My Small Biz Break partner, Maria, recently posted a great topic on her blog at Multi Entrepreneur Ideas, asking small business owners if they have a disaster plan in place. This question is especially crucial for solopreneurs.


Besides the lagging economy, there are a number of other factors that create risks, potentially disastrous risks, for your business. And I don’t say this to scare you. I say this to inspire you to take action, hopefully.


Let’s list out a couple of real life scenarios:


Your computer crashes and you can’t access your information – or possibly lose all of your data. How many times have you heard this story?


You become ill and can’t work for an extended period of time. It happened with my wife when we owned our restaurant. She developed a sudden, major illness that didn’t allow her to work for a couple of years. This impacted our business drastically.


You have your new marketing campaign planned out and save a budget for it, but then suddenly, you need to divert your cash reserves because you lost a major customer or a piece of equipment fails and you need to replace it.


No, you don’t want to spend your time constantly worrying about what could go wrong with your business. This will keep you from focusing on growing your business. To avoid this situation, take the time to review your business and protect your critical areas.


Even if you have limited funds you can still research and have ready the following:

• Outsourcing providers
• Software packages
• Data backups
• Health Insurance
• Business Insurance
• Access to loans

The worst time to figure out how to handle these scenarios is when the s*** hits the fan. Do yourself a favor and have a plan in place so you can keep your business moving forward if disaster strikes.


If you need help creating a disaster prevention / recovery plan or if you have a business disaster story you would like to share, please leave a comment below. The other readers would love to learn from it.


All the Best,


Doug Dolan
The Solopreneur’s Guide
Small Biz Break

This is post 7 of 10 in a series discussing the essential steps for launching a successful, sustainable solopreneur business. If you missed the disclaimer post, it is helpful if you take a minute to read it before going forward. Here’s the link to the post.


So far I’ve covered the following sequential steps:


1. Define Your UVP and Prime Prospects

2. Perform Your Market Research

3. Create Your Business Plan

4. Square Away Your Finances

5. License, Permits, Certifications and Legal Structures

6. Develop Your Products


Today’s topic discusses setting up shop – whether it’s a home office or another space.


Let’s start with what is the likely scenario for solopreneurs … working out of the house.


Here’s the quick checklist of action items:


1. Check your local zoning laws.
You should have already taken care of this during step 5, but in the event you missed it, you’ll need to make sure you meet all legal requirements for running your type of business out of your house, especially if you are doing any manufacturing, testing, storing of potentially hazardous materials or if you will have customers coming to your house.


You can verify be checking with the city or county office in your area that enforces zoning laws.


2. If possible, set up a separate workspace.
Your business requires focus. Unless you live alone, set up a separate room that you dedicate to your business. Working from the kitchen table with the kids and significant other interrupting every 15 minutes with requests for attention will not work. With a separate office, you can get in “the zone”.


If you are having a difficult time keeping healthy boundaries between your business space and your kids, I recommend you read up on an interview I did with Amy McCready, a positive parenting expert.


3. Set up your business accounts.
Remember to set up your various business accounts … from domain names to web hosting, bank accounts, credit cards (and other lines of credit), payment processing accounts, vendor accounts, email accounts and other online accounts.


4. Set up separate communication lines.
From phones, to faxes and email addresses, set up separate communication lines for your business from those for personal use. If you don’t, some customers may not find it so cute if they call and your four year old daughter answers the phone. Plus, keeping separate lines helps you track your true operational costs better.


5. Protect your information.
Now that you’ve set up your communications and computers, make sure you protect any critical data. In addition to organizing your information in filing cabinets and on your computer, you may need to buy a safe for storing money and other important data. Plus, you will definitely need to set up some form of back up for data on your computer. Viruses are a common occurrence and computers die. You don’t want all of your business data to die with it. And for the paper data you do want to dump, send it through a paper shredder if it has confidential data.


6. Purchase the necessary furniture, fixtures and equipment.
Hopefully, these requirements are a minimum. You want to keep your start-up costs to what is necessary. Save the frivolous buys for later when your business generates a profit. When possible, look into buying used. With the high unemployment rate and many small businesses struggling, you can find great deals on a wide variety of items.


7. Everything has its place.
An organized office is a productive office. You will need to determine what is necessary for filing cabinets, shelving and desktop organizers.


8. Set up your motivators.
Why are you starting up your own business? What are your goals and objectives? Whether you find inspiration from pretty pictures, a photo of a particular goal, your mission statement or a whiteboard with your goals and objectives, make sure you have a daily, visual reminder of the benefits of staying focused.


9. Track your expenditures.
You can’t know your true profitability if you don’t track all of your expenses. Purchase your equipment, furniture and supplies on a business credit card or file away all of your receipts. You’ll get a better picture of your actual cash flow, plus have more to give your accountant for tax breaks if you keep track of these expenses.


Setting up an offsite office includes most of the above requirements, plus:


A. Location, location, location.
For whatever reason you choose to work out of an offsite office instead of your home, finding the right location is critical. Do you anticipate walk in traffic? Will it be easy for customers to find you? Does it offer enough of safe parking? How is the neighborhood? Is it safe? Does it offer the optimal set-up? Does a shared office with a receptionist and a meeting room provide the best professional image?


B. Make sure you are up to code.
Separate from the zoning requirements mentioned above, make sure you meet any safety codes. The best way to verify this is to check with your local building and safety code department and fire department. You don’t want a surprise visit resulting in a fine.


At this point, you’re getting close to hanging the “Open” sign on your business. It’s an exciting feeling!


Next up in this series, “Launch Your Marketing Campaigns”.


All the Best,


Doug Dolan
The Solopreneur’s Guide

This is post 6 of 10 in a series discussing the essential steps for launching a successful, sustainable solopreneur business. If you missed the disclaimer post, it is helpful if you take a minute to read it before going forward. Here’s the link to the post.


So far I’ve covered the following sequential steps:


1. Define Your UVP and Prime Prospects


2. Perform Your Market Research


3. Create Your Business Plan


4. Square Away Your Finances


5. License, Permits, Certifications and Legal Structures


Today’s topic discusses the creation of your products. When I use the term products in this post, realize that it includes services, too. In some solopreneur businesses, your services may be your only products. For example, as a copywriter, I offer services to small businesses, but I still have to “create my products”.


If at this point in building your business, you are still questioning what products you should develop, you need to take a couple of steps back. Your primary problem either lies in the fact that you didn’t do enough market research, you let competing products scare you off or you’re trying to have one product service too many needs.


With sufficient research of the market place, you should see what need the market has not satisfied by current solutions. At the same time, simply because someone else offers a similar product doesn’t mean you shouldn’t develop your own version. Can you create a better product? Do you need to create a similar product to round out your total solution offering? Your total solution offering may be a variety of products and services. If so, don’t try to create a one-size-fits-all and does-everything product.


Here are 8 key points to consider when developing your products:

1. Does it pass the “so what” test?
What need are you satisfying in the market? Whom are you satisfying a need for? How does your offering satisfy their need better than the competition? Where is your objective data to prove that anyone wants what you are selling? Does the market prefer quality to low price?


If you create a product that you think the market will love without seeing objective evidence (polls, surveys, other similar successful products, reports, etc.), then why are you creating it? This may sound simplistic (and it is), but I have consulted with more than one solopreneur who developed a product they loved and, therefore, thought other people would love it, too.


2. Can it easily be copied?
Do you have an opportunity to create a barrier to entry for the competition with your product? You may choose to take legal steps through copyrights, trademarks and patents through the US Patent and Trademark Office or you may decide your barrier to entry is your skill set. Can you deliver the product in a different and better way than the competition based upon your experience and skill?


If you create a product that is easily replicated, it doesn’t mean you can’t make money. However, unless you have some other advantage, you are putting your business at high risk of working harder to make less money.


3. Check the competition, again.
Unless you’re able to launch a business within a week of doing your market research, you should go back and check the competitions’ offerings during your development phase. New competitors may have entered the market or the current competitors may have launched a new product. How do these new offerings alter your products?


4. Stick to your budget.
Simple enough – you have a budget (for time and money) in your plan; stick to it. Unless you are able to raise additional capital or can justify delays, you need to get your products to market to make money. Don’t overcomplicate the design, delaying your launch while the market gets hooked on competing products.


5. Pre-sell when possible.
It is possible to have the market pay you for your development. When launching your marketing plan, pre-sell your products by offering a limited time discount for delivery of your products at a later date. This will bring in cash to fund your development, plus it gives you a good sense if the market is truly interested in what you’re developing. A strong indication if you are on the right track is people voting with their dollars.


If you do pre-sell, you have to give a date for delivery and stick to it. If you don’t, you will lose customer confidence, harm future pre-sale opportunities, give money back (that you may have already spent) and possibly even loose a good customer … for good.


6. Do your products integrate with your plan?
When creating your business plan and goals, you may (and should) have created an identity and goals … other than revenue goals. You may have created goals focused on market penetration, sales volume, imaging, and awards. Will the products you develop work in concert with building your brand and hitting your goals?


7. Is testing necessary?
If this is your first time developing a particular product, you may want to test it out to on a select group before releasing it to the mass market. Depending on your market focus, your test market may be friends, family, mentors, other entrepreneurs or if after you’ve launched your business, a select group of customers. Does the product perform the way you promised? Better to find out testing it on people you trust will give you honest, insightful feedback before potentially burning customers.


Are there any customer or legal requirements for testing? If you are servicing the hi-tech industry with a new design, do customers or legal entities require testing by third-party, independent labs for quality assurances before you can introduce your products to the market?


8. If your product creating is complicated, record the process.
Efficiency in time and money are imperative when developing your products. If you develop rather complicated products, record your process so you can minimize time, money and errors when developing future products.


Next up in the series, “Set Up Shop”.


All the Best,


Doug Dolan
The Solopreneur’s Guide

This is post 5 of 10 in a series discussing the essential steps for launching a successful, sustainable solopreneur business. If you missed the disclaimer post, it is helpful if you take a minute to read it before going forward. Here’s the link to the post.


So far I’ve covered the following sequential steps:


1. Define Your UVP and Prime Prospects


2. Perform Your Market Research


3. Create Your Business Plan


4. Square Away Your Finances


Today, we’re going to get into what licenses and permits, certifications and legal structure you may need and how to go about applying for them. The type of business you are developing, your industry focus and where you set up shop will dictate your legal requirements and help you determine what certifications (if any) and legal structure will benefit you most.


BizFilings.com
I believe in saving time, so I’ll start with giving you a shortcut. I recommend you go to BizFilings.com. For a nominal fee, they will create a report that includes the necessary forms and government agencies to apply for the licenses, permits and if you choose, legal structure, specific to your business.


I used their service for setting up The Solopreneur’s Guide. I received my report within three business days. For $99, It gave me everything I needed for licenses and permits (and $115 for incorporation, which I didn’t select), and freed up my time to focus on other start-up activities. There were some additional fees required by government agencies, but not much.


DIY
If you prefer the more hands on approach, you can consult with an attorney, a CPA and the government agencies direct.


When taking this route, here is a list of things to know and consider:


1. Be prepared.
To minimize wasting time and money, when meeting with an attorney, CPA or government agency, be prepared. This is part of the reason why I created this series in a specific, sequential order. As I mentioned above, your business structure, industry and location will affect the licenses and permits you need and the legal structure with the most advantages. Since you already created your business plan by this point, you should have all the answers necessary.


2. Select your legal structure first.
Since this post focuses on the needs of solopreneurs, the two legal structures that apply are sole proprietorship and Single Member Limited Liability Company (SMLLC).


Which one is right for you? The three main criteria that will affect your decision are:

a)      Ease of set up (time and money)

b)      Tax benefits

c)       Liability coverage

The sole proprietorship is inexpensive, easy to set up and simplifies the tax process since the IRS only taxes you once on your personal income tax returns.


The potential down side to this structure is it doesn’t offer any liability protection (for debts and damages) and it is difficult to raise capital. You can get around some of this, however. For example, you could purchase business liability insurance and / or improve the language in your business contracts and proposals with disclaimers and indemnification clauses.


A SMLLC offers pass though taxation like a sole proprietorship, but offers some liability protection. It is more complex and expensive to set up, acting like a hybrid between a sole proprietorship and a corporation.


I prefer to keep things simple. However, if you are tempted to structure your business as a SMLLC, I recommend you seek out professional help to make sure you fully understand all the pros and cons.


3. You may need to connect with more than one agency.
Depending on your business structure, industry and location, you may need to apply for licenses and permits with local, county, state and federal agencies. How can you find out which agencies? Since the laws vary by location, you will need to do your research. You can either do a search on Google or stop by city hall or your local chamber of commerce and see if they can point you ion the right direction.


4. Zoning.
Before you launch a home-based business, you had better check your local zoning laws. If you are purely running an internet based business, you should be fine. However, if you plan on manufacturing or having walk-up traffic at your home, there is the possibility that you may be in violation of your city or county zoning laws.


The zoning laws are mainly a way to protect your neighbors from undo noise, traffic and other interruptions that a business may cause. If you’re in doubt, check with the local or county agency that manages your zoning laws.


5. SSN vs EIN
Do I need an Employer Identification Number or can I just use my Social Security Number. The quick answer to this question is to read a chart created by the IRS with some quick, simple questions. Here’s the link: IRS EIN Chart


6. Do I need to be “certified”?
Depending on your business, certification may or may not be necessary. For example, business coaches aren’t required by law to pass certification. Some choose to take courses and test with schools or industry associations as a way to differentiate their services.


In some cases, being “certified” creates a benefit for winning business or securing funding. For example, certification as an 8 (a) by the Small Business Administration (SBA) can provide socially and economically disadvantaged people with management and financial help, plus elevate their ability to compete for government contracts.


When in doubt, check with your local chamber of commerce or industry association.


7. Don’t skip this step.
While in many cases, it may seem easy to fly under the radar in hopes of minimizing costs, the government usually will catch up with you. And when they do, you may have to alter your business, change location, pay hefty fines or shut down. If your business is relatively basic, check out BizFilings.com. If you think you have liabilities and tax ramifications that may benefit from a more thorough review, get with an attorney and CPA.


The worst thing you can do is to become frustrated, choosing to take care of these requirements later when the IRS or other government officials catch up with you.


Disclaimer - I am not a CPA or a lawyer. My information and insight comes from my own research and personal experience as a multiple business owner and small business consultant. Although I have some experience with business licenses, permits, certifications and legal structures, there are variables that can alter your requirements including changes to current laws.


Next up in the series is, “Develop Your Products”.


All the Best,


Doug Dolan
The Solopreneur’s Guide

This is post 4 of 10 in a series discussing the essential steps for launching a successful, sustainable solopreneur business. If you missed the disclaimer post, it is helpful if you take a minute to read it before going forward. Here’s the link to the post.


Plus, since the process is in sequential order, make sure you’ve defined your UVP and prime prospects, started your market research, and your business plan. During the creation of your business plan, you will calculate how much capital you will need – both personally and professionally – to cover you until your business reaches self-sustained profit.


So let’s start with a calculation of your personal financial needs.

Personal Finances

If you’re cash-rich, debt-free, and are going to fund your start-up with a minute amount of your personal money, skip forward to Professional Finances. No sense in wasting time.


If however, you are not so fortunate and don’t have personal budgeting software, I’ve added a link to a worksheet for reviewing your personal finances.


When you launch the Excel spreadsheet, you will see two tabs at the bottom. Complete the first tab, “Monthly PnL” before filling out tab 2, “Projected Cashflow”. You can either print out the worksheets and manually enter your information or simply type your numbers in and the spreadsheet will automatically calculate your totals.

TSG Personal Finance Worksheets

 
It’s necessary to review your personal finances before calculating your business budget. Your personal budget will indicate if you need a loan for your business or if you can self-finance your start-up. Plus, if you do need a loan, to be eligible, not only will need to submit a personal budget to a lender, but you may need to clean up your credit, too.


Once you complete the worksheets, here are a couple of important points to remember before moving forward.


1. Make sure you add in any upcoming changes.
Don’t budget solely based upon your cash flow today. Include all increases in income or spending (from sources other than your new business) that may be a month or more away. For example, do you have an upcoming tax bill that will take a bite out of your savings or better yet, a return?


2. Are there opportunities for cutbacks and increases?
If you can’t balance your monthly personal budget, you will have problems doing the same for your business. Good business requires that you are aware of your profits and losses, and have the ability to identify opportunities for reducing your expenditures while finding new sources of profit. Doing the same for your personal finances is a plus.


3. Talk over the figures with your partner.
If you are married or share income / bills with another person, make sure you review the numbers with them and they agree, not only with your numbers, but the risk you are willing to take. If a spouse has to be the sole earner for a period of time to help get your business growing, you need to make sure you agree to the same period of time. You don’t want to start your business hoping your partner will cover you for nine months when they are thinking three. Get consensus upfront.


4. Build in a buffer.
Don’t take the saying “life is full of surprises” lightly. Not all “surprises” are pleasant.


What’s an appropriate buffer? That will vary based upon your scenario. If your venture fails, how long will it take you to find a new source of income? What is your risk threshold? While many personal finance gurus recommend you have sufficient savings to cover three months worth of bills, you may want to double that time frame. First, they calculate that number considering you have a stable income. Second, if you need to ditch your business, are you going to be another job seeker in today’s troubled employment market?


5. Set limits on your loss.
No, you don’t want to be a pessimist, but you don’t want to be a penniless fool either. I recommend you set two limits – the early warning review limit and the time to do something else limit.


Don’t leave the review (and if necessary, conversation with your partner) until your are cashless. Desperate people tend to make riskier decisions. It’s better to have time to review your current cash situation while you still have time to adjust than waiting until you feel like you have no other options.

Professional Finances

So how can you go about figuring out how much money you need to build your business?


Click on the following link to download an Excel spreadsheet with a column for one-time start-up expenses and additional columns for projected monthly expenses (both re-occurring and future one-time charges).

TSG Start Up Costs n Monthly Projections

 
After calculating these fees, compare them to your Personal Finance data. Do you have enough money in your personal finances to foot the bill?


NEED FUNDING?
Depending upon the amount of funds you seek, you have a couple of different options. Right now, lending is still very tight. Although it often seems as if you have to prove that you don’t need the money and have a guaranteed way of paying it off in order to qualify, here are some options to consider:


1. SBA Loan
You can go to a local bank that works with the SBA or go to the SBA web site for additional data on forms, requirements and lenders.


2. Investors
Whether a friend, family member or stranger, bringing in an investor may be your only option. There are some things you need to consider when pursuing this path:

1. What share of your business are you willing to give up for the investment?
2. Who is a good match for you? Bringing in an investor is like getting married. What decision-making rights do they have? Can you get along? What other professional benefits do they offer? What is their desired exit strategy?
3. If you’ve never sought out an investor, find a pro to help you with the process.
4. Put your agreement in writing.

 
3. Business Money Today
I recommend you not only check out the Business Money Today website, but contact them for additional help. I participate in a few different online business forums with the people behind this site and always find their advice insightful and honest.


4. Improve Your Personal Finances
While this may not be the option you’re hoping for, it may be what’s needed. If you are like many Americans with a higher-than-healthy credit card debt with lower-than-hoped-for income, you likely will need to improve your personal finances before you can qualify for a loan or before you should consider launching a new business.


If you are going for outside funding options, you will need to include a balance sheet, income statement and cash flow statement.


Need help turning around your personal finances quickly? Let me know. A friend recently completed an easy to follow and implement ebook titled, “Taming Your Financial Beast Today” that hasn’t hit the Net yet. If you’re interested, leave a comment below or send me an email (address following) and I’ll see what I can do to get you a discount.


Next up, “Licenses, Permits, Certifications and Legal Structures”.


And as always, if you still find yourself stuck, leave a comment below or send me a note at thesologuide@gmail.com for additional help.


All the Best,


Doug Dolan
The Solopreneur’s Guide