors or partners, a corporation or LLC won't provide much liability benefit.
17. Consider access to capital. As a sole proprietor, debt financing is the only way you can raise money for your business. Partnerships let you borrow as well as ask other partners for capital. "Corporations and LLCs have much greater flexibility in acquiring additional investments," DuBoff says. For instance, these entities can sell equity to others to generate capital. "If that's important to you, that will [help] determine the entity you select."
18. Think about your tolerance for paperwork. "A sole proprietorship is simple and elegant," DuBoff says. "There's almost no compliance." Business licenses and assumed--name certificates are all the red tape sole proprietors face in most jurisdictions. State, local and federal regulation, compliance and filing requirements rise sharply when you set up a partnership, an LLC or a corporation.
19. Know the tax implications. As a sole pro prietor or partner, you have full, personal tax liability for all the business's profits. The upside is that you can deduct the business's losses on your personal tax return. A C corporation is itself a taxable entity. If it distributes money to you or other owners as a dividend, you also pay taxes, so the money is taxed twice. With an S corporation, profits pass directly to you without being taxed at the corporate level. Also, S corporation dividends and distributions are treated as passive income, so they aren't subject to payroll taxes. LLCs can be set up similar to C corporations or like pass-through S corporations, but "an LLC that elects to be taxed as a pass-through doesn't get as favorable treatment as an S corporation," DuBoff says.
S corporations have a special risk for passive owners because they will be taxed on their distributable share of the corporation's earnings. If the S corporation's active owner-managers opt to put profits back into the company instead of distributing them to shareholders, a passive owner could have to pay taxes on money he or she didn't receive--"an awful situation," says DuBoff. So if you set up an S corporation, make sure you are actively in control of it, or incorporate safeguards to make sure you'll receive enough money to cover taxes on distributable profits.
If you're uncertain what option is best for you, consult an attorney familiar with small-business issues.
Hit the Spot
The right location increases your odds of winning the business game.
Deciding on a location for your business is one of the most important and unchangeable decisions you'll make, but it's often an afterthought for many startups--which may end up on the fast track to a liquidation sale. "You can always change your promotion strategy and mess around with your prices,". "But once you sign a retail lease or get a mortgage on a place, those are usually pretty long-term contracts [that are] difficult to get out of." Here's what to do before you call a realtor or landlord:
31. Know your market. McDonald's is a retail rat because it can exist and thrive anywhere, in affluent areas as well as poor areas. Other companies, however, might be considered retail pandas because they need to be in specific areas to survive. Think about the habitat your new business will require, and whether you're about convenience and commodities or specialty items. The answer will keep you one step ahead in retail's survival of the fittest.
If you're thinking of starting a service business such as an accounting practice, you may be considering your home as your business's habitat. If this is the case, don't just weigh the overhead expenses when making your decision--also consider whether operating from home suits your product or service. Could potential customers be put off by the thought of doing business at your house? Or will customers overlook where you're located because selling will be done largely via phone, fax and the web? Also, it's a nice gesture to make sure your neighbors are OK with more foot traffic and fewer open parking spaces if you expect to receive customers at home.
32. Gather some data. Websites such as Economy. com provide quick and practical economic profiles of every urban area in the United States. A general profile of an economy can be helpful in deciding where to locate your business. "A reliable, basic profile of whether a local economy is heavily dependent on one industry or sector is useful," says Pamela Hannigan, professor of real estate economics at New York University in New York City. The data will help you see trends and determine where your target customer shops.
33. Think like the competition. It's not an accident that the same large retailers--Home Goods, Michaels and Target, for example--locate within a stone's throw of each other. It may seem counterintuitive to settle right alongside the competition, but clustering can increase business and lead to cost savings in hiring and shipping, among other things. Says Hannigan, "Becoming part of a cluster that attracts a much larger market can still make [you] better off than if [you] try to establish [your] own market in some virgin territory."
34. Take to the streets. Demographics on paper are one thing; actually spending time in your desired location is another. "Not every field is a field of dreams," Hannigan says. When visiting a potential location, is your gut reaction that this is an area in which you'd like to shop? Something seemingly small, like parking availability and expenses, can greatly impact the amount of foot traffic coming through your door. Also, consider your industry when choosing a location. If you're a quick, in-and-out type of business--like a latte shop or a dry cleaner--it pays to locate your business in a central part of town. These days, you may also want to consider whether you could convert the location to include a drive-thru window for added convenience.
35. Ask questions. Visit small stores in various locations to see how busy they are. If you're daring, you can ask if leasing at the location was worth it and how much turnover they see going on with stores in the area. You never know what you might hear. Being aware of whether you're running a day or night business is important as well. A pub, for instance, might not fare as well in a strip mall that attracts mostly daytime traffic. You'll find plenty of information to help you online: Start your research by visiting our Starting a Business section or www.geomarketingresearch.com.
Continue learning: "How to Find the Best Location" has 22 questions you should ask regarding any potential locations for your new business. And if you're considering a shopping mall location, be sure to read "How to Select a Shopping Center Location."

Fully Equipped
Set up your startup with the right tech tools.
There's more to equipping your new business with the right technology than just walking into a big-box store and buying a desktop off the shelf. Much more. Think about the technology your startup will need beyond today--because a little planning and some smart buying decisions will help keep your business running smoothly during your startup days and beyond.
36. Start with a network. A lot of entrepreneurs aren't sure where to begin when it comes to buying and setting up the technology they need for their startups. Your network is your backbone, so start there. "You need to have a client/server-based network operating system," says Greg Alevizos, manager of professional services with Salem, Massachusetts-based IT consulting firm New England Network Group. "You want to have at least one server that has file and printer services and is configured to back all that up." Don't worry if this sounds like more than you want to tackle on your own--just see tip No. 42.
37. Get dedicated internet access. Dial-ups need not apply. But you do need enough broadband bandwidth to handle the employees you plan to hire--now or in the future. You can look into getting DSL, cable or higher-end internet solutions like a T1 line, which can handle up to 100 users. "If you go with a lower-end solution, you might not get the service-level agreement, which means that if your internet line goes down, they don't have to fix it in a hurry," says Alevizos. "You don't want to skimp on that."
38. Get anti-virus protection. This is a must in Alevizos' book. Instead of having a hodgepodge of applications on everyone's computers, consider getting an anti-virus package that resides on your server. It will be easier to manage in the long run.
39. Back it up. Do not skip this tip--data backup is a must. Alevizos recommends three different kinds of backup: 1) tape backup, an old standby that requires a bit of watching; 2) backing up off-site, or online through a third-party provider; or 3) installing a network-attached storage system at your place of business. "If you [use] two of [these methods]," says Alevizos, "then you have close to a 100 percent guarantee that you have viable backups that can be restored."
40. Don't buy your computers piecemeal. "It's ideal to get a homogenous environment so that all the machines are identical hardware-wise," says Alevizos. "The maintenance needs go down, and the total cost of ownership goes down in terms of scalability." He recommends staying with major vendors like Dell or Hewlett-Packard and getting a warranty and a service contract.
41. Buy printers that meet your needs. Alevizos points out that every startup should have a heavy-duty, network-capable printer--often a black-and-white laser will do. "If [you have] a need for color printing in [your] business model, it's a good idea to make the investment in a workhorse network-capable color laser printer," he says. Prices are more affordable than ever, and a color laser can save you from racking up big bills at the copy shop.
42. Know when to get outside help. "If you don't have in-house IT [staff], you definitely want to bring someone in during the initial stages to set up the baseline of the network," says Alevizos. It's important to get your network up and running efficiently from the get-go, and most entrepreneurs don't have the time or the expertise to do it themselves.
43. Plan for the future. Following the tips above will help you not only during your initial startup phase, but also as your company grows. You'll be prepared to add employees and still keep a handle on your technology. Just don't forget to budget in some ongoing expenses. Says Alevizos, "Don't put the blinders on when you're looking at your IT expenses annually. Never assume that the initial cost is the only cost you're going to have for any IT solution."

Youth Business Trust