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Opportunity Knocks
Business Planning 101: Keep it Simple (Part 1)
By Valerie Young
In a
famous Far Side cartoon a school boy asks to be excused from class because he
says, “My brain is full.” Whose isn’t? In today’s information- and
communication-heavy world most people are operating on perpetual overwhelm. So
it’s no surprise that if something feels even remotely complicated our
unconscious kicks in to steer our already too full brain to less taxing waters…
like lying on the couch watching (and then subsequently feeling like) the
Biggest Loser, playing mindless computer games, or compulsively checking email.
Even
people who desperately want to ditch their day job and work for themselves
procrastinate because it feels too… well, hard. All that paperwork, the
government red tape, all the complicated legal and accounting issues, writing a
big business plan, getting a loan… Ai yi yi!
If I
actually had to think about all that stuff my brain would be full too. But
that’s the thing – despite being self-employed for over a decade now I don’t
think about any of it. Why? Because other than seeing my accountant once a year
at tax time, my business – like most small home-based businesses – was
incredibly simple to set up and is even simpler to run.
I’m not
alone. Most small businesses and home-based businesses especially, are not
terribly complicated to start. Businesses like consulting, art making, web site
design, or freelance writing don’t require you to rent space, hire a bunch of
employees, or otherwise building an empire. Yet, I’ve seen far too many aspiring
self-bossers retreat to their cubicles after receiving overly complicated – or
sometimes wildly flawed – advice from “business experts.”
For
example, if you plan to start a small, one-person home-based business you can
probably ignore the advice of business experts to run out and hire a high priced
attorney and accountant. Don’t get me wrong. Both advisors can be useful. But in
the eleven years I’ve been in business, I’ve used an attorney only once and that
was to review a licensing agreement.
I also
have an accountant. I see him exactly once a year at tax time. Other than that,
like me, you can probably do everything right on your home computer using a
simple bookkeeping program like Quicken or Quickbooks. (Tip: If you plan to do
online banking, you may want to check to see which software your bank syncs
with.)
For the
first nine years of my business I did my own bookkeeping – and I hate anything
remotely mathematical. But if you can handle the basics of personal banking –
deposit your earnings and pay the bills – then you can manage a business
checking account. Better yet, pay a local bookkeeper $25-$35 an hour to come in
a couple times a month. It will be well worth the money and you can use your
time to build your business. Whether you do your own bookkeeping or hire it out,
to ensure you take advantage of every possible tax deduction I suggest you have
an accountant prepare your taxes.
A Common
Sense Take on Incorporation
Any
advice offered here is based on a combination of my own personal experience and
common sense. Everyone’s situation is different, so do your homework before
making any decisions about your business structure and/or the need for
professional advisors.
Having
said that, it drives me crazy when business start-up experts advise aspiring
entrepreneurs to run out and hire a pricy attorney and incorporate. Obviously
some businesses should be incorporated. In addition to liability issues, in some
cases there are certain tax advantages and disadvantages to incorporation. (For
a comprehensive article on the pros and cons of incorporation from Entrepreneur
magazine,
click here or go to
TinyURL.com/gcleg.)
In my
case any tax breaks from incorporation are not worth the hassle of the
additional paperwork and filing required. My guess is, unless you plan to own a
brick and mortar business, see clients or customers in your home, open a skate
board park, or otherwise start a business where liability is a factor, you
probably don’t need to incorporate either.
Take my
client Marcelle. For the past few years Marcelle had been saving money to start
a business offering personal empowerment workshops for other women of color. It
broke my heart to hear Marcelle tell how she’d just dropped over $2,000 to have
an attorney incorporate her one-person workshop business as a limited liability
corporation (LLC). When I asked what on earth compelled her to incorporate,
Marcelle told me an attorney had “put the fear of God” into her. All it would
take, said the attorney, was one lawsuit, and Marcelle and her husband could
lose their house.
I’m not
an attorney. But unlike Marcelle I’ve been at this training business for over
twenty-five years. Common sense and personal experience tell me that the chances
of being sued by a disgruntled workshop attendee are so remote as to be
laughable. Over the past two-plus decades I’ve conducted hundreds of workshops
attended by literally tens of thousands of people. During that time not only has
no one sued me, but the likelihood of my ever being sued is next to zero.
Unless
Marcelle’s workshop includes some high risk activity like fire-walking or she
makes some very specific claims that, for example, guaranteeing workshop
participants that her program will reap them a certain level of financial
success, it is all but inconceivable that she would ever see the inside of a law
office never mind a court. If a workshop participant doesn’t like Marcelle’s
seminar then the worse case scenario is they’ll ask for a refund – which, like
any reputable business person, Marcelle would promptly give them.
What Is In a
Name?
Years ago
I created a line of greeting cards under the name Making Waves. Turns out there
was a hair salon a few towns over with the same name. Since our two enterprises
had nothing to do with each other, I didn’t care and neither did they. Marcelle
hadn’t thought much about her business name until her attorney convinced her to
pony up another $300 for the attorney to conduct a legal name search meant to
once again keep her from landing penniless on the streets as a result of an
expensive lawsuit.
Naturally
if you’re planning to spend thousands of dollars on signage for your storefront
or on a big ad campaign you should definitely do a name search. But, if like
Marcelle, the biggest investment in your business name is $25 for business
cards, then that’s exactly how much you’ll be out if you have to print new ones.
Paying
for a name search goes back to common sense and proportion of injury. If it
turned out that another company actually does have a legal claim on Marcelle’s
business name do you really think their first course of action would be to drag
her into court? No company wants to spend money on attorney and court fees if
they can help it. A far more likely scenario is that the offended company would
have their legal counsel send Marcella a letter telling her to cease and desist
using their name – at which point she would.
Was
Marcella’s attorney trying to take advantage of her? Not at all. Instead like
any good attorney she was doing what she was trained to do, which is to protect
her client against possible litigation. Common sense tells us though that the
risk of losing a home as a result of a disgruntled attendee at a personal
empowerment workshop or the inadvertent use of an existing business name is next
to nil. The $2300 that Marcelle spent on unnecessary legal protection could have
been better invested in marketing her business.
For
example, instead of protecting her business name Marcelle could have used her
hard-earned cash to get a great name! If you want to be confident that your
business name is not already taken or you are still shopping around for a name,
marketing guru and “Head Stork” at
NamedAtLast.com,
Marcia Yudkin can help. Marcia offers an impressive list of resources for
Do-It-Yourself-Namers allowing you to search the availability of company names
in the U.S., Canada, U.K, Australia, and New Zealand, find books and other
products, and check out the originality of tag lines. (For information on how
non-profits can get a free name and tag line see Resources for a Change.)
Or, for a
very reasonable $997, Marcia and her crack team of international “storklets,”
will come up with ten original names from which you can choose. Now that’s what
I call money well spent!
Are there
times when you need to incorporate, retain an attorney, or hire an accountant?
Of course. But most businesses really can Keep it Simple. Spend your money on
things that will grow your business – building your expertise, hiring a good
copywriter, getting a professional looking web site, finding a killer business
name. Keep it simple and your head really will be full – with ideas!
Take a
break from figuring out how to change your life by changing someone else’s life:
VolunteerMarch.com is a national clearinghouse of volunteer opportunities.
For Katrina specific opp’s
CommonGroundRelief.org
About the Author
Outside the job box expert, Valerie Young,
abandoned her corporate cubicle to become the Dreamer in Residence at
ChangingCourse.com offering resources to help you discover
your life mission and live it. Her career change tips have been cited in
Kiplinger's, The Wall Street Journal, USA Today Weekend, Woman's Day, and
elsewhere and on-line at MSN, CareerBuilder, and iVillage.com. An expert on the
Impostor Syndrome, Valerie has spoken on the topic of
How to Feel as Bright and Capable as Everyone Seems to Think You Are
to such diverse organizations as Daimler Chrysler, Bristol-Meyers Squibb,
Harvard, and American Women in Radio and Television.
Find more articles written by
Valerie at
ChangingCourse.com/articles/ | 
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