So You Think You Want to Start a Business - Laying the foundation for a great business! | Jack Dunigan | Skillshare

So You Think You Want to Start a Business - Laying the foundation for a great business!

Jack Dunigan

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19 Lessons (1h 57m)
    • 1. Introduction

      2:51
    • 2. Business Start up Myths and Realities

      8:12
    • 3. 5 critical success factors

      5:05
    • 4. Qualifying your idea 3 questions

      6:03
    • 5. Should your be online brick and mortar or both

      12:11
    • 6. How much money will I need

      11:46
    • 7. 10 things a lender looks for

      6:12
    • 8. Funding sources

      6:23
    • 9. Home based business

      3:37
    • 10. Buying a business

      3:05
    • 11. Franchises

      3:37
    • 12. Sole proprietorships

      5:20
    • 13. Partnerships why and why not

      7:06
    • 14. Are you the business partner type

      5:42
    • 15. 3 things to do before a partnership

      4:04
    • 16. 6 things to consider before you start a partnership

      5:43
    • 17. Corporations

      6:36
    • 18. Why you don't need a business plan yet

      11:08
    • 19. Final Lesson

      2:29

About This Class

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In this course, I will reveal and explain the things you need to know BEFORE you sign a lease, BEFORE you purchase or lease tools and equipment, and BEFORE you purchase or create inventory. Here's what I will cover:

  • Business Start-up Myths and Realities
  • Five Critical Success Factors
  • Qualifying Your Idea - 3 Questions to Ask and Answer Before You Go Any Further
  • Should Your Business be In a Brick & Mortar Storefront or Shop, Online, or Both
  • How Much Money Will You Need? Here I provide a downloadable start-up budget form
  • TheĀ 10 Things a Lender Looks For
  • Funding Sources
  • Home Based Business
  • Buying a Business or Starting a New One
  • The Ins and Outs of a Franchise
  • Business Structures
    • Sole Proprietorships
    • Partnerships - Why and Why Not
    • Are You the Business Partner Type?
    • 3 Things to Do BEFORE Entering Into a Business Partnership
    • 6 Things to Consider Before You Become a Business Partner
    • The 3 Types of Corporations for Your Business
  • Why You Don't Need a Business Plan Yet...and What you Do Need Instead
  • What to Do Now - Should You Start a Business or Not?

Transcripts

1. Introduction: So you think you want to start a business well before you sign that lease? There's a few things probably we should talk about. Do you dream of owning your own business? Well, it's within the reach of just about anyone, and millions of people have done so successfully. But the difference between success and failure is knowing a few things before you sign a lease before you buy tools and equipment before you purchase any inventory. Action is one thing, but intelligent, prudent and informed action is another. Going into business is a risk, but make it a smart one. You can burn through a lot of money in just a short time if you don't think about a few things before you start spending any money. Who? My My Name's Jack Henigan of a business owner, a mentor, accounts on author and the founder and CEO of the practical leader dot com says 1972. I and my company have been helping people just like you reach for their dreams and succeed . We know a lot because we've done a lot. We've got great clients. We've helped them do, Ah, lot of wonderful things. We have a lot of learning knowledge, experience, skills, ability, confidence training and the result has been growth. Now here's what you'll learn in this particular course. You'll learn about the myths and realities of owning your own business. You learn the five critical success factors of every successful business owner. You learn the three questions you need to ask an answer. Before you invest one thin dime, you learn how to know how much money you will need and an easy to use budget form for you to figure that out. For start up costs, you'll know where to find the money you need, and you'll learn the 10 things lenders look for before they loan your money. You'll also know whether you should buy a business or start one from scratch. You learn the pluses and minuses of a home based business. You'll learn about franchises and what that means. You'll learn whether your business should be online in a brick and mortar store front or both. You'll learn which structure your business should take. Should it be a sole proprietorship? Should it be a partnership? Should it be a corporation in the ends of outs of each of those and you'll learn why you probably don't need why you probably don't need a business plan and what you do need. Instead, there's a course project that goes along with this. You learn to qualify your business idea. We've got some downloads to help you with that you learn to develop a projected start up budget and you'll create a list of funding sources to try and find the money to get going on the path towards reaching your dream, you'll focus in on a business structure. You'll decide on a business location, and you'll have a complete and simple pre start business check. They will help you get going. So let's get started. Go ahead to the next lesson and I'll see you there. 2. Business Start up Myths and Realities: Hi, I'm Jack Dunning. Other Throughout my career, I've helped a good number of clients who think they want to go into business, helped them get started. And some of them I've actually talked out of it. Not because they're not great people, not because they didn't maybe have the money, but because there are there's a lot more to starting a business. And maybe you might think there is. And in this video today, we're gonna talk about business startup missin realities. Myth number one. All I need is a good idea to be a successful entrepreneur. Truthfully, you do need a good idea to be a successful entrepreneur, but it's not all you need to be a successful entrepreneur. I will be talking about how to qualify that idea to see if it's good enough for you to risk your time and your money on starting up a business. The myth All I need is a good idea to be a so successful on premier. Actually, the reality of that is a good idea is a great start, but it takes hard work, research and planning, plus successful implementation strategies to turn your idea into a profitable enterprise. and ideas a light in the dark, but there's a whole lot more. This is starting and running a successful business than that now, to illustrate this good idea thing. There's a picture here of a Ford Edsal. It was came out about 1958. I think it was. Some of you will remember most of you probably will not. If you are aficionados of classic cars, everybody knows. And that's all. Interestingly, there's no record of an Ansel ever having been stolen to tell you how bad an idea it was. This is well researched. They spent millions of dollars to Ford Motor Company did on researching this car, and they thought there was a market for it. The problem was, it just wasn't it was a bomb from the beginning. It was a great idea, but it just was not. Ah, an idea that the public was interested in. Ford thought it was a great idea. The designers and engineers at Ford thought it was a great idea. The public, they had a different opinion of it. Myth number two. If you go out on your own, you won't have to work so hard or such long hours. I hear that a lot particular from people who've never run a business. And they're working in a shop where they're working on the sales floor or they're working in one of the cubicles around an office somewhere. And they get the idea that the boss just sort of sits around and hangs out and does whatever he or she wants to do. And so they think, Well, I'm just gonna go out on my own so I don't have to work so hard because look at him. He doesn't work hard to look at her. She doesn't work hard, and she didn't have to work such long hours. But the reality is very, very much different then, that you'll probably work harder and longer than you've ever worked before. But you'll enjoy it more. It is your business. You're not working with somebody else, and exhaustion will fade at the moment. You probably say I did this at this. When you have a successful business that starts to pay the bills a little money in your pocket. Myth Number three, you'll be able to deduct everything so you don't have to pay taxes. That's a really common idea that you can deduct everything. The truth is, you can't deduct everything. You can deduct ah, lot of things taxes that you have to pay her based on net income. But there are strict regulations that have to be observed on exactly what can be deducted and what is not a deductible expense. You'll need a good accountant to help you sort through all of that myth. Number four. You won't have to report to a boss. Well, true. You don't have to report to a boss, but that doesn't mean there's no one to report to. In fact, when you run your own business, you don't have a single boss. You have many bosses. You have your customers. Primary boss. You have to report to them produce a quality product produced quality service delivered on time on budget. Yet to be reputable, yet to report to a board of directors if you have one or business partners, if you have one or investors, if you have them, you have to report to perhaps banks that you may have borrowed money from. You have to report to federal governments in terms of licensing state governments in terms of licensing and codes. Business building codes in the like a jet to report to. You got a lot of bosses that you have to deal with in order to have a successful business myth. Number five business owners get to do the work they want to do and only what they find interesting. Well, maybe, and maybe eventually, but not early on. The reality is you're gonna wear a lot of hats. You're gonna juggle a lot of things in order to make a business work because you're in charge of not just one thing. You're in charge of everything and so think again. If you think you just get to do the only on Lee the work you want to dio, you've got to be in charge of everything. Myth number six. I am a skilled fill in the blank so I can be a successful business owner. Some of you know I used to run a Millwork company, which we made doors and windows and furniture and molding and the like, and I ran into ah, good number really, really, really good. Still highly skilled woodworkers. They were craftsman. They had no clue about what it took to run a business. One guy I had to let go for some other reasons and he went out on his own, started his own business, and I dropped in to see him several months later. See how he was doing? I liked him and he said I didn't realize that if I don't build out enough hours during the week, I don't get paid. I didn't realize everything I have to do. Owning a business. Exactly. And so this this brief introductory series of videos is there to help you understand that there's a whole lot more going on. You may be skilled as an artisan, as a craftsman, as a consultant, as a speaker, as a sales person, as a mechanic as, ah Carpenter, there's a whole lot mortar that for running a successful business, you've got to do a lot of things you've got to manage. You've got to do accounting. You've got to do marketing. You've got the higher fire train and deploy employees. There's a lot to be done. Not that millions of people haven't done it before and done it well. You just need to know it coming on in And myth number seven, The final missed today. If you choose to be self employed, you'll be limited in what you can achieve since you'll be working alone. That's sort of true. Ah, a lot of people think they can just turn out enough work on their own to be able to do what it is they need to do. That is not the case. You will need to extend your reach, multiply your effectiveness and divide your work by employing of the people by getting them to help you. And I know in the woodworking business, for instance, it is almost impossible to turn out enough work on your own to survive. But if you hire other people in those hours are billable hours to the client of the customer, and you can begin to make some real money because you can turn out mawr work. And that typically is the case. Even if you're doing on consulting or in educational practice. Muchas ah, the practical leader is we hire people who do a website design. We hire people who do book cover designs. We hire people who are, ah, social media marketers. We hire people who are accountants. We hire all over people so that we can focus on. Those things are gonna make us money. But if we didn't do it, I'd have to do it, which would limit my time and my ability to tackle those things that are really, really, really important. The reality is, the limitations are largely in your head, but so it requires a different way of thinking it would cause an expansion of your consciousness about how business actually works and what it requires from you in order to make a successful business. Okay, Great. In the next video, we're going to talk about the good idea and how to qualify that idea. And I've got some great stories to tell you about some people who had a great idea and about some people who thought they had a great idea. But it turned out to be a disaster for them. Proceed with the next lesson. When you're ready, leave any comments or questions below and I'll get back to you as soon as I see them. Thank you. 3. 5 critical success factors: today, we're gonna talk about five critical success factors that you wouldn't take a look at yourself and the people around you to see if you got him. So you get ready to have a successful business. Let's take a look. Critical success factor number one, the ability, the managing multitask. Oh, when you start, it is, especially in the early days when you don't have much money and you're trying to save money . You've got so much to do, you've got to run everything. You're running shops, you're running the store, you're running the floor, you're running bookkeeping, running and counting your running production, and you're managing everything. So you need the ability to multitask because people coming to you for the answers, you hire people or you have customers. They want to know this and that. And so you need to know how to manage all of this stuff and multitudes. If you're a disorganized person, this could be a problem. So you need to take a look at your schedule and see how well you can manage how well you can multitask, because this really is indeed the critical success factor. Success factor number to education and experience in the field analysis over the past 100 years or so has shown that when people decide to go into business, say they leave a particular job or they come out of school and they want to go into business. If they have education and or experience in that field, their chances of survival and success are much, much higher now franchises when you were gonna talk about franchises in a future episode, but when you do franchise, they will give you an awful lot of training in that field. That's what you're paying for when you buy the franchise, and that helps out a little bit. But odds are, let's say that your ah hobby woodworker and you decided to go into woodworking business you could do well. There is a caveat to this that just because you know how to do woodworking or you know how to make clothing or you know how to ah, to maybe build houses or something like that doesn't mean that you have the business side of things, which is what we're providing here in this series. You need the business side of things as well, but they're not exclusive. You can't get by with one instead of the other. You need both. You need business skills, but you also need education experience in the field. Critical success factor. Number three is a strong work ethic. Hard work. I don't want to mislead. You had more than one business. And I can tell you no such thing is a 40 hour work week. You're gonna work 60 70 hours a week. It's going to be very hard. You'll succeed, but it will be hard. And if you don't have a strong work ethic, if you think is going to go into business, I see these things online all the time. How you could get $10,000 in your checkbook in a week and all you have to do send that one email the lying to you. It isn't true. It won't work. And what they're trying to do is sell you something so that they can lay on the beach. And this isn't gonna work. So you need to understand their no magic bullets. There are no shortcuts. It takes a strong work ethic. Critical success factor Number four if we get there, is effective time. Manage. This goes back to your organizational skills, but you're gonna have to juggle a lot of things and you have not Onley your business. But you have your own personal life and your family's life as well. So you you have to learn how to manage time because you don't want toe get stuck in one ditch on one side of the road. You've got a full schedule that needs to be managed. I've got a course right now. If you want to take a look at if you just go to the practical leader dot com in the upper right corner, there's a little box. It says Free course. That's the time management course. You can sign up for that absolutely free of charge, and it's delivered to your email box in six lessons, and it will help you get a leg up a head start on effective time management. And everybody can use that as a refresher, even if you're pretty good at it. A little refresher course doesn't hurt once in a while. Critical success factor. Number five willingness to ask for input from others. I won't tell you a story of ah Riel life situation here. It's a family of husband and wife who owned a Cabinet shop there, May kitchen cabinets and they were sinking. There was some mismanagement with a person he had hired before, and things were they were about to go under. And they say we're about to lose the family business. We need some help. Well, as the mentor begin to talk with them, he discovered that they were there because the wife wanted to be there. The husband had been unwilling to ask for input from others. Now I'm not blaming males. I'm not. I'm just telling you, in this dynamic, it was she who wanted help. He was reluctant, but because he just didn't know what he was going to do. So he came and he got help. And it saved the family business willingness to ask for input from others. Lots of people have learned lots of things, and they're willing to share them with you. So be sure and ask others what they think about your situations, and they'll be glad to give you help. So here the five set factors are number one, effective time management number two, education and experience in the field. Number three. A strong work ethic number four, effective time management number five. A willingness to ask for help 4. Qualifying your idea 3 questions: I am Jack 10 again of the practical leader dot com. We're going to discover the three simple questions you can ask yourself that will let you know if your idea is a good one. Now, what would you dio if you had a great idea and you invested a fortune in an idea and you marketed heavily over a period of actually three or four years in that idea? But it just didn't work. At the end of the time your businesses collapsed. Here's the story of someone who did just that and why his dream was destined to become a nightmare. From the very beginning, it had no chance of success ever. In the first episode, we were talking about knowing what your idea and if your idea was a good one and a good idea actually can be qualified in your head. You can think something is a brilliant idea cause you thought of it. But business speaking, there are some simple things you need to take a look at a serious, honest look at. And that's what we're going to talk about in this episode of how how to know if your idea is a good one. It may be well, thought out could be well planned. But that's not gonna be enough to make your business idea success. Neither is well funded in the story that I'm gonna tell you in just a minute. This man invested a huge amount of money. I mean, a lot of money, and it still didn't work. So this is the tale of an ill conceived, unqualified idea from the beginning. OK, so this guy came to me as a client and he had been at this five years. I didn't help him in the beginning. If I had, I could guarantee you this would not have happened. But he didn't come to me until five years into his business. He had an idea for something was in the sports field that he had invented. And he thought it was a brilliant idea that it would help people in this certain sports field improve their game to fabulously well, whether they were amateurs or pros. And he put a huge amount of money developing prototypes. I mean, a fortune, even working with some companies in China for possible fabrication and manufacturing of these devices spent a lot of money and it just didn't work after a period of time. It just was a failure failure, because he spent a lot of money before he qualified the idea and I met. A lot of people say, Well, we set spend enough money in order to make this work well, you do have to spend money and you do have to invest capital. But if you if it's a bad idea, is throwing that money down the drain, it's not going to go anywhere. And that was the case of this one If you're ready for this. He spent 60 1000 U. S dollars for prototypes and for marketing, and after five years, he had sold not one, not one after five years, $60,000 not one sale. So I asked him a very simple question. What problem does this solve? His answer was amazing. He said. I don't know $60,000 he had no idea what this product actually did because he did not understand the very basic premise of a successful business. And that is problem solving. But I own the Miller Company. Get a guys. I had a lot of guys work for me and they thought they were building furniture or moulding or doors or windows or trim, but they were wrong. And I said, We are not making anything. We're solving problems. People come to us with something that doesn't work or something they need. And we're gonna fix that problem for them because that's true about business. And so if you don't know what problem your business, our business idea will solve, who does? And I asked this gentleman that if you don't know who does, did you not get into the head of people who would buy this and figure out if they perceived that there was a problem that you could solve for them and that they would pay enough money for you to be able to make any money on your business? He didn't know they didn't know. Three questions. Ask yourself before you spend any money on your business idea. Question number one. What problem does it solve? Question number two. What question does it answer? And number three, what desire does it fulfill now? All transactions, all sustainable businesses are problem solving businesses. Every one of them. Okay, So to qualify your idea, ask those three questions And if your business idea does not obviously answer at least one of those questions, it's not a good enough idea to risk your time and your capital on. Therefore, you need to move on to another idea. Your dream can easily become a nightmare because business is risky enough. Don't take a foolish risk. Hope So is not a valid strategy. Throwing out money. Opening a business. Trying to put your idea into riel life and hope that something will happen and it will work is not a valid strategy. If there is no problem solving, there is no business, so it's simple enough, and so many potential people never do it. Ask yourself, What problem does this solve? What question does this answer? What desire does this will fill? If you cannot readily identify that, then you can't market because marketing is based on the problem solving aspect as a benefit to the customer. We will talk about that in a future episode in this series. I'm going to tell you two stories one happy one, one sad one and what they mean for you about how to structure your business. See you then 5. Should your be online brick and mortar or both: In today's episode, we're gonna talk about a very important principle. Should your business be a brick and mortar business, an online business or perhaps both. And we're gonna help you to learn how to decide which it should be or if it should be both . There is the story of two start ups. Now. I know both of these people they have been clients, or I have been a coal counselor on one of them. And so I know who they are. And I know their history so I can talk to you about the moment. Give any specifics as to exactly who they are or anything like that. But they're both great people. They both had great ideas. One succeeded marvelously. The other one didn't do so well. So anyway, let's let's talk about him. First time is one who had an original design. It was a baby carrots, not this one. But it's, ah, carrier. She designed for moms to carry young babies new newborns up to, um, you know, a few months old and it was designed specifically to be sold online, and she actually did really well with that, to the point that she expanded radically. Um and and I don't mean that the bad since I mean, she just did really well. The other was another client that came in and they made a bunch of decisions before they talked to us. And this particular client had the idea of starting a business for selling pet accessories like the one on Rover here, little caps and bandannas and cat jewelry and and, uh, hairpins and all kinds of stuff that could be sold for animals for your pets. And her idea was to sell these in a shop. And by the time she came to see me, she had already signed the lease on the shop and she was going to sell these from this business, which requires traffic in it requires fixtures and tenant improvements and the like. This one didn't work out so well, you know that this business actually did not survive. So here's why. It didn't work out so well. The cost for these are not the same of running a business online as opposed to running a business from a brick and mortar place are very different. And so let's take a quick look at this and see you see one of the secrets in business, which will talk about just a little bit, is the ability to control costs and to understand before you get very deep in this how much this is going to cost. So if you have an online business, you're gonna have several things. You're gonna have a hosting service for your website, and that is roughly equivalent to a lease on a building somewhere or purchase of a building . Usually people lease a storefront in a mall or a strip mall somewhere, and that's a monthly cost. You had to pay that every month for your hosting service, and it won't cost much literally from 5 to $10 a month for a quality hosting service that host gator or dream host or host wins or blue host or one of those are a lot of my other go . Daddy is another one that's out there that you can you can host from, and so it won't cost you month and then you have website development. This is T I. There means tenant improvements, and that's the equivalent of building out your business. If you think of a hosting service as a plot of land and in your platform, which is usually WordPress because it's a good content management system has plenty of e commerce plug ins that you can use, then that's a bear building. And then your website development is what the building is gonna look like. The rooms that you're gonna have. That's the pages and the services you're gonna offer online. And you know, the branding in terms of colors and fonts and design and generally. And that's usually a one time cost that if you don't have this talent yourself and most of us don't, then you're gonna have to hire this done. And that can be anywhere from a few 100 to a few $1000 depending on the complexity of website development and who you hire to get it done. And then there's marketing because you need to drive traffic to your website. Just because you build it online doesn't mean anybody will ever find it. There's over a 1,000,000,000 that's 1000 million websites online, and so you're gonna have to help people find you. And so marketing is the key there, and you're gonna have to spend some money typically and certainly a lot of time and expertise, and that's usually a monthly cost. But it can pay huge, huge dividends. It's equivalent of putting your business in the best location. The hosting service is just digital space. It's not good. It's not bad. It's just space. Marketing is what determines where your business is positioned in the great array of businesses online and how people are gonna find you because nobody makes any money until somebody buys something, somebody has to buy something, and before they're going to buy it from you, they have to find you and they have toe want what it is that you have. Not every person who browses the Internet is looking for what it is that you have for sale . You have to find that person, and the next cost here is maintenance and security, which is a monthly cost, fixing things that go wrong on the website and updating plug ins and updating your platform and doing security issues. And I'm here to remind you you really do need security there. Some plug ins you can get that are not expensive. You will be hacked. Everybody is hacked. We have been. We are every day. We get noticed. The people who've tried toe hack our websites so you'll need security, and that'll cost a little bit of money but not very much. Figure 2030 bucks a month, and then you'll need office space. But you can run this from home. All you need is a computer in an Internet connection, and you can run your online business at home because in the case of the person, let's go back. In the case of the person here on the left who was selling the she was manufacturing first in her home. But then business got so good that she had the outsource that to other people little sewing manufacturing facilities that were producing these things for her, and then she was storing them in a garage. And maybe you might have to store these maybe in rented storage space or something like that. But that's that's not the cost of doing business that we're talking about here, but we're talking about Here are the two similarities of actually having a storefront from which your business can function Now for a brick and mortar business. There are some similarities, but they're not equivalent in cost. In a an online business. You had a hosting service in a brick and mortar business. You have a storefront that you have the least somewhere or a shop if you're doing that sort of work now, some businesses, of course, we'll talk about the minute. Don't lend themselves online, but most do. Okay, so you're gonna have a storefront business, so you're gonna have a least It has to be paid and at least will be from 1 to 5 years, depending on what you negotiate with the landlord. Then there will be tea. I That's 10 and improvements. And that's the build out inside on the fixtures, carpeting, paint room divisions, office equipment, pointed sale equipment, all that kind of stuff that goes into having an online excuse me having a brick and mortar business. And that's a one time cost that could be substantial. And that's where the lady it has this little pet boutique business came in. She'd already leased a building, and she was now trying to do some tenant improvements to it. We'll see in a minute how that was a big mistake. Okay, so then there's website development because you probably will want a website as well. Ah, for your business, at least a location website, even if it's one page. And here we are. And here's our hours. You'll probably want that because nobody uses Yellow pages anymore. The phone book. They look online for products that their services they're looking for. Did you love utilities, Phone power, Internet water? That will be a regular cost to you. Then you'll have, ah, marketing because you gotta drive traffic. Just because you build it doesn't mean anybody will find you. So you have to be able to market that. So marketing is very, very important because people have to find you. Then there's maintenance and security on the building, depending on what you negotiate. And there's also probably gonna be taxes. That's for office space. You can probably have the office in your storefront building. Okay, Now some businesses can do both. You can be both an online business and a brick and mortar business. Some should should do both, even though they may only be one and others can only be one type a restaurant, for instance, not gonna work online, although you will have a website, but it's not really your business. Your business is in a brick and mortar place, same way with a maybe a repair business. People don't typically send things like your car to on online place. They find it online and they take it there. OK, so that's the difference is for either business tight all costs and we went through some of those. All costs must be covered before you, the business owner make any money, so you have to cover the hosting service and pay for the website development and pay for the marketing costs and pay for maintenance and security and pay for any office equipment that you had to buy before you make any money. If you have a brick and mortar business, that monthly lease payment has to be paid and all those 10 and improvements have to be paid for and all of the utilities have to be paid for every month. And any marketing that you're doing has to be paid for in any maintenance and security have to be paid for, and that office space that you're using cost you every month because you're taking up square footage and a piece of property for which you're paying a square footage price. So all of those have to be paid for now. Happily, the lady who was selling the baby carriers, she did great because their costs were low and she kept them very low when it came to the other one. She didn't survive that the pet boutique did not survive because she had the wrong type of business. Location she should have been. Could have been an online business because that opens her up to the world. If you have a local business, your traffic is going to come from local people. If you have an online business, your traffic is gonna come from everywhere. So instead of being able to sell pet boutique items toe local pet owners, she could have been selling pet boutique items toe all pet owners anywhere. And that's what would have been the advantage. She didn't make it because she didn't start the right type of business. Now controlling costs is key through a profitable business. And so, in none of those, do you want to go crazy with spending fabulous amounts of money before you get things up in online and you want to get by with what you can because it costs money to start businesses , and it's time to evaluate and consider carefully before you sign a lease before you buy a hosting agreement. Before you spend any money evaluated, consider carefully talk to a business mentor talking to a business mentor. Someone is experienced in starting businesses. It's so important perfectly. If you've never run one before, you can find them at local universities and colleges. There may be a business organization in town that can help you out, talk to somebody and determine exactly what is the right type of business that you should be offering. We're gonna talk about how much money you're gonna need. The idea of raising capital is always critical, always important, never off. Understood well, and finding sources of capital is another problem. Mary, we're going to address 6. How much money will I need: I am Jack down again of the practical leader dot com, and this is the next episode episode number four in our series. So you want to start a business? Everything you need to know and think about before you sign a lease were up to the point now where we need to talk about how much money you're going to need and where you're going to get it. But that takes up quite a bit of time and space, which we don't want to load up on one episode. So in this one, we're going to focus on adequate capital how much money you're gonna need to get started according to Quicken. And you may know quickens and Intuit to Quicken Cookbooks is a great program that I recommend all small businesses used according to the M, 40% of all small businesses start with a capital investment of less than $5000 it's not very much money these days. Can't buy much of a year's car at that price certainly can't buy a new one at that price less than $5000. A further survey reveals that 64% of all startup businesses began with less than $10,000 of capital. Therefore, most new businesses are pretty well strapped for cash, and that's okay if you plan well. And if you're a very good manager of what resource is that you do have. So when we're talking about how much capital you're going to need to start, your business is there are four things to consider. First of all, there are capital expenditures. We're going talk about each of these today. There are operating expenses. There are professional services that you may need to hire, and there are personal finances that you need to be very much aware of. So let's talk about capital expenditures, which are fixed assets first kept. They are of the tenant improvement that you will make in an earlier episode I talked about Have it when you movinto property or if you're operating out of your home with an online business, there are 10 and improvements and you're going to make if you're operating in a brick and mortar place and you Lisa place, and there's almost certainly things you're gonna need to do on the inside. Maybe building partitions, running wiring, running, plumbing, building fixtures, building in walls, designing the place and setting enough for the run of your business. So those air tenant improvements. If you're working at home, you may have to do some remodeling in a room or something to handle the flow of business. And if you're selling products, you have to have some place to store those products unless they're digital products, and then you're gonna have to be concerned with your website and with your social media marketing accounts and with the developing A website, things like that. So that's what we call tenant improvements. Then there are machinery and tools that you may need if you are running a shop or a restaurant or coffee shop or a gift shop or something like that. If you're starting some sort of manufacturing facility, you're gonna have to buy machinery and tools here. If you're short on cash and almost every new business start up is short on cash. If you're short on cash, then you need to think about buying used equipment. There's lots of it around because there are businesses that are selling off equipment as they upgrade their supplies, or their businesses that are going out of business and you Kenbrell I a lot of their stuff at bargain basement prices. And then there's office equipment that you may need. You probably have some of computers, maybe desk chairs, desks, printers and fax machines, although not too many people use those anymore. But you might need one, depending on the type of vendors that you use. Some of them require a fax. They won't take emails, and you may have to buy some of that or lease some of it and there than there are fixtures that need to be taken care of, which, if you have a coffee shop or restaurant or retail facility, then you're gonna have to have fixtures to display your merchandise, to prepare the merchandise to serve the merchandise. If you're a restaurant, that sort of thing. So you're gonna need to be aware that sort of stuff, you have to make a good gas about how much that's gonna cost, because that's gonna come into where you're going to need money. We're talking about how much money you're going to need, and this one we're explaining some of it. We're gonna talk in the next episode about where to get money, but in this one. Where do you find it Next? Operating expenses for your particular business. There'll be overhead expenses. And here's a snippet from a spreadsheet I've actually included in the very last applied of this presentation. There is a photo of a downloadable template to do a spreadsheet that includes all of these things in far more detail than we can go into online here. But those overhead expenses are what it cost to keep the place open. Accounting expenses, advertising, depreciation, rant, utility insurance, employees that you have to hire. Telephone costs, Internet connection costs, payroll expenses cause you have expenses if you have employees, not only do you deduct taxes from their income, but and some of those you have to match those taxes and that sort of thing so those overhead expenses need to be considered. Then there are inventory costs. If you have a retail place in your selling clothing or you're selling crafts or you're selling food or you're selling furniture or you're selling dishes or you're selling antiques or you're selling something, then you have inventory. How you going to stock that and you're gonna have to go out and buy stuff that you're going to resell most of the time, you cannot get it on consignment. And if you're a brand new business, they usually won't give it to you on a 30 day note. You have to go ahead and pay for that stuff right off. And then there is, of course, the business licenses. And if you've done any tenant improvements in a facility, they're gonna be permit costs, an inspection costs. And there are site fees and maybe are applicable, depending where you are. So that's part of the operating expenses and your business license. You have to pay for that every year, almost always every year. Next, our professional expenses that you will have you right off. You probably will do your own bookkeeping. Most people do. They start off. They don't hire a bookkeeper just yet, but if you do, then you're gonna have the cost of hiring a bookkeeper. If you use a point of sale service or if you use a good set of books to keep your accounts like QuickBooks, a lot of this is resolved. If it's set up properly, that's the hiccup. There's a bit of a learning curve on all of these accounting programs. This is no place to scrap on expenses. You want to make sure that you understand how to set up your account, how to set up your books right from the very beginning. It will save you multiple issues later on. Multiple problems. Okay, so you're gonna need a bookkeeper. You're gonna have to hire employees or sales reps that are going to Maybe maybe you're gonna work alone. But it won't be very long that you're gonna have more work than you can do by yourself. And you're gonna have to hire people and then their legal fees. If you decide to incorporate that, you may want to see an attorney about what type of incorporation. If you decide to run a partnership, we're going to talk about legal structures in a future episode. But if you decide to be a partner with somebody, you definitely need a lawyer to draw that up and be very, very careful with that. We'll talk about the perils of partnerships later on. So if you are going to incorporate, you'll need a lawyer. You'll need maybe a lawyer to review leases before you sign a lease and a facility somewhere so there's gonna be legal fees you need to pay, and then there's marketing costs. If you promote it, you'll get some business. If you don't promote it, you're rolling the dice. Somebody may or may not find you. Somebody may or may not know where it is that you are, and you can't take that risk. You have to be able to market and promote from the very beginning. Janitors, maintenance and grounds care again. You may do some of this on your own, but it won't be very long that you'll be too busy to be able to do this on your own. And you're gonna have to hire that. And that's part of professional services to hide that in some buildings, if you go into, they provide that. But it's an added cost that they add on to the least, and you have no choice but to pay it. If that's the case, then you need to be aware of. That's an expense that you're gonna have to be sure of, the two to be able to plan on. Then there are your own personal finances. Now, a lot of business start as a part time business And if you decide to quit your job and go into business, then you're gonna need quite a bit more money. So the question is, how are you gonna live until your business makes a profit? Very, Very few businesses will make a profit from the first day of the first month or even the first six months or year they'll take in money. But that's not the same thing, is making a profit. Now here's a word of warning, without doubt, as soon as you get a business license or as soon as you begin the two. If you buy a domain name, you're going to get bombarded with all of these solicitations of people promising you how they can make you all this money right off the bat. They are all lying. They are lying. It isn't true. There is no magic bullet. The succession of business is always the same. You go into business, you build a name for your business. You build a reputation for your business and ultimately you gain profitability. But it does not happen. It's certainly in the minor percentage of the time. Does it happen immediately? It takes time. How are you going to live until your business makes a profit. That means are you going to run this business full time or you're going to run a part time either by hiring someone or by limiting the scope of your business until it gets up and going and a lot of people do that. They start part time, and maybe they were to support themselves while they're building the business. Now, if you are living now is a wage earner somewhere you need to plan on three months living expenses while you're getting started. And if you're going to go whole hog in this, you need to be at least six months ahead as an owner of your living expenses, to be able to cover those while you're building the profitability of the business and that takes some time. But you're gonna need that much cash, and to go in without it is a recipe for disaster. So you need tohave a cushion of money so that you have some way to pay your living expenses while your business gains its own footing. And the rule is mawr is better. More money you got, the more capital you've got in reserve funds is the best start up with that way. Okay, I said earlier that I was going to show you this. So you this Klink will be a clickable link down below in the notes. You can go there, and I have spoken with the owner of this particular website and of this spreadsheet, and he's a great guy. I've looked at a lot of spreadsheets for business startups, and I don't like most of them because they assume too much and they are directed. Business is far larger than the typical 5000 or $10,000 start up business that most entrepreneurs they're going to begin with this spreadsheet. I like it because if you see in the right column, it explains exactly what goes on each line. And if you're new in business, it's no shame to say I don't understand what these things are. I've had dozens and dozens and dozens of clients who come in wanting to start a business, and they all tell me they're all embarrassed to tell me that they don't understand any of these things, and that's no problem whatsoever. We don't expect you to understand those things. We're going to show you what they are in. This spreadsheet is the best one I've ever seen for explaining exactly what goes in each line of this spread she and this is an Excel red sheet. So if you can open an Excel spreadsheet 2007 or newer, this will work for you, and it's a good one. So I'll leave this link down below. We're going to talk about where the fine capital. So I encourage you. If you're thinking about going into business, to go ahead and click on that link down below and download that spreadsheet and begin to work on your business in terms of what you think it might cost, and then we're going to talk about where to find some of that money. 7. 10 things a lender looks for: I and welcome back to our course on. So you think you want to start a business in this brief lesson? We're gonna talk about the 10 things that a lender looks for. When you go to borrow some money, the first thing they're gonna look for is your character, which is for them evidence by the commitments that you've made so they can look at your credit history and, um, your credit report and see what that indicates. And that's back in the day. A long time ago, I was able to get loans based only on my signature because I knew the banker and he's just say, OK, that's fine. Let's just do this. He didn't look for anything just because he knew me. These days, local banks don't make loans that way. They're all determined by somebody up the chain. We don't know who we don't know where. So it's not as easy as it used to be. And they're gonna look at a lot of things, basically character and commitment. We're gonna look at your credit rating, and if your credit score is really bad, I've had clients who came in and they had hard luck they had some difficult times. I'm not maligning them at all. Everybody has those difficult times and as a result of credit score had suffered. And in that particular case, uh, the odds of getting a loan from a traditional under pretty slim. And if the lawyer credit score, the higher the interest rates going to be. If you can get a loan, it all, and that may sink you right off because the interest payments alone, maybe mawr than you can handle or should handle. In that case, you want to work on getting your credit score down, and there are sources online that will offer you a bunch of stuff. Be careful of those. Many of those are scams, and you don't want to be sucked into that. Basically, make your payments on time. Lower your debt load, live within your means for 34 years and get your credit score good and solid, and you have a good chance of getting alone. The third thing is a cash flow. They're going to see if you have enough money to make payments, and this is where I've seen potential business owners get crossways. They'll they'll make projections in the business plan. And by the way, when you're going to borrow money from a traditional institution, this is the one place where you probably will need a business plan to start your business. You don't need one. I've got a little thing a little formed towards the end that will get you started. You don't really need a business plan, but to go borrow money, they're probably gonna want to see a business plan. And I see these wild eyed projections about cash flow. You may have lots of faith in your business, but I would just play it safe and and moderate what you think will be the returns, because the people you're going to see have been in business a long time. They've been dealing with businesses, and so they're not gonna be. Is enthusiastic as you are there gonna be more realistic. So take an honest look at your cash flow That means personal cash flow to, And if you're tied up in debt elsewhere and want to take on more debt, they're gonna wonder where you're going to get the money to pay this back. Have a look at your collateral. If you don't have a business and you're just starting. You probably won't have any collateral for your business unless you're somebody who has some business property or you have some inventory to go and get started. They might look at that and they're gonna look at your capital. They want to see again. Are they going to get paid back? They're gonna look at your knowledge of the industry. And we've talked about this that the people who do best in business typically go into business in an area they understand. And they know enough franchises are a little shift on that because they will indeed, as part of franchise contracts, teach you a good deal about the business. But if you're not doing a franchise, you notice starting the more you know about the industry and you can you can demonstrate that the more confident lenders gonna feel. Number six. How much money are you putting into this? And this is again not to malign anybody's financial circumstances at all, but it's tough going for a while. You can typically borrow any money unless you have some money, which doesn't make a lot of sense to most of us. But they were gonna want to look and see. How much money are you putting into this? Because they're looking at the element of risk. And they, the lender, do not want to be the only source of risk of the carrier of risk. Rather, number seven, they're gonna look at your financial history. You can go to creditkarma dot com credit sesame dot com Ah, sometimes the credit cards you might have. I think Discover offers a credit report or you can go to the credit agencies. And once a year, you can get a credit report and take a good, honest look at it. And remember, they're going to look at just the numbers, just the items. They're not gonna look for explanations or anything. You're just gonna look at what's on the report. Ah, look at your financial projections. I mentioned this earlier on in this list. Be reasonable. Be honest about what you think you can make. And first year to maybe a little tough. And if against start turning a profit in 23 years, then something is wrong. Um, really your management skill Do you appear tohave the where with all to be able to run the multi facets of a business. We've talked about those in this course that will be evidence by the neatness in the completeness and the accuracy of your application for a loan. They're gonna look at that and say, Well, you couldn't even manage your way through Ah, application, how you're going to run this business, Which is, by the way, well taken point and number 10. Finally, we're gonna look at your competition and see who you're going up again to determine whether or not your business has a chance of making it. I live in an area where I'm always surprised at the number of Italian restaurants that start here. Every year you have a bowl slew a whole bunch of new Italian restaurants, and we already have hundreds of in the area. So why they think they can make it? I don't know, but they seem to think that they can. So you need to look at your competition seriously and see how well you pit and how well you can demonstrate your ability to penetrate that, uh, competitive field, their number one concern. They want to get paid back, and so they're going to look at these 10 things to see if they have reasonable assurance that they're actually going to get their money back. All right, let's take a look at the next lesson, which is going to be where to find that money. So you then? 8. Funding sources: we're gonna talk about where to find the money. There are basically two sources of finding. One is called Equity equity is what you own. That would be resource is that you actually possess the other one is called Debt. We'll get to that in a minute. So let's talk about some equity sources of funding that might be useful to you. Number one is your personal savings. I've been counseling. People go into business for years. It's amazing how many come and talk to me when you start a business hopeful that they can get a grant somewhere to start that business. Unfortunately, there was a time here in the United States when grants were indeed available, but they haven't been for about 15 years or so, so they're not available. So you've got to find money somewhere. You need money to start a business, and we learned last week that a 50 51% or 52% of forgot exactly the number who of people who start businesses do so with $5000 or less, and 64% start with $10,000 or less. So you don't need always huge amounts of money But you do need money. And so one source of that, of course, is your personal savings. So we recommend that if you don't have personal savings, that you embark on a program of saving now with the object in mind being able to go into business. This works all the time. Lots of people say, for 2345 years till they get enough money to be able to start their own business. The second, of course, would be fun that you get from your family and friends. And unless you're a complete outcast, usually you can get some funds. Your family or friends will loan you some money. Maybe they even give you some money to get a business started, and that's a good source to go. You can find it from them. Another one is from taking on a partner in getting contributions from that partner partnerships are fraught with peril, their risky. So be very, very, very careful about partners. Contributions, terms and conditions are very important thing to look at when you're doing that. However, there are many people who have started businesses with partners and have done so successful , and that might just be the thing for you to do so that will be a source of money. Now, the next source, we're gonna talk about his debt, and that will be money that you owe. It's borrowed money from somewhere. Of course, the number one source of banks and credit unions to get money from credit unions are sort of, ah unique thing here in the United States, and there used the affiliate with a certain industry for a certain segment or a certain location here in our area. If you live in this county, you could belong to a credit union. But their credit unions that have to do with the people who maybe along the schools or teach in schools, working schools, they have credit unions, many other organizations do as well. So if you go to the bank, you can go to the bank and borrow some money from them. There are what we call community expressed micro loans here in the United States. You can check through the S B a small business administration here in the U. S. About finding where these micro loans are, and these air for small loans of the $35,000 for purchasing inventory supplies, furniture, machinery, pictures or equipment in these loans are administered and delivered through nonprofit organizations. One good source here in our area is the Goodwill Micro Enterprise Programme. So you might check with Goodwill industries in your area. And they may have a micro enterprise program that they will work with the Great because they work with you on your business, plan to refine and focus on your business idea. They talk about marketing. They took about all these facets of running a business, and they help you get a small loan to get up and started. So that's a good place to go. Now, wherever you go, if you're gonna borrow money of $50,000 or MAWR, that's often guaranteed by the S B A by the Small Business Administration. But that is not a grant. And you have to get alone like you would any other loan, you're gonna have to be able to prove that you have good credit and that you're likely to pay this loan back so they will expect you to contribute 30% of your own equity. So if you're gonna borrow $100,000 they they're gonna want to see $30,000 from you. You also going to need a credit score over 700 they will want to see of business plan Gonna work on a small, abbreviated form of that before this series is over. Now do not borrow. Do not borrow from payday loans, title loans or any short term lending sources. You'll see them advertised on television. Payday loans keep you trapped. They have exceptionally high interest rates. They have exceptionally short lead time to pay it back. Title loans or car title loans in states that outlawed payday loans because there's such a shark environment have come up now with title loans where you take in the title to your car and you give the title to them and they hold. That is as collateral against the money that they loan to you. And if you don't pay back, you lose your car. A very, very bad thing to Dio. Do not borrow from payday loans from title loans from any short term lending source. And that, of course, includes credit cards which are not recommended because interest rates range from very low . But you have to have very very, very good credit to get a low interest rate credit card up to, like 30% outrageous amounts. And it's very hard to pay back alone at that high rate and ever see a profit in your business. So don't borrow those now. There's some alternative sources you can go to for crowdfunding and crowd sourced micro loans. And that is, of course, Kiva Uli, circle up Indiegogo rocket have Kickstarter and go get funding. You can check all of these out just out of dot com behind any of these and there are ways to raise money in the in the cloud or through crowdfunding. Now, if you just have a business idea and you put that business idea up there, if it's not well marketed, if you do not gather a large circle of people who are interested in you and you trust you who believe in you, you're not going to get very far with that either. But it is a good place to start these air, the sources where you can go and get capital. You will need money if you're gonna find it, find it from one of these. Remembering those places I told you not to go to 9. Home based business: and this lesson on course on. So you think you want to start a business, we're going to talk about home based businesses, the pluses and the minuses. So here the advantages working from home is convenient. You get up, you go to the room to your office. Wherever you're doing your work and your at work. You save money on commuting, dry cleaning lunches out another daily expenses. You don't have to commute. You don't need to wear office close so those expensive dry cleaning bills are going to go out the door and you don't need out cause you're at home and you don't have the daily expenses like that. Stop it Starbucks on the way for a cup of coffee. All of that adds up because you can make your own coffee at home. You have a flexible schedule. You can work when you want. This works really good for people that have a family. Or maybe they have another job and they want to start a business without quitting their job because they don't have the capital to live on entirely while they're getting their business up in going so they can work at home on off hours or on weekends and get their business up and going. You can also work around the schedule for the rest of your family, taking kids here and there off the school, off the sporting events and things like that. And you can gain tax advantages since you can deduct a portion of your home use for business. The way that works is that if you have a dedicated room or a dedicated portion of your house set aside just for business, the IRS gives you a form that you can calculate of the expenses of your home. And then the portion of those expenses that are proportional to the space that is used for your business can be deducted from your taxes as a business expense, and you can avoid leasing and t I. That's Tenet improvement costs. Ah, now, this is really gonna work. If you don't need a storefront, most zoning regulations won't let you run a business out of your home where people are coming to shop or people are coming to do other services. You have to be careful about that. You don't want upset the neighbours and you don't want to get crossways with the zoning and permitting requirements in your particular jurisdiction. Here are the disadvantages of a home based business. Zoning or deed restrictions may prohibit that. We just talked about that. Working for home can be isolated and lonely. If you're a real social person, that can be a problem. However, some of that is, um, sort of remediated a little bit by social media, and you can get online of this could be a trap to, but you can get online and you can communicate with other people. But if you like to to visit with people during breaks and the like, that could be a problem. A za home based business You'll have more difficulty finding financing. That's true sort of, but that's changing a little bit. So conventional sources don't like the Lend on home based businesses. But other sources don't seem to have a problem, because so much of it is done these days. In home, distractions from family or neighbors may make it hard to work. That's true as well, and home based businesses are often subject IRS scrutiny. That's true, however, we've deducted expenses in our home for many, many years and never had a problem. We've never been audited over that, although some people seem to be. But that's just not an issue. That's assuming you keep good books and good records in your and you don't deduct an exorbitant, huge ridiculous amount. Be reasonable and be accurate on that. And I think the Irish will leave you alone. But they do tend to look at this a little bit more, so that's the advantages and disadvantages of a home based business. 10. Buying a business: Welcome back. This is the next lesson in our course on. So you think you want to start a business, and this one we're going to talk about whether you should buy a business or start one. Now, if you start a new business here, the advantages of starting one from scratch you're not hampered by a previous image of that business or the technologies that that business might be built around. Sometimes they had a system in place. It worked. Okay, but things have changed, but you're kind of stuck with it. So if you if you start a new business, you're not going to be hampered by those things. You can choose the location, your name, business name. You can build your own logo and you can build your own. Relationships were starting from scratch. You can do that. You can explore new markets and new directions for that business, and you can see your dreams come true because it's something you built from scratch. But there are disadvantages to there's no customer base, so you have to build it all from brand new from scratch. There's a greater risk because you have no customer base. It's an untrue ride product. It's and then tried service. It's an untrue I businesses in on tried location. You have no track record as a business when you start one from scratch. So the difficulty in financing increases and you can see your dream become a nightmare because it just didn't work out. And that's something you want to be aware of. Now. If you're gonna buy a business here, the advantages. You have an established clientele, you have suppliers and location. If you buy a business, you have a known quantity, a proven formula and a name for that business. You have help and starting and running the business because almost always in a business purchase contract, the previous owner or owners will be around to help you figure out what to do and how to do it and and how to take care of this thing in that. And you can review the records of that business to see how well they have done. And it's easier to obtain financing for a business. It's already up and running because you have a track record. The disadvantages are there potential hidden issues, debts that you may not know about the maybe a poor reputation, So it's always a good idea just to ask around town. Ah, what the reputation of the businesses and you may have certain customers of that business that were loyal to the owner. This is particularly true in businesses like auto mechanics, wood shops, installation companies, contractors and the like. The loyal to an owner to particular person. You don't care about the business name, and that can be a problem. And sometimes you have out of date inventory that's been on the shelves for a long time, where you might have transfer issues. That's where you need a lawyer. You need a lawyer when you're gonna buy a business. You absolutely need a lawyer to make this happen. And there's no guarantee this success will continue, although there's more guarantee than there is not. But there's still no absolute guarantee that the success will continue for that business. Next lesson, we're gonna talk about home based businesses 11. Franchises: in this lesson that so you think you want to start a business, we're gonna talk about franchises now. What is a franchise? It's a right granted to an individual or a group Could be a corporation. Are group of partners to market a company's goods or services within a certain territory or in a certain location? Now, most famous franchises you might be aware of our McDonald's. Domino's Pizza, the UPS Store. It's a business in a box. What, what you're buying with the franchises. You're buying years and years and years of experience in what makes a successful business work. You're also buying brand identification. Everybody knows McDonalds. Everybody in those Domino's pizza. Everybody knows some of some of the lesson on franchises are not as well known, but they carry the weight of ah, of an established corporation behind the business. So most decisions are already made for you in a franchise, and you have support system in place. Even before you open the store, it is lower risk. It's not no risk, but it's lower risk. But it comes at a price. You have a pre built brand and you have pre tested processes, you know exactly how they're going to make McDonald's hamburgers and French fries. You know, exactly. I was going to make these pizzas and like and so that's all done for you. You're not starting from scratch. And for some people, it's a very good idea to buy a franchise. You need to read the fine print, and you need to think about this really well before you do it. But I know people who have done very well at this the advantage of a buying a franchise are you have a proven image in product. You have marketing and sales power that you will buy cooperatively with the franchise corporation. Limited experience is needed because they're going to show you exactly how to do everything . And you have training and professional guidance, usually at a training center somewhere in the country. And you have a continued consulting relationship to help you deal with the problems that arise in the operation of the business and you have access to other franchisees for help. Who will give you the advice on how to do this event? The disadvantages are you have a loss of control. You're not always your own boss, do you have a McDonald's franchise. You can invent your own sandwiches. You have to sell what it is. A McDonald's tells you you're going to sell. Ah franchise will require royalties to be paid and other fees using cooperative advertising and the like. That had to be continually paid, so they're going to get a share of your business rights in the beginning. In the form of these royalties and fees, you have operational boundaries and limited choices. You can't just open a subway restaurant anywhere you want to. You have top open. One word is they tell you is available toe open one and, um, in that. Since you're not you really your own boss, you are. But you're not really your own boss because you have limited choices. You have a binding contract with them that you just can't up and get out of. Sometimes you can buy out of it, but almost always. That's not the case. And if the franchisor has problems at the corporate level, those become your problems, and there are franchises that have gone out of business. Kenny Rogers Chicken is one steak and Shake is probably going to go out of business, write off. That's a franchise company. And they've been around since the twenties or thirties, but 19 twenties and thirties. But they're not doing very well. Okay, so in the next lesson, we're gonna talk about sole proprietorships. 12. Sole proprietorships: We're in the middle of a Siris on things you need to know before you start a business in this episode we're gonna be talking about Should you be a sole proprietor for reasons why and two reasons why not? So let's take a look. There's more than one way to structure your business. You could be a sole proprietor, which is by far the most common. And then you can be a corporation. You could be a partnership. There's more than one type of corporation, all of those we're going to discuss in future episodes. But in today's episode, we're going to focus in on four reasons why and two reasons why you should not be a sole proprietor as a business owner. First of all, the reason why Number one, it's fast and simple. You don't need articles of incorporation. You don't need partnership agreements. You don't need all of the other agreements that come with the corporation's by laws and, like you just start a business, you probably need business licenses, but you would need those anyway. You might need zoning clearances, but you would need those anyway, Just to start up your business, you can sit down here today and say OK, here I am Mr Me and this is my business and it's easy. Simple to start up. Reason number two. You don't have any stockholders or partner partners. Toe answer to you are the sole one that is the owner of the company. So you don't have to report to stockholders. You don't report the partners Reason number three. That means you would be the sole decision making. You don't have to sit down with your board of directors and decide on capital improvements on direction or pricing and that kind of stuff. You decide what it is you want to do when you want to do it, how you want to do it and what it's gonna cost if you have a partner. Same thing is having a board of directors you're gonna have to discuss with that partner or partners what it is you're going to do, how you're going to do it, what it's going to cost, and then how that will affect you and your business. You don't need that if you're a sole proprietor. Reason Number four It's a much simpler tax return are speaking here specifically in the United States. I do not know the way taxes air calculated in other parts of the world. I only know how they're done here in the United States. If you're a so provider here in the United States and you are a sole proprietor of a business, what you do is report that income on a Schedule C as self employment income because you are employing yourself in your company and then your expenses are scheduled on Schedule C and you have a net profit as a result of that, and you may owe Social Security's result of it. You may owe income taxes as a result of it. You may not own anything as a result of it. It's a simpler tax return if you are sole proprietor. But there are two downsides. Reason number one. Why you should not be a sole proprietor is it can be more difficult to get financing, especially in the long term. Now, if you're a sole proprietor and you go into a bank and you want to borrow some money or you go to a lending source and you want to borrow some money, they're gonna lump everything together. Your personal income your personal expenses, your personal tax return. That's all considered one and the same, and they're going to take a look at it. And they do not actually regard you as a business that they regard you as a person coming in to get money. And when you want to borrow money for your business, then it becomes a little more difficult to do. And if you're looking for long term capital, it can be a lot more difficult to do if you're a sole proprietor. That's why they sort of look at with more favor in terms of corporations and in terms of partnerships, because there are some advantages there for them as a lender. Reason Number two. Why you should not be the sole proprietor is personal. Liability is a courtroom in this picture here. If you are a corporation, there's a firewall between you and your personal finances and your business. So if you are sued in your business and there's a judgment rendered against you, they cannot come after your personal property. They cannot come after your personal finances on Lee the assets of the business. This may be the biggest reason why you should not be a sole proprietor very long. Now here's the good thing. You don't have to decide today. You can start as a sole proprietor and you can become a corporation any time. So if you're uncertain about the future of the company or if you are, just don't want to go through all the paperwork to get a corporation set up and start it. And by the way, it's a lot easier than you might think. But if you don't want to do all that, you can start as a sole proprietor. I recommend a corporation. However, you need to take into consideration your particular circumstances, the dynamics that exists in your country when it comes to loans when it comes to liability and decide whether or not a corporation is the way to go. Almost always it is. And in fact, we will talk about partnerships why you should and why you should not. And then we're going to talk about corporations. So we have three in a row on business structure. Today was so proprietorship next week, partnerships why you should and why you should not and finally and corporations and how to do it and why you should and why you should not on that, So stand by for those 13. Partnerships why and why not: we're talking today about business partnerships. Should you become a business partnership? Why and why not? Let's take a look. I formed a business partnership some years ago. Did not turn out well. I think about half of them statistically do, and about half of them do not. It is not something to be entered into lightly or flippantly or casually. It needs to be carefully considered. So in today's episode, we're gonna talk about the reasons why a business partnership can be a good thing and why it cannot be a good thing. A lot of people are attracted to business partnerships, but I am very, very clock now. Here's what a business partnership is. According to the Wexler Legal Dictionary, which I got a Cornell University, a partnership is a for profit business association of two or more persons. Because the business component is defined broadly by state laws and because persons can include individuals, groups of individuals, companies and corporations, partnerships are highly adaptable, inform and vary in complexity. And that's true. Major groups can each can be a partner in a joint venture, but we're not talking about that in this series. This series is dealing with small business, a business that you might start and what a partnership would mean for you. For most small businesses of partnership is to individuals who decide to go together and start a company or organization of business. It is typically good friends. I see ads from time to time in various business places where someone is looking for a business partner. But by and large that's not the case. What usually happens or two friends of sitting around and they think, G we could go into this. Let's do this together and they start a business together, partnerships arm or than business collaborations. When I ran a Millwork company down in the Caribbean, I collaborated often with another Cabinet shop. I was not a Cabinet shop. I was a Millwork company. I made stuff out of solid lumber. The business that I partnered with was run by lady who had a Cabinet company, and she did new solid lumber very often. She used she goods which are eat typically plywood or veneer products, and from time to time. Part of one of my jobs would include cabinets and the like, which she was able to make, and from time to time, she would have projects. It would include solid goods, doors and windows and molding and the like, which I would make, and we would collaborate together on a project. But that's not a business partnership. A business partnership is far more formal, and it has far more binding arrangements or usually can often be corporations. But they're certainly legal agreements that air drawn up by an attorney. Now, here are some reasons why a business partnership can be a good thing. Both partners share the cost of a start up, the easily invest equal amounts of money. Sometimes you have a share equity partnership where someone invests the money and the other partner doesn't invest any money. They invest their time and their labor for a specific period of time, which would be the equivalent of an amount of money, said he both buy in to the company with equal amounts of investment. Whether it is money or ah, labor share investment doesn't really matter. They both share the cost of a startup. Both share the responsibilities and the work. So you divided down the middle. One person does one thing and one person does another in the partnership that I had. That didn't last very long, but I was the front in person. I got the sales and I handle the customers, and my business partner handled the shop. The production of those things that I sold both share business risks and expenses. And so because you are a partnership agreement, you have a partnership agreement. Then whatever goes right or whatever goes wrong, you share it equally. If it goes good, everybody does well. If it goes bad, well, everybody does. Battling each person in the partnership add unique skills and their own contacts in the business community or in the community at large in order to make the business a success. Finally, ah, business partnership can offer mutual support in motivation. You're there to sort of encourage each other and talk things over and come to decisions all together. Now that's on the bright side of things. That's how things are supposed to work, doesn't always. But that's how things are supposed to work here. The reasons why not to have a business partnership, you both my shoulder joint responsibility and individual liability. In other words, you are liable for the obligations of the company together. But should your business partner default or in some cases, simply disappear, just skip out. You are still liable for everything that's joint an individual liability. You share it together, but you are individually liable for everything, including the obligations made by another person in the partnership to you share the profits right down the middle. You each get half. So what often happens in ah, business partnership arrangement is that one does more work than the other. Or at least they feel like they do more work than the other, and they feel like they should get more of the profits. But the partnership agreement almost certainly says that you share it down the middle, and so that's a potential conflict, probably the most common source of conflict in business partnerships number three. And this is a bad one to know. One has total control over the business. It's a 50 50 and so there are often standoffs and power plays in order to exercise control over the business. 50 50 arrangements don't work very well. In fact, they work badly. People try them all the time, but this is a challenge here because nobody has total control number four. Sadly, your friendship will probably not survive. A partnership did not in mind the guy that I went into business with. We were good friends before. We are not good friends today. And number five, the meeting where you sit down with your lawyer to form your partnership agreement will be the best meeting you will ever have. It will go downhill from there. Sorry to sound cynical, but it's the sad truth. It's gonna go downhill from there. All right, keep in mind John D. Rockefeller's famous words, a friendship founded on business is a good deal better than a business founded on friendship. Next, we're going to talk about the qualities that make you a likely business partner type. 14. Are you the business partner type: We've been talking about different business types, and we're in the middle of one about being a business partnership. If you miss the 1st 1 of this segment on being a business partner, let's go back and take a look in this one we're going to talk about. Are you the business partner type? Okay, there six things to consider when you think about going into a business that a lot of things to consider when you think about going into is a business partnership, the six things really come into play. This is sort of a self analysis about you and your proposed business partner Number one. Do you have shared values now? The reason I bring this up is because shared values when you both value the same things that brings respect, respect to each other, respect to the partnership. So do you have the same motivation, values and similar work habits? Do you have the same understanding of what is right and what is wrong? This is particularly critical when it comes to dealing with customers and how you handle those customers and the type of work that you perform for those customers. Do you have the same values when it comes to keeping one's commitment when it comes to handling money in terms of accountability and processing and all that, what you do to earn that money and communication? No, I had a I had a business partner for a while, and we had another way of looking at things. When it come to earning the money, I thought we needed to turn out Stella stellar work, exceptional work. He thought good enough was good enough. And ah, that was a huge values conflict that ended the compromise of the business. I didn't stay with it for more than six months with That's a different story. And finally, in communication, do you communicate with each other without having to be found. In other words, am I going to communicate with my business partner without him or her having to come and find me to get an answer to something or to get an accountability for something and vice versa? Number two shared objectives. If you both want the same thing for business that equals hope, you believe that you're heading towards that. You're all the hours that you spend, the reputation that you're building and the products and the services that you produce, all our in hope that you get the same things from business. This ties in directly to the previous one about having shared values. Number three shared expectations were the critical factors in business partnerships is anxiety, intention and stress, and you want to add as much pieces you can to the relationship. So you must both have the same expectations off how each will contribute, of how each will respond, of how the business will conduct itself and how the business will turn out. If you have the same expectations, then you can have peace because it eliminates these four sources of stress. Next, do you have complimentary skills and strengths because you're gonna cooperate and you're gonna collaborate? But you don't want to compete? You can do things that your business partner can't. The business party could do things that you cannot, and it's not a competition between you. It is a cooperation and a collaboration. One supplements the other. If you have shared values, if you have shared expectations, then those things are gonna work out quite well. Otherwise it ends up being a who's better than who situation creates stress that good next one of the role of a spouse. Spouses of significant others are not on business agreements. They are still there. The role of a spouse. Business partnerships sometimes are husband and wife or two significant others together, and they form a company that can work out quite well. It often does not work out quite well because of the different way that people do things, and they seem to look at the relationship differently because they are a couple now. On the other side of that, the fact that you have a spouse or significant other that's in the mix even when that spouse or significant other is not a business partner. That's still a factor in the relationship because that comprises the majority of the time away from the business and perhaps even there as well. So that is something to be considered. What role are the spouses of the significant other is going to play in the business partnership because do not be deceived into thinking you're going into partnership with one person. You are going into partnership with one person who is surrounded by another person or other people. That's something to be considered. Those are the factors that need to be lookout. Finally, in your gut. Do you trust this individual now? This is why business partners air best if you've known each other for a long time, and if you had cooperative collaborative events and efforts before, so you know if you can. But if there's a little small voice and when it says I am not sure about this person, then think long and think hard about it. You can probably tell before I am not a fan of business partnerships. As such, they can be big, big trouble. They work out well, sometimes many times they do. Not next week, we're going to talk about the things to do before you create a business partnership. 15. 3 things to do before a partnership: In today's episode, we're gonna talk about the three things you should do before you create a business partnership. Don't do them at your own peril. These are three things you need to do. Let's take a look. Okay? Talking about the three things you need to do before you start a business partnership. Number one. Do your due diligence. I know you're friends with this person. I know you're both great people. I know you've ever known each other for a long time, and you think this is gonna be the best thing since sliced bread? But I'm here to tell you this is business. This is not friendship. This is business. So you want to do due diligence, particularly in this area? Is this a sound business idea? If you're curious about how to determine that, go back to one of the first videos in this series and you will see how to qualify the business idea. Do this Even if you're great buddies, you still want to know? Are we embarking on something that has a good chance of making any money? Also, you want to find out? Is this a person that you would loan lots of money to. So you want to find out if this is a reliable, trustworthy person when it comes to handling debt. Therefore, you need to check references on each other, so you want to ask around. You want to find out whatever person this is now, this goes deeper than just credit. This has to do with likability. This has to do with reputation in the area. This has to do with their ability to get along with people in stressful situations. This has to do with with the problem resolution. This has to do with handling criticism. This has to do with handling success. So number two, you want a lawyer up. That means, for you going to get a good attorney who is going to check things out for you and is going to write up air Tight will thought through business partnership agreements that will specifically address these six things. Number one who has what percentage of ownership in the company? Number two. How will you allocate profits and losses at what proportion? If it's 50 50 it's 50 50. If it's a different percentage, it's precisely how How is that gonna happen along with that you're gonna want to ask who gets money and when. Who takes a drop from the business? And who doesn't? Number two Who can bind the partnership, that is, who can enter into a legal agreement. Say you're gonna be borrow money and who combined the partnership into a contract? Is it going to be you? Is it going to be the other person? Is it going to be both? How is that gonna happen? Number four. Who is the captain? Who's going to make decisions At some point? Somebody's gotta manage the company so that you don't have to All both of you don't have to get the authors more than one. All of you get together to decide who's going to do water, What you're gonna handle, how you're gonna handle the problem, what you're going to do with a certain thing. Who's going to be the captain of the ship? Number five. What happens if one of you dies or divorces and your lawyer can help you figure that one out and number six, how will you resolve disputes? Because they will inevitably come. And now the third thing you need to do before you consider a business partnership is. What's your exit strategy? How you're going to get out of this. This has a lot to what you're expecting. Did you want to start this business? Get it going good, sell the business, split the profits and walk away. Is this a lifetime career? If it becomes unbearable to you, how are you going to get out? And that needs to be specified in your partnership agreement. How does one person by out another person How does one person bow out if they want to get out of the company? All right, next episode in our series, we're gonna starting about corporations, and we'll see you then. 16. 6 things to consider before you start a partnership: We've been talking about different business types, and we're in the middle of one about being a business partnership. If you miss the 1st 1 of this segment on being a business partner, let's go back and take a look in this one we're going to talk about. Are you the business partner type? Stand by. Okay, there six things to consider. When you think about going into a business, there are a lot of things to consider. When you think about going into is a business partnership, these six things really come into play. This is sort of a self analysis about you and your proposed business partner Number one. Do you have shared values now? The reason I bring this up is because shared values when you both value the same things that brings respect, respect to each other, respect to the partnership. So do you have the same motivation, values and similar work habits? Do you have the same understanding of what is right and what is wrong? This is particularly critical when it comes to dealing with customers and how you handle those customers and the type of work that you perform for those customers do you have the same values when it comes to keeping one's commitment when it comes to handling money in terms of accountability and processing and all that, what you do to earn that money and communication? No, I had a I had a business partner for a while, and we had another way of looking at things. When it come to earning the money, I thought we needed to turn out Stella stellar work, exceptional work. He thought good enough was good enough. And, ah, that was a huge values conflict. It ended the compromise of the business. I didn't stay with it for more than six months, but that's a different story. And finally, in communication do you communicate with each other without having to be found. In other words, am I going to communicate with my business partner without him or her having to come and find me to get an answer to something, or to get an accountability for something and vice a versa? Number two shared objectives If you both want the same thing for business that equals hope , you believe that you're heading towards that. You're all the hours that you spend, the reputation that you're building and the products and the services that you produce, all our in hope that you get the same things from business. This ties in directly to the previous one about having shared values. Number three shared expectations were the critical factors in business partnerships is anxiety, intention and stress, and you want to add as much pieces you can to the relationship. So you must both have the same expectations off how each will contribute, of how each will respond, of how the business will conduct itself and how the business will turn out. If you have the same expectations, then you can have peace because it eliminates these four sources of stress. Next, do you have complimentary skills and strengths because you're gonna cooperate and you're going to collaborate? But you don't want to compete? You can do things that your business partner can't. The business party could do things that you cannot, and it's not a competition between you. It is a cooperation and a collaboration. One supplements the other. If you have shared values, if you have shared expectations, then those things are gonna work out quite well. Otherwise it ends up being a who's better than who situation creates stress that good next one of the role of a spouse. Spouses of significant others are not on business agreements. They are still there. The role of a spouse. Business partnerships sometimes are husband and wife or two significant others together, and they form a company that can work out quite well. It often does not work out quite well because of the different way that people do things, and they seem to look at the relationship differently because they are a couple now. On the other side of that, the fact that you have a spouse or significant other that's in the mix even when that spouse or significant other is not a business partner. That's still a factor in the relationship because that comprises the majority of the time away from the business and perhaps even there as well. So that is something to be considered. What role are the spouses of the significant other is going to play in the business partnership because do not be deceived into thinking you're going into partnership with one person. You are going into partnership with one person who is surrounded by another person or other people. That's something to be considered. Those are the factors that need to be lookout. Finally, in your gut. Do you trust this individual now? This is why business partners air best if you've known each other for a long time, and if you had cooperative collaborative events and efforts before, so you know if you can. But if there's a little small voice and when it says I am not sure about this person, then think long and think hard about it. You can probably tell before I am not a fan of business partnerships. As such, they can be big, big trouble. They work out well, sometimes many times they do. Not next week, we're going to talk about the things to do before you create a business partnership. 17. Corporations: We've been discussing business structures. We've talked about sole proprietorships, which are by far the most common form of business structure, particularly for start up businesses. We've also talked about partnerships, which are also quite common. But in this lesson, we're going to discuss corporations briefly and what they can mean for you. The corporation is a legal entity that separate and distinct from its owners. It's a person, a living, being without a body. As such, a corporation enjoys most of the rights and responsibilities that an individual will possess. It can enter into a contract you cologne and borrow money. It consume and be sued. It can hire employees, it can own assets and the dreaded it can pay taxes. Nobody likes that, but that's the way it is. So let's talk about the three types of corporations as they relate to a business. We're not talking about nonprofit organizations here. I have different stuff on that in another course, but, um, and this one we're talking about business corporations, which forms S corporations, C Corporations and LLC's. So let's start with C corporations, which is a common ordinary corporation. It's conventional, and it has these advantages as protection. It's a firewall between you, your personal assets and any litigation that might come against the corporation. Otherwise, in the sole proprietorship, you as the owner are exposed and liable for any litigation that might come against the company in a corporation. You were shielded because of this firewall A of the corporation. You can raise money. You can have some tax benefits when it comes to a corporation, and there are some disadvantages. It costs more because you have to hire an attorney to get it started. There's more paperwork to complete and more forms to file, because you have to do both in the state that you are incorporated. And if you file in one state and moved to another one, then you have to re file not a new corporation, which you have to file usually is a foreign corporation in a new state. So if you uh, started corporation in Arizona and you moved to Florida, then you have to file as a foreign corporation in Florida, even if you do not have any offices anymore in Arizona, there's still some accountability that goes on in both of those states. And then there's the federal level when it comes to taxation that you have to deal with. And then there was double taxation in that you are taxed on all of the earnings of the corporation, and then you are taxed again on the personal earnings that you take from the corporation. So you get to pay taxes twice now for S corporations, which most small businesses, if they're going to incorporate, are either s corporations or they are LLC's, which will be the next one An s corporation. In Subchapter s corporation, you have the same. You have protection against litigation, you can raise money as a corporation and there are some tax benefits. Because the corporation does not pay federal income taxes on the earnings of the corporation, all profits and losses are reported on you the shareholders individual tax returns. If you have several shareholders, it's reported there. So that means that everything that comes into the corporation is taxable, except that you deduct, of course all of your business expenses and inventory and wages paid to other employees and benefits paid for other employees and the like and insurances and l a list of everything that the business expenses deducted. Then whatever profits there might be. Our reporter Ana shareholders individual tax return. So the s corporation also like Commission corporation has some disadvantages. There were higher costs because you gotta hire an attorney and there's more paperwork to complete. Two more forms to file and you are limited to 100 shareholders. If you want to take your corporation large and find large numbers of shareholders, people gonna buy stock in your corporation, then in s corporations not the right one to do. But you need to discuss this with it. Ah, good tax accountant and a good tax lawyer. And you can issue on Lee one class of stock again. You need to discuss this with competent professionals in this field who can advise you about what is the right thing to do? Finally, an LLC which means limited liability Corporation is also a very common corporation for small businesses. My business is have been LLC's, except for a non profit, which is a different type of corporation, entirely which we won't talk about. Here you have the same protection with an LLC as you do for a sub chapter s or conventional corporation. You can also raise money like you can in the others. And there are some tax benefits because there's no double taxation in this one, and you have an unlimited number of shareholders, so you can bring in all sorts of people in an LLC. There are some disadvantages, though. Higher costs like there are in the other two. You have to hire attorneys and you have more paperwork complete and more forms to file, and it does not. An LLC does not have perpetual life. Sub chapter s Conventional corporations have forever live. They just keep going and going and going and going until you formally stop them. But LLC's don't they have a set length of time, and when that time is reached, then you either have to renew that, or you have to change to a different type of corporation or you simply let it go when you're done. OK, so when it comes all these corporations, my advice to you is to think about it. Do you want to be a so proprietorship? Are you entering into a partnership, or would you like to form a corporation again? Get yourself a good accountant yourself, a good attorney and talk things over very well with them. See a good business mentor if you need to. About what is the proper thing to do for you? You could always start as a sole proprietorship and start a corporation later, and that is a very common process. Many people, particularly mom and pop businesses, started as a sole proprietorship, and then within a few months or a few years, they'll form a corporation. So you can discuss that with your professional mentors and guides and decide what to do. In the next lesson, we're gonna talk about why you don't need a business plan. Certainly not now, but you might in a short time and what you can do instead, see you that lesson. 18. Why you don't need a business plan yet: I Welcome back, we're almost finished in this course on. So you think you want to start a business in this lesson? We're gonna talk about why you don't need a business plan yet. The business plans are typically terrifying to most novices. When you're first starting out, they seem so complex and they seem so difficult. And I never recommend right off that we started with a business plan. You might need one later when it comes to finding investors when it comes to finding lenders on the like. If you wanna have a partnership, then you probably will write a business plan. But in this particular case, when you're just getting started, there's some things you can do to lead up to it that will actually help you fill out of business plan later if you need one. But most businesses start many small business. Don't ever have a business plan. And while that's debatable, where that's a good idea or not, they seem to get by. Okay, so you don't need a business plan just to get started. And here's why Business plans assume too much. It's really hard to guess what it is that you're going to do If you don't know what it is that you're going to do and you've never done it before. And so you assume a lot, usually too much of it. They're little more than a guess at this point. You really if you haven't done a particular business or been in business, you really don't know. And so it's just a guess about what's gonna happen, how much money you're gonna make, what it's gonna cost to run the business. And there's some things you can do. And I'm gonna show you gonna have a worksheet for you in this lesson, part of the course project that will help you figure that out. And here's an important, um, axiom to remember, no strategy, no plan, regardless of how thoroughly it sought out, ever survives contact with the real world without alteration, amendments or even abandonment because it's subject unforeseen events in the independent will of others. All business plans are changed. All all of them are change. None of them are written in stone, or they shouldn't be there. Only a good guess about what you think is going to happen and such they require amendment from time to time they set us up for disappointment and disillusion. Because business plans Air used to find investors were raised money. They tend to be overly optimistic and unrealistic as to expected profits. I was given one. Somebody wanted me to invest in their company. I did not do it. But when I read their business plan, it was wildly out of line with what typically was gonna happen. And sure enough, it's been three years now, and that company has gotten nowhere near where it is. It should have gotten, too, according to the business plan says. Too bad. But it does happen and business plans tend to disappear after creation. They're not living documents, so they get filed away, and the next thing you know you've forgotten all about that's another reason why not to spend an awful lot of time creating one, because then what happens with it? It gets in a file somewhere. You never see it again. Every destination, though, does need a beginning. And we've talked about this, you know? So you think you want to start a business, and we've talked about some of the basics of extra getting that business, organizing getting up and started. This is a startup thing. This is not about running a business. This is about starting a business business plans of projections of where you want to go. But what you really need to do is understand and accept where you are right now were the starting line, and that's the place to focus our attention. At this point in the business lifespan planning is more important than plans. It's Dwight Eisenhower. Plans are worthless. But planning is everything, and that's because they don't. They do not survive contact with the real world. But planning helps you. You begin to organize your thinking, and you can think realistically, realistically about what is probably going to happen. So we've provided what we call a reality check, and this is your first assignment, and I want you to ah review and write an answer. Even if you are a bit sketchy about what to put somewhere, that's okay. At least this covers the introduction to your business, the marketing of your business and how the business we run operationally on a day to day basis. Let's go through each of these items briefly. In the introduction, you're going to give a detailed description of the business and its goals. Now its goals. I do not mean in six months I'm going to make $100,000 or anything like that by its goals. I mean, where do you see this business in five years, 10 years and 15 years. Some people started business forever. They're going to run it until they're just done running in, The gonna retire or they're going to sell or whatever. But other people are looking not to run a business to want to get up and going, and then they're gonna flip it. They're going to sell it to somebody else and move on to another type of business that has a lot to do with your personality and your personal objectives. So give a detailed description of the business exactly what it is. And you remember we talked about those three critical questions. If you don't remember those, go back and review that lesson again. But those three critical questions well, what problem does it solve? What question does it answer? What desire does it fulfill? And so be sure, include that in the description, don't talk about the physical aspect of the business as much as you do with psychological aspect, list the skills and experience that you bring to the business. Remember, we talked about early on one of these lessons that people who started business based on the things that they know, either in their own profession or as a hobby and then a well tend to do better in business than those who don't. The exception of that can be in buying a franchise where they have an extensive training program. So list of skills and experience you bring. There's no bad answer here. There's only a truthful answer or an exaggerated one. Just be truthful about it because this is the starting line and you, if you want to get from here to where you are, you need to know where here is, and then you're going to learn what it is you need to learn and what it is you need to experience before you make your business is a successful one. Discuss the advantages that you and your business have over competitors. Look around and make sure I've I've talked to some people who had a business idea that I thought was doomed to failure. It just wasn't gonna work. One particular person I spoke with wanted to start a coffee shop where unemployed people could come and gather and and maybe look for work. I don't see a reason for that. Why we got one just for that purpose. When you can go to a coffee shop that's in existence right now and do that. So it was a business idea that I thought was unnecessary. The final problem you'll solve. What question? You will answer what desire you will will fulfill. We talked about these in an earlier lesson. I go over them a lot because they are absolutely critical marketing. You may have Ah, great business. But if no one knows anything about it, then you're getting nowhere. Discussed the products and services your company will offer and identify customer demand. Does anybody want this? Go back again and look the the affection where I talked about the $60,000 mistake where a person had a solution for a problem that did not exist and he spent $60,000 plus learning that So what demand is there for your product and or services that you intend to offer? Identify your market whether it's local or whether it's national or international regional . And how big is that market and where is it? Because that's where you're going to have to market. You're gonna have the promote in places where your customers are going to be found. Explain how your products and services will be advertised and marketed. I know this is gonna be sketchy, but you're going to talk about whether you're going to use radio and TV where they're going to use Craigslist, Facebook promotions, Internet promotions. Ah, sign twirler out on the street. Whatever it is that you may use, just talk about some of the ideas that you might have about how to market this inn. Earlier lesson. I talked about how you wear many hats, and this is the case you're gonna have to be. Not only the person runs the business, but unless you have a budget for it, you're gonna have to be the person who markets the businesses. Well, explain your pricing strategy and I didn't go into this too much. But when I own the Millwork Company in the Caribbean, my pricing strategy was to market and position ourselves at the high end of the market. We charged on awful lot of money because we were extremely good at what we did, and we want to define the end of the market that had deep pockets. But some people want to go to the budget side of things, and the farther down you go in your price cutting strategy, the more people you're going to have to compete with. So there's something to be said for that. You may have to, but then again, you may not have to. And this is where you begin to discuss and explain your pricing strategy and then, finally, operations. How's the business going to be managed from day to day? Are you going to manage it? Are you going to hire a manager to run the business, discuss your hiring and personnel procedures? Now? You may not get into that right now. Maybe only you. But eventually you're gonna have to hire people, and you need to think about what that means and how it is that you're going to go about it . Because of certain laws and regulations that have to be honored when it comes to hiring personnel, Discuss insurance, Lisa rental agreements. When you get ready to open. If you're running a brick and mortar store front somewhere or shop, the landlord is gonna want you to have insurance liability insurance for the property. So if someone gets injured there, he or she the landlord is not liable. And then, if you're gonna Lisa, you need to learn and be experience on what it means to lease or rent property somewhere, so that you don't get taken in the account for the equipment that's going to be necessary to produce your goods and services and then account for the production and delivery of those goods and services. Some of the equipment you might have most of it. You're probably gonna have to purchase or lease somewhere and determine what it is you're gonna need and what it is it's going to cost. In the section we talked about on on funding of business, there's a a budget form that you can download. It's an Excel spreadsheet you can download, and you can begin to list out What is this going to cost you to actually get up and going so that you can do the right sort of job that you need to do to satisfy your customers. In the next lesson, which will be the final one. We're going to recap everything and learn if you're ready to sign a lease. 19. Final Lesson: Well, we're almost there. This is the last lesson than our course on. So you think you want to start a business, and in this lesson, you're almost ready to sign that lease. I'm gonna help you make a decision whether to go ahead with your business idea or not. You're almost ready. Owning business is the dream of thousands, and it's well within the reach. Just about anyone with a dream and some information so they can make some educated action. The difference between success and failure is knowing a few things before you sign a lease before you buy tools and equipment before you purchase any inventory. Action is one thing. Intelligent, prudent, informed action is another. Going into business is always a risk. You're going to risk your time. You're going to risk money. You're gonna risk money of other people. You're gonna rescue reputation, make it a smart risk. I've shown you what to do and why. Here's what we've covered in this course the myths and realities of owning your own business, the five critical success factors of every successful business owner. The three questions you need to ask and answer before you invest even one thin dime. How to know how much money you'll need an easy to use startup budget form Where to find the money. You're gonna need the 10 things lenders look for before they loan you any money, whether you should buy a business to start one from scratch. The pluses in minus of a home based business the ins and outs of a franchise. Whether your business should be online in a brick and mortar store front or both which structure your business should take. Should you be a sole proprietor? Should you be a partner, should you be a corporation and why you probably do not need a business plan, but what you do need Instead, the course project included the worksheet on qualifying your business idea developing a projected start up budgets. So you know how much when you're gonna need to get started creating a list of funding sources in your area, focusing in on a business structure, deciding on a business location, completing a simple priest art business check. And then you're ready to make an educated and realistic choice. Been a pleasure to have you in this course. If I can help you leave comments anywhere in this course certainly below this lesson and I'll respond. Thank you