Starting a successful business is not an easy task.  There’s a lot of time and/or money that goes into getting your idea organized and off the ground.  As people get farther into implementing their business they usually realize that they’ll need more money to make their idea a reality.

Last night I saw a show for the first time called Shark Tank where entrepreneurs pitch thier ideas to a group of wealthy investors, the “Sharks”, and ask for a specific amount of money in return for a stake in their company. I think they’ve been on the air funding entrepreneurs for a while, but I don’t watch that much TV so this was the first time I heard about it.

Critical Investors

I watched as several budding business owners made the case for their product and why it would be a good investment for the “Sharks”. One lady had spent 3 years and her entire life savings developing her company only to have every investor deny her any money.

Each of the “Sharks” had legitimate concerns about the feasibility of implementing her idea and competing against the businesses already existing in the industry.  One guy came out and told her that her idea was dead and she obviously took it very hard.  After the lady left, the panel of investors discussed whether he was too hard on her, whether he should have gone about telling her the same thing in a more constructive way.

The guy replied with something along the lines of, she needs to know that her business isn’t going to succeed before she plows any more time and money into it so she can move onto something else.

Protecting Your Money

Think how much easier that situation would have been for the women if she would have had that conversation with a group of knowledgeable business people three years ago.  Before putting her life savings and years of work into the product.  Now she’s totally committed to making the idea work, she can’t entertain other alternatives, she’s backed into a corner.

I think it would be a good use of any entrepreneur’s money to get a panel of experienced people to look at their idea and give them feedback when they’re first getting started.  The goal wouldn’t be to get a yes/no answer, yes you should pursue it or no you shouldn’t.  Instead the goal would be to build a list of questions that needed to be answered

To compile a set of objections that shoud be addressed early on to determine the feasibility of success and the potential return on investment.  Every entrepreneur will hear negative feedback about their idea and can’t let the negativity alone stop them from pursuing their dream. However they can make note of the issues people raise and research them early on to help prevent themselves from throwing everything they have down a money pit.

Business Research Example

I’ve enjoyed the following set of articles from Perry Marshall.  He tells a story of his role on a board of directors where he raises legitimate objections about the economic feasibility of a major business deal and the pushback he gets from the leader of the business.

• Board of Directors – Part 1
• Lack of Market Research – Part 2
• Company Building – Part 3 

The summer can be a great time to start a side business because life tends to be a little more laid back. People are going on vacation and taking time off to hang out with their kids so your day job may be a little more relaxed. Plus there’s nothing on TV to distract you at night : )

Many other personal finance bloggers have written about the benefits of starting a business such as My Two Dollars and Man Vs. Debt. Although starting a business isn’t easy it can be rewarding, here are some steps to get you started.

Turn your passion or hobby into a business

You’ve already read about this a hundred times from other bloggers, but the reason we keep saying it, is because we are living proof that you can earn extra money by starting a business that you are passionate about. The reason you choose a hobby or something you love to turn into a business is because you are more likely to stick with it when you aren’t making any money from it.

For instance, if you are good at math, but you hate the subject and you are not a patient person, then you shouldn’t start tutoring high school kids on Algebra and Calculus. Here is a quick list of some good examples for side businesses to start:

1. Math or Science Tutoring
2. Camping/hiking trip guide
3. Landscaping
4. IT Consultant
5. Musical Instrument Instructor
6. Photographer/Videographer
7. Personal Trainer
8. Mail Order Baked Goods Company
9. Specialty Arts & Crafts business
10. Professional Organizer (yes, some people enjoy organizing stuff!)

Focus On Getting Business Before You Set Up Your Business

If your business is a skill that you have, then focus on getting clients first. So many people focus on getting business cards, a website, setting up a business bank account, start an LLC, and they don’t even have any customers yet. The truth is, you don’t have a business until you have customers or clients. Start networking with people, tell your friends and family what you’re doing, and get some commitments from paying clients first. Worry about the details later.

Bootstrap Your Business

Since most service-based businesses can be started for less than $1,000 you probably don’t need to take out a loan to get started.  Drum up some paying customers and use that money to pay for any initial expenses you may have.

It’s trickier if your business involves a product that you make since you may need to buy the raw materials.  I think the best way to do it is to create the product on demand. Don’t go out and by hundreds of dollars in materials, make a bunch of widgets, and let them sit there and collect dust.

Instead make a sample or two, target your audience, invite them to your house for a demonstration or display show, and start taking orders on demand.

Network to Market Your Business

Have a presence on Twitter and Facebook and incorporate a blog into your business website.  Be sure to connect with other small business owners through local business organizations like the chamber of commerce or a Business Network International chapter. Let all of your friends and family know about your side business, strike up a conversation about it when appropriate. 

The most important part about starting a side business is to be patient. You won’t be rolling in extra cash right away. It takes a few months to get your name out there, and you’ll get rejected a lot. Be persistent and be patient.  Who knows, someday your side business could end up turning into your full-time business.

Erik Folgate is an associate writer for Money Smart Life. He also writes about personal finance, social media, and personal life issues on ErikFolgate.com.

The failed bankers on Wall Street have been whining that if they have to cut bonuses and salaries dramatically, they’ll be unable to recruit great talent, and they need great talent to fix the situation.

 

And for years, boards have been claiming that they need to pay CEOs $50,000,000 salaries in order to recruit the very best for their companies.

 

Jamie Dimon at Chase said, “It’s possible someone’s going to walk in my office and say, Jamie, I have a family. I can’t afford to live that way.”

 

This, of course, is nonsense.

Seth Godin, author of “All Marketers are Liars”, wrote this week about the myth of big salaries for executives in corporate America.  Seth makes the case that there’s a disconnect between what executives are paid and the value that they bring to the company.  He thinks the reason they’re paid so much is that the market for CEO pay is artificially high because corporations and their boards are trying to attract and keep talented executives simply by offering more money than the competition offers. Seth argues there are ways to market these top jobs other than just throwing more money at them.

Are These CEO’s Crooks?

So are CEO’s that accept these enormous salaries stealing from the shareholders? No, I don’t think all CEO’s are crooks; my title’s just a play on Seth’s “All Marketers are Liars” book title.  I think that the talent and time required to manage these huge businesses to profitability should be rewarded and I can’t blame the CEO’s; if companies are willing to pay that much I can’t fault them for accepting it.

I think it’s pretty standard that most salaries in many public companies are governed by a pretty strict process that entails researching the market and paying employees just enough to be competitive in the market.

What’s the Solution?

So even if the market for CEO pay is hugely over-inflated, what can company boards do to keep and attract talented leaders other than pay the price?  I don’t know the answer to that but I do know that given the current economic meltdown shareholders are much less likely to be forgiving of watching their stock value plunge while CEOs continue to earn millions.

I don’t think government caps on CEO pay are a good idea but if companies don’t start making changes on their own the government may start taking matters into their own hands.  I think it would be wise of corporate boards to reform corporate pay policies themselves so that politicians don’t try and force “one size fits all” regulations on them.  What do you think?

QuickBooks is small business accounting software, made by Intuit, the same company that created the user friendly tax software, TurboTax.  QuickBooks has made my life much easier over the past week as I’ve gathered the business finance records for our accountant. 

Quickbooks Accounting Software

I neglected recording our business income and expenses throughout the year so I worked last week to put everything into Quickbooks.  Luckily the whole task wasn’t as bad as I thought it would be, Quickbooks allowed me to easily import our bank and PayPal records. Unfortunately I hadn’t been downloading the credit card data and they Chase only would let me download the last 45 days worth of transactions so I had to input those by hand.

Quickbooks Reports

I actually bought QuickBooks Pro back in 2007 and setup the business account but didn’t use it much in 2008 so I thought it would take forever to get all my information in the software.  Learning the basics of Quickbooks accounts and how they handle income and expenses wasn’t too bad and the reports it creates are great.  You can create Profit and Loss, Income and Expense, Balance Sheets, and Cash Flow reports that give you good insight into the finances of your business.  I love how the reports let you looks at your financials from many different perspectives.

Quickbooks & Taxes

I took along the Profit & Loss report Saturday night when we went our for dinner with our tax guy, also my college roommate, he looked it over and said it would certainly save me money.  Last year I gave him a spreadsheet with the whole year’s worth of business finances so he had to bill for all the time it took to organize and categorize the data.  This year the reports Quickbooks generates will make it much faster and easier for him to prepare our business tax return, which means its cheaper for me!

I don’t know why it took me so long to finally make full use of QuickBooks but I’m glad I did, it’s a great piece of accounting software and it’s made my life easier!

Are women more entrepreneurial than men?  We’ve had twice as many women apply than men for the Small Business Stimulus Package so far. 

Of course, it’s by no means a statistical indicator that women are more likely to start a small business, perhaps they are just more willing to share the details of their current or future business.  Whatever the reason, we have some women who need your help with their business ideas.

Virtual Assistant Business – Dee was recently laid off from her job and is in the middle of starting her own virtual assistant business to support her family. 

Craft Supply Business – Sara has identified a potential need for a craft supply store in her hometown and is building her marketing plan.

Both of these ladies want to build a business of their own, and they are both enterprises that could potentially help create jobs in a time of economic turmoil.  Sara will create business for her suppliers and may need to hire someone to help out in her store.  Once Dee has customers for her business, she would like to hire other administrative assistants that have been laid off.

Please stop by the small business section and offer these enterprising women some words of advice or encouragement!

Market research is on the mind of the first featured applicant of the Small Business Stimulus package.  Sara is in the middle of the market research phase for a sewing and craft supplies business.

You can read more in the small business section about her market, her plans for the business, and some suggestions I make for how she could research her market.  Check it out and give Sara some other ideas she could use to connect with people locally to pick their brain about their craft needs – Market Research Tips

Contest Sponsors

I’d like to thank contest sponsors Anne Haynes, Oak Ave Productions, and Write and Promote for offering their services as prizes to help out small businesses.  I’m currently in discussions with a few other companies that would like to provide prizes as well.

I was contacted by someone at Intuit yesterday about their MyCorporation service that lets you incorporate online.  They’re currently offering their corporation and limited liability filing services for free, here is what he had to say about the offer:

“We now know that the economy is in a recession.  And one of the best ways to turn the nation around is to get people back to work.  So, MyCorporation is doing our part, offering our services for FREE, so entrepreneurs nationwide can start new businesses and give back to their local communities through the creation of new jobs.”

Click Here to start your business (use coupon code MYGIFT)

Do you own a small business or have an idea for a business that you’ve been wanting to start?

Today I’m announcing the Small Business Stimulus Package, a contest designed to help small businesses that are struggling or just getting started in these tough economic times.

The Grand Prize

The grand prize winner will receive $250 cash and a business action plan.  Applicants must be willing to discuss parts of their busines in an open forum because the business action plan will be crafted on this website with the collaboration of all the readers.

We’ll take a look at your businesses goals and challenges, brainstorm online using our collective experience, and make suggestions on steps you can take to help your business.

To apply send an email to smallbiz [at] moneysmartlife.com or use the contact form.  You can learn more about the details of the contest on the stimulus package page.

No Bailout for Small Businesses

Who knows what, if any, assistance the government will provide for small businesses and how long it will take to go into effect.  This contest is our small way of taking action to make a difference, to help your bottom line right away, rather than just waiting on the solution Washington comes up with.

Business Service Prizes

There are also prizes for runner-up applicants.  Other small business owners have donated their services as prizes that will be awarded to runner-ups.  Some of the examples of prizes available are:

• Free Logo for Your Business – Oak Ave Productions
• Free Small Business Blog Setup – Your’s Truly
• Free Search Marketing Consultation – Anne Haynes
• Free Website Promotion Service – Write & Promote

How to Apply

Simply email a description of your current business or potential business idea to smallbiz [at] moneysmartlife.com or you can submit it with our contact form.

If you don’t have a small business of your own but know someone that does and who would be interested in participating then send them this way!

Make sure you subscribe for daily updates so you can read about the businesses that apply and help out by offering your input!

MyCorporation is running a promotion where they’re offering free incorporations and LLC formations for a limited time; They will setup your Limited Liability Company or Corporation for free when you use the coupon code of MYFREE, click here to sign up.

Starting a Business

I’ve noticed one of the reasons that people hesitate to start their own company when they have a good business idea is that they’re unsure of all the details involved with things like forming an LLC, getting an EIN, setting up a business bank account, etc. 

While I certainly understand the hesitation I do think it’s a shame that uncertainty can be a barrier to innovation and entrepreneurship.  I felt the same way before I started my eBay Business several years ago but in hindsight, navigating all the legal documents and business setup wasn’t so bad.

Of course, it would have been nice if I could have had my LLC formed for free : )

Free Incorporation Service

The incorporation service with MyCorporation typically runs $149 but they are waiving the fee so you can incorporate online for free for a limited time.  So what’s the catch?  Well here’s the explanation from the General Manager of MyCorporation, Deborah Sweeney:

“We’ve been successful throughout the ups and downs of the economy over the last decade. We know that small businesses are key to driving economic growth, from the creation of jobs, to stimulating commerce. Right now, MyCorporation has the opportunity, and we welcome the responsibility, to give back to the business community and drive our nation back to prosperity.”

Charges for document shipping, state fees, publication fees, and additional product fees will be charged at regular rates but the cost of the incorporation service is waived.

Business Stimulus Package

I think it’s great that MyCorporation is helping entrepreneurs get started and it inspired me to help kick start the entrepreneurial spirit in others as well.  I’m going to be launching something next week to help out small business owners, I’m calling it the Small Business Stimulus Package.

If you have a small business of your own and would like to promote your services, check out how you can participate in the Small Business Stimulus giveaway.  If you want to submit your business in the contest, you can preview the Small Business Stimulus application.

If you have a small business you’ve been waiting to get started, take advantage of the offer to save $149 on the formation of a new corporation or limited liability company. 

• Click Here to Apply (Coupon Code MYFREE)