Small Business Guide for Success

Here’s a list of matters entrepreneurs should consider in forming a business, courtesy of Kevin Freeman, a Chicago-based corporate attorney with Drinker, Biddle & Reath L.L.P.:

Business’ name and Website: Check with your local secretary of state to make sure that the name you want is available. If you do not intend to form an entity immediately, check to see whether you can reserve the name and for how long. Also, research whether or not the name is available as a Website too and reserve as many variations of the name as possible including all domain permutations (i.e. “.net” and “.us”)
Trade names/trademarks: Consider whether your business or product name (or a mark) should be protected; file appropriate paperwork with the United States Patent & Trademark Office.
Business plan/budget: Create a business plan and a budget, even if you do not intend to solicit investments from others. This will help you stay focused, work through problematic issues associated with your business, and help you set goals. Periodically compare your company’s current state of affairs to the business plan and budget; make adjustments as needed.
Seek professional help: Although there is a general temptation to save money by doing it yourself, it can cost more in the long run if you have to pay someone to help remedy a situation that could have been prevented by consulting an expert. Attorneys and accountants are sometimes willing to give general guidance (either for free or at a reduced fee) to budding entrepreneurs with the hope that they will be retained in the future when the business reaches a point where it makes financial sense.
Insurance: Consult with an insurance agent to determine the appropriate insurance policy for your business including D&O coverage, a policy covering directors and officers.
Licenses: Check with your local city/town to insure that you have obtained the requisite business license for your business and confirm that you have obtained the necessary regulatory permits or approvals.
Observe corporate formalities: To maximize liability protection and properly capitalize your company, hold shareholder and board meetings at least annually. Never commingle business accounts with personal money, and consider adding an independent director to your board of directors.
MBE/WBE status:Investigate whether there are commercial advantages to registering as a minority-owned business enterprise or as a women-owned business enterprise.
Know your industry: Get your hands on as much information as possible about your industry. Your goal should be to become an authority on your type of business.

A Sound Setup

Choosing an ownership structure can be tricky, but knowing your options can help you determine the right fit

By Anthony Calypso

Check out these resources for additional information on company structures.

Books

Form Your Own Limited Liability Company, 4th Edition (NOLO; $44.99) by Anthony Mancuso
LLC or Corporation? How to Choose the Right Form for Your Business, 2nd Edition (NOLO; $24.99) by Anthony Mancuso
Corporations, Step-by-Step (Barron’s Educational Series; $18.95) by David Minars

Organizations

The Small Business Administration (www.sba.gov)

The National Business Development Council (www.natbdc.org)

Websites

Internal Revenue Service, www.irs.gov (Keyword Search: Business Structure)
Nolo, www.nolo.com

Money Matters

Using sound resources, savvy entrepreneurs find capital for their business

By Carolyn M. Brown

Credit Cards: Break or Burden?
Credit cards provide a simple means to gain access to capital. Among the findings of the Washington, D.C.-based National Small Business Association’s survey of 500 small to midsize companies, credit cards top the list of options small-business owners rely on for capital, with 44% saying that their company has used them within the last 12 months. However, financial experts caution that credit cards are not a long-term financing solution. Instead, credit cards should be used temporarily to fill the gap between raising startup capital and running the company until it produces positive cash flow–that is, until income covers expenses.

Using a credit card in the name of one’s business is a good way to build up the company’s credit history, says Tarik Smith, CEO of California Credit Solutions (www.californiacreditsolutionsllc.com), which helps clients repair their credit. But Smith notes that interest rates typically run 1% to 3% over prime, with some business credit cards ranging from 14% to as high as 28%. And with 71% of survey respondents revealing that they carry over substantial balances on their cards month-to-month, the interest rates only contribute to the financial strain.

Understanding that determined business owners want to pursue their entrepreneurial endeavors at all costs, Smith stresses that the key is to use credit wisely so that you don’t overextend yourself.

“Ideally you want to keep your balances low, which means below 30% of your total credit limit,” advises Smith. “If you are close to or over the limit, your debt could hamper you and your business.”

Every Little Bit Helps

Effective marketing and advertising strategies can gain clients and ultimately revenue

By Tennille M. Robinson

Do…Know your business. Have a clear understanding of what your business is in an individual sense. Knowing will impact who you align with, how you are portrayed, and whether or not to participate in certain initiatives, says Jennifer Stokes, a program manager for the Myrtle Avenue Brooklyn Partnership, a local nonprofit in Brooklyn, New York.

“You have to be hands on and you have to be present,” says Steffon Isaac, creative director for the Polish Bar of Brooklyn. Here, he recommends a three-component concept, which the Polish Bar consistently keeps in place when implementing marketing initiatives. Each, he says, ensures they are not digressing from the campaign’s original purpose.
1.	Map it out. Thoroughly develop the strategy intended for use.
2.	Put it to work. Embark on a process that will allow things to say on track
3.	Measure the impact. Have technology that will enable a measurement of success.

Do…Develop strategic partnerships. According to Stokes, “Cooperative advertising brings your advertising up a notch, because now you’re working with increased dollars and increased voices and that interprets to increased power because you’re working collaboratively.”

Do…“Start small and sharp,” recommends Maisha Walker, president and founder of Message Medium (www.messagemedium.com), a New York City marketing firm, about building your Website to market your business. “Grow the site as your revenues grow.” She says a common mistake business owner’s make is assuming a cheaper method is better. “An inexpensive one or two page professional Website will usually work better than a 10 page site created by someone without the knowledge to make it really sing for your business.”

Don’t…Bore visitors with your Website. Not focusing on what the client really wants to know is a big mistake entrepreneurs often make, says Walker. The home page is not the place for any lengthy copy (i.e. mission statement, history, etc.) According to Walker, the first question your Website should answer is: What can you do for me? “And your site should say it in a way that is clear and compelling,” she adds.

Don’t…Wait too long to measure impact. Monitoring a marketing initiative throughout its run can save money if it is not working. “We don’t measure an initiative when it’s done; we measure it in increments as we move forward,” says Steffon Isaac, creative director of the Polish Bar of Brooklyn. “And so, if we’re not where we should be two weeks into a campaign, we shut it down or shift it.”

Do…Vet ideas with others. “It’s one thing to come up with an idea,” says Isaac. “But if you can’t justify and measure these things, then it

isn’t going to work.” He and Tricialee Riley, owner of the Polish Bar, developed a marketing template, which they use to discuss the prospective results of a marketing/advertising initiative (i.e. return of investment; execution of campaign; etc). Outlining the pros and cons allows you to fully articulate and thrash it out to ensure it has all the vital components.

Don’t doom your domain. Online marketing is an area often passed over by business owners. Andrew Morrision, founder and president of the Small Business Camp (www.SmallBusinessCamp.com), a New York-based business development firm, suggests picking a domain name that makes senses, something everyone can spell and relay. “When you pick a domain name, it needs to relate somehow to the key words in your industry,” he says. Also, focus a portion of your Web page on capturing e-mails and gathering testimonials.

A Graceful (and Lucrative) Exit

Effective succession planning lets you profit from your business even after you leave

By Tamara E. Holmes

Want more info? Check out these books and Websites for additional information on succession planning.

Books

How to Run Your Business So You Can Leave It in Style (Business Enterprise Press; $24.95) by John H. Brown
Seven Keys to Unlocking the Door to Your Dreams: Exit Strategies for Business Owners by Robert C. Gellman (CBIZ Inc; $19.95)
Exit Strategy Planning: Grooming Your Business for Sale or Succession (Gower Pub Co; $99.95) by John Hawkey