How to Start a Business (General Overview)

8/12/2019 How to Start a Business (General Overview)

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A Whizkins publication

A Quick Guide to Starting Your Own Business

Topics Include:

Business Planning

Determining Financial Needs

Choosing a Legal Entity

Whizkins

And Mo

How to Start a Business

Copyright 2014 Whizkins Corporation. All Rights Reserved.

MMillennial

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CONTENTSA Whizkins Guide


Payroll Taxes13

02 Create a BusinessModel

03 Create a BusinessPlan

04 Customer Discovery& Validation

04 FinancialProjections

05 DeterminingFinancial Needs

06 Choose A BusinessName

07 Choose A LegalEntity

08 GetProtection

08 Permits, Licenses &More

09 SelectA Location

10 Acquire InsuranceCoverage

12 HiringEmployees

12 Manage PayrollTaxes

13 Acquire Record-keeping Tools

14 LetsWrap Up!

Retail

Creatives

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How to Start a Business: IntroductionWelcome to Whizkins! Were super excited or you, and we congratulate you on taking the rst steps towardsmaking a living rom your passion. Our Whizkins team is always a click away i you have any questions.

Be ore you get started, i youre interested in building a team, check out some oour member proles or Whizkins Pages to see i theres anyone looking to pursuea passion similar as yours. You might just nd that per ect match to join you onyour project, but i you want to ride solo, well be here to support you!

Just one more small note. Starting a business is a marathon and not a sprint. Teres a lot o material here, soeel ree to always ask questions and take breaks. No one expects you to knock everything out in one weekend.

OK! Are you ready? ake a deep breath. Here we go!

Well cover starting a business at a very high level since different businesses have different steps along the way,and as you read through this guide, you can tweak things here and there to t to what youre doing. When youreready, you can take in more o our resources on the Whizkins website or specic needs.

I youre not sure about getting started or where to go, just log in and ask us, and well be glad to help youalong your way. While youre reading, you might nd you can jump sections, please eel ree to do so i yourecom ortable skipping. Remember, you have the whole Whizkins community behind you, and everyone at

Whizkins is here to help make creating, developing and managing businesses easier.

Again, welcome, and lets get started.

Step 1 - Create a Business Modelo begin, we recommend lling out our Whizkins exclusive idea-to-paper worksheet we call Eureka! Its ree,

only 14 questions long and you can download a version o our Eureka! orm rom our online store.


W A Quick Guide to Starting Your Own Business

Above: Small businesses sup-port the economic backbone

or many cities and counties.

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So what does our Eureka! orm do or you? It helps you quickly add more details to your idea without gettingyou started on a ull business plan. Essentially, the Eureka! helps you create a business model in a very easy way.(A business model is just a description on how you will create and distribute value to customers.) Once yourenished with the Eureka!, we can help you start building on top o this business model by using some o ourother resources, such as a our business plan template.

Step 2 - Create a Business PlanI youre on Step 2, great work on completing your Eureka, or completing another business model worksheet!So whats next? We recommend creating a business plan. Yep, we said that word: planning. It wont be too bad,though, because were here to assist you with it.

We have resources available on Whizkins or creating business plans. You can nd the Whizkins UltimateBusiness Plan in our online store. I you want to use our business plan, you certainly may, or you might want

to nd a pro essional on Whizkins who is offering business planstoo. Whatever is the easiest or you. I you need our help, just let usknow.

So what does a business plan include? Here are a ew items yourbusiness plan should include:

Executive Summary - Brie summary o everything youre doing.

Organizational Plan - Description about your business modelyou just worked on, in ormation about your purpose/mission andproblems youre solving.

Services/Products - Description about the products or servicesyou will be offering to solve your customers problems.

Intellectual Property - Tese are intangible assets, such as patents, trademarks and copyrights.

Strategic Plan - Description about your vision and how you plan to achieve it.

Marketing Plan - Description about the goals you want to reach, such as sell 10,000 units, and a descriptionabout how you plan to achieve these goals.

Financial Documents - Tis section might include budgets, nancial projections and use o proceeds.

oday, theres a push or skipping the business plan and go straight to the customers. We believe you have todo both, so you can have a business plan to document and detail how exactly youll approach your targetedcustomers and what youll be sharing with your targeted customers, especially since theyre going to havequestions, and youll want to have thorough answers.

Plus, business planning is critical or small businesses because it helps you think about various aspects o yourbusiness in ways that might not have previously crossed your mind. Failure to plan is one o the leading causeso why small businesses buckle, and the act youre reading this says youre already on the road to success, and

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youll be different rom all those other small businesses.

Teres a good chance that once you nish your business plan, you might change it many times afer you completeit. Tats OK! Tats good because it means youre being exible, and youre doing whatever it takes to succeed.

Step 3 - Customer Discovery & ValidationTese two items (customer discovery and validation) orm the core o whatsconsidered the lean start-up. Its a great way to evaluate your market potential be oreyou start spending a lot o your time and hard earned money. With customerdiscovery and validation, your business plan will come into play. Youll have a greatunderstanding o the people who have the problem, the problem youre solving andhow you plan to solve it. With this in ormation, you can talk to potential customersand try your idea out and change it as you go on. [As a small note, be sure to checkthe category below called Step 8 - Get Protection be ore publicly disclosing youridea. Tis privacy is especially important i you plan to obtain a patent on your idea.]As part o your customer discovery and validation process, you might also want togo ahead and build a prototype. Not sure how youll make your prototype? Weve got

you covered. On Whizkins, we have a ew business pro essionals who offer great services or obtaining patentswith your prototypes, and we also know o a couple o resources that can help you build your prototype.

I youre interested in learning more about Customer Discovery and Validation, please check out Steve Blanksbook, Te Startup Owners Manual: Te Step-by-Step Guide or Building a Great Company.

Step 4 - Financial ProjectionsWe know math isnt a popular topic, andspreadsheets are probably about as likeableas a root canal, but we have to talk aboutnumbers or a bit. We know many peopledont like numbers, so well try to makethis as painless as possible. Using yourEureka! orm and business plan you canstart making a list o the items you mightneed, such as materials, employees, sup-plies, inventory, marketing expenses, office

space and any other key resources.

One way to keep your operating expenseslow is to make use o extra space in your home (we have a great article about thehome office deduction on our site) and, i youre selling products, a virtual retailstore, such as the ones we offer members.

Lets talk about estimating revenue or a ew minutes, as youll need this estimate or preparing nancialprojections.


Above: Excel Worksheets area great tool or planning &analyzing your nancials.

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Prices

Estimating your revenue can be a little tricky. Your revenue is directly related to volume and price. A good startingpoint or establishing a price is to check out your direct competitive products and services. Tis in ormation will

be available in catalogs and websites. I there are no directly competitive products and services available, you canuse these methods to establish price:

Compute sales prices at a standard markup percentage above cost or a standard return on yourinvestment.

Set your prices intuitively to reect availability and value. Set prices based on competitive prices in a similar market.

Volume

Determining volume is a little trickier than determining price, especially i theres no historical data or youto make an estimate. In determining the reasonableness o your estimate on volume, you will need to evaluatemarket demand or the product, the effect o existing products in the market already and your ability to producethe estimated volume. Industry statistics and demographic data, such as the type made available by the U.S.Bureau o Labor or U.S. Census Bureau, can also help you make an assessment on your targeted market. (Psst,dont orget to check our articles, documents and blogs or in ormation on determining your market.)

With your estimated expenses and revenue, you can create a prospective prot/loss statement to help you visualize how your business might do when operating. When youre done with these projections, you will havea tool to help you determine i the potential market youre trying to capture will make your venture worthwile.Plus, youll also get an idea about how much startup and pre-operating costs might run.

We have some nancial templates available to get you going on your nancial projections, and as a Whizkinsmember, you are always ree to ask a pro essional online or advice or tips about putting together your projections.Feel ree to share your projections with a pro essional member online and receive eedback.

Step 5 - Determining Financial Needs


Plenty o Money Here: NYC Financial District

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Once youve gotten a projection together o what your expected expenses and revenue might look like over thenext year or two, you can begin to look into how you might und your venture. With your nancial projection,you can gure out the amount needed to get started and begin operations and subtract rom amount neededwhat you already have or might be willing to contribute, and the remaining amount is what you need to get

unded.

Tere are several routes you can go to nd additional nancing or your venture: partners, shareholders,employees, social and amily connections, vendor nancing, customers, angel investors, venture capital rms,banks and microlenders. For more in ormation on which nancing alternative might be best or your business,you can search our articles, blogs, documents, orums, pro essionals and business directory or potential options.Also, depending on your business, you might be able to take ull advantage o our undraising plat orm.

And remember, the Whizkins community is behind you, so eel ree to check around with other members orany thoughts or ideas on your business planning.

Congratulations

I youve completed Steps 1 - 5, good job! What do you think o the ull picture? You have your business model,a business plan, customers discovered and validated and a set o nancial projections. With our plat orm, youcan put all this in ormation into a single document, and share it with a mentor or pro essional. How cool is that?

Once youre done reviewing, you might be ready to rock and roll onto the next part or you might be think-ing, hmmm, I dont know about this just right now, which is ne. Dont stop just yet. Find out what has yourethinking the idea, and take a ew minutes to go back over all o your hard work, and see i you can tweak it justa little. Not sure how, ask Whizkins or one o our pro essional members!

Step 6 - Choose a Business NameSo heres another un part o this process. What will be the name o your business? You may have done this earlyin the process, and thats OK. I youre not sure just yet, here are a ew tips:

Choose a name that clearly communicates the product or service oryour business.

ry to avoid using your name in the title i you think you might sellyour business. For example, a potential purchaser named Dave mightnot want to own Bobs Bicycles.

Check with state and ederal trademark registries rst because we wouldeel bad i you ound an awesome name, led your documents, ordered

shirts and cool promotional products and then ound out the name isprotected rom use by you by the law.

Feel ree to have a business name different rom what you plan to namea legal entity, i you decide to choose one. For example, Bobs Bicycles might actually be the businessname or Robert International, LLC.

Learn more about trademarks below (or in our articles, blogs and documents). We have some greatarticles about picking business names.


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Step 7 - Choose a Legal Entityrying to choose a legal entity can be con using, which makes sense because

there are several to choose rom, but well break it down or you. We havea lot o tools that talk about the choice o legal entity, such as articles, blogsand documents. Plus, you are always welcomed to chat with a pro essionalto nd out which entity suits you best and have them work with you onling your document with the appropriate state government office.

Te choice o entity is important because each provides various benets(such as the ew we listed to the right) that might be benecial or the typeo business you might want to run. Tere are 5 basic options:

Sole Proprietorship Partnership Limited Liability Company (LLC) C-Corporation S-Corporation

Its not that one is better than the other, some are just better suited ordifferent purposes. For example, i you plan to have a large companywith shareholders, a C-Corporation might be the best option. Te morecomplicated the legal entity, such as a C-Corporation, the more ees thatwill probably be required to maintain the legal entity status.

For example, with a C-Corporation, you will have board meetings, boardminutes and higher incorporation ees. (More in ormation about legalentities can be ound in our articles, blogs and documents.) Tere are alsocertain tax implications involved with selecting a legal entity. So whileyoure thinking about which type might work best or you, please eel reeto check with some o our pro essional members who can help you set upyour legal entity.

Once you decide on a legal entity, you may check out your respective statescorporation division or ling the right paperwork. I you want to work as a

sole proprietorship without a legal entity, you might have to register a DBAor trade name with your state, county or local office. Te DBA or tradename registration is used to let others who transact business with you knowwho is doing business with them, such as Bobs Bicycles being the DBA orRobert International, LLC.

Lastly, or tax purposes, youll want to le a orm SS-4 with the InternalRevenue Service, which is a orm or receiving an Employer IdenticationNumber. Tis number acts in a way very similar to your social securitynumber and will be using or communicating with the IRS and certain oth-



Sole Proprietorship

Partnership

LLC

C-Corporation

S-Corporation

Unlimited Liability Income axable to Proprie

Unlimited Liability (GPLimited Liability (LP)

Income axable to Partn

Limited to Corporate AssIncome axable to Memb

Limited to Corporate AsseIncome axable to

Corporation

Limited to Corporate AssIncome axable to

Shareholder

Learn Moreabout Legal

Entities bySigning Up for

Whizkins!

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er public agencies.

Step 8 - Get Protection

rademarks, copyrights and patents. Navigating the waters with the United States rademark and Patent O -ce can be tricky, but there are a lot o resources and people available on Whizkins to help you. rademarks,copyrights and patents can work together to protect brands, written and lm works, products, processes anddesigns. Youll need these to keep your competitive advantage against competitors. Intellectual property helps toset up barriers o entry, which will make it more difficult or competitors to close in on your market. Just thinko how great it would be to have a product that no one else can build without your permission and everyone onthe planet wants to buy it. Awesome, right?

Trademarks/Servicemarks

rademarks and servicemarks are used to identi y a good or service rom a particular origin. Te value in thesemarks come rom the goodwill associated with them. For example, think about Nike and wherever you see itsname or Swoosh logo. What type o image does it portray in your mind? Wouldnt you like your name or logoassociated with a particular value in your customers minds? When you get that value, youll want to protect it

rom others who want to make money off all o your hard work in building that brand name, and that is whattrademarks and servicemarks do.

Patents

Patents are rights granted by the ederal government to an inventor. For a specic number o years, the ederalgovernment permits you to have a monopoly over your invention, giving you permission to license it or to notlicense and take legal action against anyone who makes, uses or sells your patented invention during the patentsli etime without your consent. In short, the patent must be novel, use ul and unobvious. Tere are severalbusinesses available on Whizkins to help you obtain a patent.

Copyright

Copyrights protect creative works that are literary or artistic. Sofware alls under copyright protection aswell. Copyright law protects creative works by preventing other rom reproducing, reprinting or copying thecreative works without permission o the author. Copyright protection is granted as soon as the author puts theworks into a tangible orm. For added protection, we suggest you le an application with the U.S. Register oCopyrights.

Step 9 - Permits, Licenses & MoreDepending on the type o business, you might have to register or re permits, business permits and specialother licenses to operate. You can check our business directory or your city halls and county offices, or speakwith a local pro essional about permits your business might require. Public offices and certain pro essionals willhave the in ormation regarding the appropriate licenses you will need to obtain be ore opening your doors.



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Please be mind ul however, that your state and, sometimes, ederal governments might be responsible or issuingpermits, licenses and certicates be ore you can operate. For example, a CPA license is issued by a state board versus a local office. Additionally, states generally issue sales tax certicates, and or some states, they might beresponsible or collecting county and local sales and use taxes too, but be sure to check to see i the county and/or local offices dont administer their own sales and use taxes.

As an employer, you will most likely have to register or state employer identication number with your statedepartment o labor and/or department o revenue. Tis number will be used or communicating with respectivestate offices or purposes o ling in ormation.

Step 10 - Select A LocationDepending on the nature o the business, you may or may not need a place o business away rom your home.A ew things to consider are proximity to your targeted market, availability o labor, traffic ow and possibility

or congestion, availability o signage, presence rom the street, proximity to competition, zoning and buildingrestrictions, compliance with various ederal laws, such as the Americans with Disabilities Act and proximity tomass transit hubs. Here are a ew other tips to consider or your business:

Retail Business Visibility raffic Flow Proximity to popular stores, such as anchor stores, i.e. big department stores Proximity to competitors Proximity to complementary stores, such as locating an active wear store next to a gym

Service-Based Business Proximity to customers (however, this is being changed with Whizkins!) Accessibility to properly skilled labor Image the location gives Availability o storage capacity Proximity to transportation networks, such as interstates, rails or waterways

Manufacturers Accessibility to properly skilled labor Accessibility to raw materials Proximity to transportation networks, such as interstates, rails or waters Capacity Affordable land or space

So once youve gured out a location, there are some other items you might want to review about yourlocation:


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Will it accommodate expansion? Does the layout work with your business? Will the acility meet your utility demands? Does it comply with the Americans with Disability Act? I it does not con orm with ADA, will you have to make the changes? Is there adequate parking? How close will you be located to police and re protection services? Who manages waste?

Te Whizkins plat orm has several resources or helping you nd a location,such as a listing or real estate pro essionals. Tese pro essionals, along withaccountants and attorneys will be able to help you determine the rights thatcome along with the property, whether you should lease or purchase, keyclauses in your lease or purchase agreements and more.

I youre interested in trying to navigate your location selection on yourown, please take a ew moments to search our articles, blogs, documents,and orums or in ormation on lease agreements.

Here are a ew items to pay special attention to while youre evaluating your options:

erm Cost Actual rentable square ootage ax responsibility Maintenance responsibility Insurance responsibility

Flexibility Exposure to risk

Step 11 - Acquire Insurance CoverageA must have in any business is insurance. Insurance not only protects the assets o your business, but it alsoprotects your customers rom any un ortunate accidents. Te key is to get just enough insurance, which can bea bit tricky. You dont want to underinsure, which will expose you to risk o paying out o pocket or what yourinsurance does not cover, and you dont want to overinsure where you are paying more in premiums than youneed to pay. Tere are are several types o insurance (not all are required) that you might encounter:

General Liability Workers Compensation (mandatory with employees) Business interruption Product liability or malpractice Car Insurance Key Person Insurance Health Insurance Disability Insurance Fidelity



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With Whizkins, our website will help you avoid one o the major pit alls that accompany obtaining insurance:the ailure to shop around or the best insurance value. Fortunately, not only can you shop around in one placeat Whizkins, but you can send us a request to look around or you, have instant chats with members who are in-surance agents or nd insurance providers in our directory. How cool is that! You can also talk with them abouttheir nancial stability, which is a good thing to do with insurance providers because the last thing you want is

or your insurance provider to go under right when you need them.

Another common pit all to watch out or is spreading yoursel across several carriers. Many insurance providersoffer price discounts or carrying all o your insurance needs with them. Plus, having one or two, instead o ouror ve, insurance providers helps reduce the risk you are purchasing redundant insurance coverage. Havingonly a couple insurance carriers mean you wont be paying twice or the same coverage.

Evaluating your risk can be a tough task or an entrepreneur, but no need to ear! We have resources availableor evaluate your risk exposure. As youre working with a pro essional or reviewing documents, blogs or articles

on Whizkins, here are a ew things to keep in mind:

Identi y your exposures. Determine the magnitude or each exposure. Identi y the coverage you will need or each exposure. ry to lump coverages together by similar events, or example, general liability and automobile

property might be one carrier and business interruption and property might be or another. Tis willmake the claim process easier.

Evaluate deductibles and premiums with potential insurance providers that might cover your exposure. Evaluate the prices and stability o the insurance providers. Make sure the exposure with the largest risk o loss is covered rst.


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A Quick Guide to Starting Your Own BusinessW

Step 12 - Hiring EmployeesOnce you move rom non-employer to an employer, the business game changes a bit in terms o regulatoryrequirements. Here are a ew items you might need to keep in mind as you start your hiring process:

Preparing job descriptions Advertising available jobs Reviewing applications Interviewing prospects Checking with re erences Complying with the American Disability Act and citizenship requirements In orming new hires o personnel policies In orming ederal government o new hires

Fortunately, we have a lot o resources on the Whizkins plat orm to help you manage the hiring process. Wehave personnel policies, such as Drug and Alcohol Policies, Equal Employment Opportunity, Vacation Policiesand more.

Hiring can be a un process, but youll have to handle it with care because a lot o rules surround the processo hiring and working with employees. Te requirements above might also change i you are working withcontractors. Contractors might have agreements that list out responsibilities and obligations o the contractingparties. Contractors are less o an administrative burden, but you generally will not have much control over howthey go about doing your work.

Whizkins is also a great hotbed or nding talent. With our individual and student proles, you can learn about

the type o work members truly love doing. All you would have to do is search or those certain qualities, reviewtheir proles, ask a ew questions and set up an interview. Tis process helps stop you rom losing money rompricey recruiters and other talent search ees.

Step 13 - ManagePayroll TaxesOk, we will admit. Payroll taxes arent themost un part o the operating process.Guess what though! We have plenty oresources to help you do them (search ourdocuments, blogs or articles), or i youwant, you can nd someone or a companyto administer them or you.

Tere are plenty o payroll processingcompanies that take out all the headacheso withholding state and ederal payroll taxes and ling the respective returns on time. Plus, we might have some

members available who have experience with managing payroll taxes, and they might be looking to help out

Copyright 2014 Whizkins Corporation. All Rights Reserved.12


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part-time or ull-time.

I youre going to try to manage payroll taxes on your own, we salute you! Tere is a signicant amount oin ormation about withholding and ling returns out there. Weve tried to condense some o that in ormationon our plat orm with our articles, blogs, documents and orums. Here are the items youre going to be looking

or:

Quarterly Returns Form 941 (employers quarterly payroll tax return) State and local quarterly payroll tax returns (check to see i you are required to le monthly) State unemployment returns. Note: some states have other tax requirements, such as employment development and training taxes.

Annual Returns Form 940 (employers annual ederal unemployment tax return) Form 944 (employers annual payroll tax return) Forms W-2 (employment wage and tax statement) Form W-3 (transmittal orm) Forms 1099 (these orms are required or specic types o payments above certain minimum amounts,

e.g. above 600.00 or contractors) Form 1096 (transmittal orm) State and local annual payroll tax returns State annual unemployment tax returns.

Step 14 - Acquire Recordkeeping ToolsFor all that work youve done, youll want to make sure you keep up with therevenue youll be generating rom it and the assets you use to generate that record.Tere are a variety o programs available to help you keep track o recordkeeping,such as an accounting in ormation system.

Tese are systems on your computer that keep track o your bookkeepingand nancial reporting. A lot o our business solutions providers online offeraffordable services to help you keep track o your records. You can nd more inour business directory.

Be ore you start operating, youll also want to have in place procedures andpolicies surrounding inventory, cash and other assets that are critical to youroperations. We have articles, blogs, documents, and orums available to help youpinpoint how to best protect your assets.

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A Quick Guide to Starting Your Own BusinessWLets Wrap Up!Now, i youre in the retail industry or restaurant industry, youll have a ew more steps to go, such as acquiringinventory, purchasing ood supplies, training employees, and more. We have more in ormation on things to do orspecic industries in our articles, blogs, documents, and orums. Please be sure to check your ellow members as

there are pro essionals, experts, businesses and indivduals who might be able to help out, i you need it.So gearing up is a lot work, but this is what Whizkins is here to do: make this process easier. For each step, theresources are all available on Whizkins to help. No more searching other websites or pulling out dusty materials

rom the library. You can work on your business idea and pull resources and talk to pro essionals on Whizkins asneeded.

Disclaimer: Our solutions are designed to provide you with quick, reliable and affordable in ormation in regard to accounting, nance,law, management, marketing, tax, technology and other business areas. We are neither a public accounting rm nor law rm and, as such,we are prohibited rom providing both public accounting services and legal advice. I the services o a public accounting or attorney arerequired, please seek the assistance o a licensed CPA or CPA rm or attorney, respectively. Some in ormation provided on our websitemay originate rom third parties. Such in ormation is not guaranteed by the owners, operators, administrators or otherwise o this site tobe accurate, complete and compliant with statutes, guidance, best practices, rulings or any other orm o regulation. Content provided onthis site shall not be deemed to be tax, legal, nancial or other advice and we encourage you to conrm the accuracy o the content. Byyour use o this site and any o our products, you hereby accept and understand the oregoing statements. For more in ormation on our

terms and policies, which are incorporated herein by re erence, please re er to our privacy policy and terms o service. LDA #167Exp. Date: July 3, 2015, Santa Clara County, CA

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