Starting a Business
 

Any of you guys run or ever owned a business? Got experiences to share? Knowledge to impart? Advise to dispense?

Re: Starting a Business
 

That's a pretty open ended question. Are you starting from ground zero? What kind of business?

Re: Starting a Business
 

Yes, don't do it unless you are willing to partake in a long period of anguish until it all pays off. It is a lot of work and very time consuming. Everyone wants to be paid off but nobody wants to pay you on time.

Make sure that you have enough start up cash to sustain yourself and operations for a long period of time. If you do not have as much start up cash as you projected as necessary in your business plan and lenders will not give you as much as you need because they are risk adverse; don't start operations. Chances are you will need as much cash or credit as you projected and possibly more.

Partners can be a good thing to alleveate financial burden, but be forwarned, some guys do not have the same vision or ethics as you do. Be prepared to fight many battles if you guys are not on the same page.

I would tell you more, but I am in a rush. I wish you luck.

Re: Starting a Business
 

Never owned, but there's a couple things:

Start learning about tax deductions.

Start getting the basics of accounting down.

IRS has a little checklist: [url=http://www.irs.gov/businesses/small/article/0,,id=98810,00.html]Checklist for Starting a Business[/url]

Oh, and being a little unethical isn't a bad thing if survival is the issue. :FIREdevil:

Re: Starting a Business
 

[quote=Angry;866610]Yes, don't do it unless you are willing to partake in a long period of anguish until it all pays off. It is a lot of work and very time consuming. Everyone wants to be paid off but nobody wants to pay you on time.

Make sure that you have enough start up cash to sustain yourself and operations for a long period of time. If you do not have as much start up cash as you projected as necessary in your business plan and lenders will not give you as much as you need because they are risk adverse; don't start operations. Chances are you will need as much cash or credit as you projected and possibly more.

[B]Partners can be a good thing to alleveate financial burden, but [U]be forwarned, some guys do not have the same vision or ethics as you do. Be prepared to fight many battles if you guys are not on the same page[/U].[/B]
I would tell you more, but I am in a rush. I wish you luck.[/quote]

all great advise and the bolded part is the best advice you could ever have. i recently left the company i started because my bussiness partners (my best friend and his dad) were completely worthless and unreliable. if you do get partners i would advise against them being anyone you are close to, it can drive you apart very quickly, and in my opinion it's not worth it.

Re: Starting a Business
 

[quote=JoeRedskin;866608]That's a pretty open ended question. Are you starting from ground zero? What kind of business?[/quote]

I intended it to be an open ended question so people can share whatever they think is appropriate.

I'm in the process of starting a software company with my time and money and if things go well I'm hoping to bring on some venture capitalists.

Re: Starting a Business
 

[quote=Angry;866610]Yes, don't do it unless you are willing to partake in a long period of anguish until it all pays off. It is a lot of work and very time consuming. Everyone wants to be paid off but nobody wants to pay you on time.

Make sure that you have enough start up cash to sustain yourself and operations for a long period of time. If you do not have as much start up cash as you projected as necessary in your business plan and lenders will not give you as much as you need because they are risk adverse; don't start operations. Chances are you will need as much cash or credit as you projected and possibly more.

Partners can be a good thing to alleveate financial burden, but be forwarned, some guys do not have the same vision or ethics as you do. Be prepared to fight many battles if you guys are not on the same page.

I would tell you more, but I am in a rush. I wish you luck.[/quote]


Great advise.

Re: Starting a Business
 

I free-lanced as a web designer and also did some social media before I started an official business partner with someone else. I've been doing it since June and I have come to the realization I don't like it. Ha.

Since we are a web company, we had very low expenses and very low barrier to entry, so we did not have too much hardship starting to pick up clients and getting some kind of cash flow, but i'll tell you, it is very FEAST OR FAMINE. I would go through cycles of all sorts of lengths where I'd be earning more than i'd ever earned before (I'm 23 so the bar is pretty low) and then going forever without ever seeing another dime.

Also, be prepared to wear all the hats in the business. I know everyone reads that and goes of course, but it's easy to start your own business doing something you love to do but really only spend 20% of your time doing it -- the rest of it is sales, networking, accounting/admin, and other stuff. If I counted up my time of what i actually do, I don't spend a lot of time doing what I like. I think that is probably the biggest problem.

And I second the whole warning about Partnership. It is very difficult to be on the same page and cover the right skill sets to make it work long-term. After only working with my partner for 3 or 4 months, we had to have a huge meeting and we weren't sure if we were going to make it through each other's different way of doing things. Things finally worked out, but I don't really like what I'm doing, so I'm getting into the wellness field!

Re: Starting a Business
 

Business relationships are made to be broken. Can't think of one that ever really lasted.

Re: Starting a Business
 

Friends usually don't make good business partners.

Know your competition, and know your market.

Re: Starting a Business
 

[quote=saden1;866617]I intended it to be an open ended question so people can share whatever they think is appropriate.

I'm in the process of starting a software company with my time and money and if things go well I'm hoping to bring on some venture capitalists.[/quote]

Leveraging skills you already have is huge, I know you're a software guy already, so it's wise to stick with a field you know. Sounds like a field that can keep overhead expenses and working capital really low, at least in the startup phase, that's a plus. I imagine all you need is a powerful PC and maybe a server or two?

Try to develop a few software products as far as you can on your own before hiring others or investing further. Venture capitalists will be much more likely to invest if you show them that you've developed a product or two. Hopefully you can even demonstrate that there is a demand for your product first.

You're going to be dealing in intellectual property, so once you've developed a product to the point where it's nearly ready to go to market, consult with an intellectual property attorney about the process for patents, copyrights, and otherwise protecting yourself.

When you get to the point where you need funding in order to take the next step with your business, give careful consideration to the the financing. Venture capitalists will often want an equity investment in your company. They'll give you funds in exchange for a stake in your business. So if they give you say $100,000 in exchange for a 25% stake in your business, that will entitle them to 25% of all future profits. But the plus is that if your company fails you don't owe them a dime - you won't be liable for paying them back.

The other option is straight up debt. Simply secure a loan and pay regular interest. You can often find loans with a 'cash flow window' structured in such a way that you make only interest payments for a given period of time before having to pay down the principal. You can deduct interest payments against your business's taxes, so you'll reduce your tax liability which gives you cash flow relief while you're in the startup phase.

Taking on a loan has the advantage of allowing you to retain 100% ownership in your business, giving you the right to 100% of the profits. The con is that if your business fails, you'll need to pay back the debt. You'll be liable for doing so, which can thrust you into bankruptcy. There's obviously risk there, but the reward is greater as you retain the rights to 100% of cash flows & profits.

But that brings me to my next point, you can minimize your personal risk by incorporating. Once you've got a product to the point of development and you're ready to consider financing options to fuel growth and you're ready to consider intellectual property lawyers, then it may be wise to talk to said lawyer about incorporating. Incorporating allows you to avoid personal liability in the event your business fails. Debtors will not be able to place liens on any of your personal assets, incorporating essentially builds an unbreakable wall between your business assets and your personal assets. If your business fails when incorporated, your debtors can only place liens against your business assets. If your business fails under a 'sole proprietorship' model (where you simply own the business privately, sans incorporation), they can come after your personal assets.

Good luck saden. Hit me up if you want to discuss anything further, I'll be glad to lend whatever help I can.

Re: Starting a Business
 

Forgot to mention, part of my job entails strategic market analysis. I administrate our market and demographic databases. Its of course centered around healthcare and the Philadelphia market because obviously that's where we're located, but if you think you need any demographic data for markets you're considering targeting, I can probably work something out quietly and get it to you.

I'd imagine software is something you'd peddle to other software firms, or peddle electronically via the internet. So demographic information on a particular region or target market may not be relevant to your business model. But if you think you'd have a use for it and want to talk more, feel free to PM.

Re: Starting a Business
 

A family member of mine started up a tech business in the late 90's that wasn't a dotcom after having a well paying job at one of the major hardware companies. Apparently he's still feeling the effects of it a decade later and it caused a lot of strain on his marriage. I'd say go for it so long as your single and don't have any kids.

Re: Starting a Business
 

Is it in the Traveling Pharmacy field?

Re: Starting a Business
 

Got your business plan together?

Re: Starting a Business
 

[quote=saden1;866617]I intended it to be an open ended question so people can share whatever they think is appropriate.

I'm in the process of starting a software company with my time and money and if things go well I'm hoping to bring on some venture capitalists.[/quote]

What type of monety does it take to open a software company and whats the biggest cost?

Re: Starting a Business
 

[quote=Schneed10;866691]Leveraging skills you already have is huge, I know you're a software guy already, so it's wise to stick with a field you know. Sounds like a field that can keep overhead expenses and working capital really low, at least in the startup phase, that's a plus. I imagine all you need is a powerful PC and maybe a server or two?

Try to develop a few software products as far as you can on your own before hiring others or investing further. Venture capitalists will be much more likely to invest if you show them that you've developed a product or two. Hopefully you can even demonstrate that there is a demand for your product first.

You're going to be dealing in intellectual property, so once you've developed a product to the point where it's nearly ready to go to market, consult with an intellectual property attorney about the process for patents, copyrights, and otherwise protecting yourself.

When you get to the point where you need funding in order to take the next step with your business, give careful consideration to the the financing. Venture capitalists will often want an equity investment in your company. They'll give you funds in exchange for a stake in your business. So if they give you say $100,000 in exchange for a 25% stake in your business, that will entitle them to 25% of all future profits. But the plus is that if your company fails you don't owe them a dime - you won't be liable for paying them back.

The other option is straight up debt. Simply secure a loan and pay regular interest. You can often find loans with a 'cash flow window' structured in such a way that you make only interest payments for a given period of time before having to pay down the principal. You can deduct interest payments against your business's taxes, so you'll reduce your tax liability which gives you cash flow relief while you're in the startup phase.

Taking on a loan has the advantage of allowing you to retain 100% ownership in your business, giving you the right to 100% of the profits. The con is that if your business fails, you'll need to pay back the debt. You'll be liable for doing so, which can thrust you into bankruptcy. There's obviously risk there, but the reward is greater as you retain the rights to 100% of cash flows & profits.

But that brings me to my next point, you can minimize your personal risk by incorporating. Once you've got a product to the point of development and you're ready to consider financing options to fuel growth and you're ready to consider intellectual property lawyers, then it may be wise to talk to said lawyer about incorporating. Incorporating allows you to avoid personal liability in the event your business fails. Debtors will not be able to place liens on any of your personal assets, incorporating essentially builds an unbreakable wall between your business assets and your personal assets. If your business fails when incorporated, your debtors can only place liens against your business assets. If your business fails under a 'sole proprietorship' model (where you simply own the business privately, sans incorporation), they can come after your personal assets.

Good luck saden. Hit me up if you want to discuss anything further, I'll be glad to lend whatever help I can.[/quote]



[quote=Schneed10;866692]Forgot to mention, part of my job entails strategic market analysis. I administrate our market and demographic databases. Its of course centered around healthcare and the Philadelphia market because obviously that's where we're located, but if you think you need any demographic data for markets you're considering targeting, I can probably work something out quietly and get it to you.

I'd imagine software is something you'd peddle to other software firms, or peddle electronically via the internet. So demographic information on a particular region or target market may not be relevant to your business model. But if you think you'd have a use for it and want to talk more, feel free to PM.[/quote]

Thanks for the advise. I will have to get back to you on the demographics stuff and further advise.

Re: Starting a Business
 

[quote=firstdown;867384]What type of monety does it take to open a software company and whats the biggest cost?[/quote]

Not a whole lot of money required. The biggest cost is the initial time I have to invest in developing the software.

Re: Starting a Business
 

[quote=diehard;867301]Got your business plan together?[/quote]

I'm working on the business plan right now and I have no business partners yet. Still need to flush things out a bit more.

Re: Starting a Business
 

[quote=saden1;867418]Not a whole lot of money required. The biggest cost is the initial time I have to invest in developing the software.[/quote]

I would say that marketing the software is going to be your biggest cost and what makes or breaks your business. Go on line and do a search after search like your a customer looking for your product and that should give you an idea on some ways to market your product. I'll have to say that's where some trial and error is going to happen. I have waisted thousands of dollars on advertising that produced nothing.

Re: Starting a Business
 

How is it going Saden? What type of business have or were you trying to start?

Re: Starting a Business
 

[quote=Angry;892411]How is it going Saden? What type of business have or were you trying to start?[/quote]


I missed this.

It's going pretty good though I've had a few setbacks. I'm having an issues with what I thought was a partner. He is the business guy and I'm am the software guy but it seems that I am to do everything. In any case, I've dropped him though I suspect if I am successful he'll be suing me. I've also had to deal with a few other things related to the software stack I was using. I changed the back-end which set me back about 6 weeks but it had to be done. I'm back on track now and implementing core features.

There still a lot of stuff that has to be done but right now I'm working on creating storyboard and pitch deck. I am trying to everything the right away and if all goes well we will have a demo and pitch deck to show angle investors in September.

Anywho, I may call upon you warpathers to take a survey and beta-test the product when it is complete.

p.s. Anyone have experience severing ties with a business partners? Any suggestions of how to do it best.

Re: Starting a Business
 

In writing with clear and unequivocal statements. If there is anything amicable left in the relationship, enter into an agreement that terminates the relationship and in which he rescinds all rights to any interest in the company including any rights in earnings derived from his past contributions.

If he has been paid or put money into the business, make sure that it is accounted for and he agrees that it has been accounted for.

If he has received all the compensation he is going to receive, spell that out and make clear he is owed nothing else. If he is going to receive compensation to waive all interest in the company's future earnings, spell out the compensation and the waiver.

If it is not amicable, do all the same things send it to him asking for him to set forth his disputes, if any, in a set time frame. Send it registered/certified, etc. Serve it on him by private process server if you have to. Once the deadline passes, if he has not responded, send a letter indicating the partnership is over in accordance with the terms of the prior letter.

Mercilessly put things in writing, no detail is too small and be clear that he has waived, either by agreement or by his failure to timely dispute after notice, any future interest in the business and has similarly waived any money owed him for his past contributions.

If he is willing to agree, it is easy. If not, paper, paper and more paper. Remember, you want him out of the past and future of the business. You want to owe him nothing for the past and extinguish any claims he would try to bring in the future.

Did you have a partnership agreement to begin with- either oral or written - concerning investments in and proceeds of the business?

Re: Starting a Business
 

Send him one of these with a letter to go pound sand.

[IMG]http://edaraksti.files.wordpress.com/2011/12/dick-head-tshirt.jpg?w=627[/IMG]

I would quit using any words like partner because he can use that against you.

Re: Starting a Business
 

[quote=JoeRedskin;921011]In writing with clear and unequivocal statements. If there is anything amicable left in the relationship, enter into an agreement that terminates the relationship and in which he rescinds all rights to any interest in the company including any rights in earnings derived from his past contributions.

If he has been paid or put money into the business, make sure that it is accounted for and he agrees that it has been accounted for.

If he has received all the compensation he is going to receive, spell that out and make clear he is owed nothing else. If he is going to receive compensation to waive all interest in the company's future earnings, spell out the compensation and the waiver.

If it is not amicable, do all the same things send it to him asking for him to set forth his disputes, if any, in a set time frame. Send it registered/certified, etc. Serve it on him by private process server if you have to. Once the deadline passes, if he has not responded, send a letter indicating the partnership is over in accordance with the terms of the prior letter.

Mercilessly put things in writing, no detail is too small and be clear that he has waived, either by agreement or by his failure to timely dispute after notice, any future interest in the business and has similarly waived any money owed him for his past contributions.

If he is willing to agree, it is easy. If not, paper, paper and more paper. Remember, you want him out of the past and future of the business. You want to owe him nothing for the past and extinguish any claims he would try to bring in the future.

Did you have a partnership agreement to begin with- either oral or written - concerning investments in and proceeds of the business?[/quote]

Or more succinctly put....hire a lawyer.

Re: Starting a Business
 

[quote=JoeRedskin;921011]In writing with clear and unequivocal statements. If there is anything amicable left in the relationship, enter into an agreement that terminates the relationship and in which he rescinds all rights to any interest in the company including any rights in earnings derived from his past contributions.

If he has been paid or put money into the business, make sure that it is accounted for and he agrees that it has been accounted for.

If he has received all the compensation he is going to receive, spell that out and make clear he is owed nothing else. If he is going to receive compensation to waive all interest in the company's future earnings, spell out the compensation and the waiver.

If it is not amicable, do all the same things send it to him asking for him to set forth his disputes, if any, in a set time frame. Send it registered/certified, etc. Serve it on him by private process server if you have to. Once the deadline passes, if he has not responded, send a letter indicating the partnership is over in accordance with the terms of the prior letter.

Mercilessly put things in writing, no detail is too small and be clear that he has waived, either by agreement or by his failure to timely dispute after notice, any future interest in the business and has similarly waived any money owed him for his past contributions.

If he is willing to agree, it is easy. If not, paper, paper and more paper. Remember, you want him out of the past and future of the business. You want to owe him nothing for the past and extinguish any claims he would try to bring in the future.

Did you have a partnership agreement to begin with- either oral or written - concerning investments in and proceeds of the business?[/quote]

He hasn't put a single cent into the business while I have put in nearly 2K thus far not to mention enormous amount of time and energy. No one has been paid for any services rendered and won't be paid for some time. You get paid in equity and he hasn't lived up to his end.

We have had oral conversation about going into partnership and his contribution so far has all been oral in nature (mentoring if you will). We don't have any legal partnership and the couple times I have brought the subject up for discussion he said we aren't there yet and need to spend our money wisely (lean startup model, etc). Now, we are ready to take the next step and it make sense to get all our legal ducks in a row but he has been a no show several times for our meetings and frankly I am tired of his lack of effort and commitment.

I am meeting with a tech startup law firm this Friday to create a formal business partnership with my other partners and represent our company in all future legal matters. I intend to bring up the issues with this particular partner and hopefully they will do all the work in legally serving ties with him.

Re: Starting a Business
 

[quote=saden1;921002]I missed this.

It's going pretty good though I've had a few setbacks. I'm having an issues with what I thought was a partner. He is the business guy and I'm am the software guy but it seems that I am to do everything. In any case, I've dropped him though I suspect if I am successful he'll be suing me. I've also had to deal with a few other things related to the software stack I was using. I changed the back-end which set me back about 6 weeks but it had to be done. I'm back on track now and implementing core features.

There still a lot of stuff that has to be done but right now I'm working on creating storyboard and pitch deck. I am trying to everything the right away and if all goes well we will have a demo and pitch deck to show angle investors in September.

Anywho, I may call upon you warpathers to take a survey and beta-test the product when it is complete.

[B]p.s. Anyone have experience severing ties with a business partners? Any suggestions of how to do it best[/B].[/quote]

Ironic that you would ask. Whoever is the majority owner has the upper hand. If you are equal partners then you both must come to a formal agreement. The easiest way and what I did was (although I was the majority owner) formally resign from the company and turned over all intrest to my partners. After my resignation we drew up some paperwork and held a formal debriefing. Basically you guys will have to come to terms on some things (the product etc.). If you guys cannot come to terms then I'm sorry to say that there is probably no way to avoid a lawsuit.

As for me in case you were wondering I may start another company later on, but I will not have a partner(s).

If you have nothing in writing about a partnership, I would say you have about 90% of the battle won. The issue is what state you reside and if verbal contracts constitute a legal binding agreement. I am not an attorney, but did sleep at a Holiday Inn last evening. Maybe one of the legal warpathers can comment to this regard.

Re: Starting a Business
 

[quote=saden1;921038]He hasn't put a single cent into the business while I have put in nearly 2K thus far not to mention enormous amount of time and energy. No one has been paid for any services rendered and won't be paid for some time. You get paid in equity and he hasn't lived up to his end.

[B]We have had oral conversation about going into partnership and his contribution so far has all been oral in nature (mentoring if you will). We don't have any legal partnership[/B] and the couple times I have brought the subject up for discussion he said we aren't there yet and need to spend our money wisely (lean startup model, etc). Now, we are ready to take the next step and it make sense to get all our legal ducks in a row but he has been a no show several times for our meetings and frankly I am tired of his lack of effort and commitment.

[B]I am meeting with a tech startup law firm this Friday to create a formal business partnership with my other partners and represent our company in all future legal matters. I intend to bring up the issues with this particular partner and hopefully they will do all the work in legally serving ties with him[/B].[/quote]

After reading all of that, you can kick him to the curb with nothing more than a loud and thunderous "Go Away!" If there is nothing on paper that you have signed stating that he has any stake in your company, then it is all too easy. It sounds as if you guys haven't even gotten your "letters of formation" together yet. Proceed with the other partners carefully.

Re: Starting a Business
 

[quote=jbcjr14;921041]If you have nothing in writing about a partnership, I would say you have about 90% of the battle won. The issue is what state you reside and if verbal contracts constitute a legal binding agreement. I am not an attorney, but did sleep at a Holiday Inn last evening. Maybe one of the legal warpathers can comment to this regard.[/quote]

Verbal contracts are binding in every state. The issue with verbal contracts, as opposed to written, is proof of the terms - it is easier to prove the terms of a written contract than an oral contract. It is up to the person asserting a term to prove the term existed.

Re: Starting a Business
 

[quote=Angry;921042]After reading all of that, you can kick him to the curb with nothing more than a loud and thunderous "Go Away!" If there is nothing on paper that you have signed stating that he has any stake in your company, then it is all too easy. It sounds as if you guys haven't even gotten your "letters of formation" together yet. Proceed with the other partners carefully.[/quote]


The issue I have with just kicking him to the curb is that he has documents relating to our business from the get-go (business concept, revenue model, feature set, etc). He also had access to our initial dataset which took a month to collect and is highly invaluable to our business. You never know what disgruntle people are capable of doing which makes legal action inevitable.

Re: Starting a Business
 

[QUOTE=saden1;921045]The issue I have with just kicking him to the curb is that he has documents relating to our business from the get-go (business concept, revenue model, feature set, etc). [B]He also had access to our initial dataset which took a month to collect and is highly invaluable to our business.[/B] You never know what disgruntle people are capable of doing which makes legal action inevitable.[/QUOTE

Does he still have access and if so the first thing you need to do is block him from having access. The business concept and other stuff is probably nothing new (I could be wrong) so that info is pretty useless. As you know I'm in Insurance sales and what seperates me from the other is I have a working business plan and I stick to it and treat the customers the best we can. Thousands of people have the same business plan and concept but they fail to follow through with the plans so its not big deal.

Re: Starting a Business
 

[quote=firstdown;921051]
Does he still have access and if so the first thing you need to do is block him from having access. The business concept and other stuff is probably nothing new (I could be wrong) so that info is pretty useless. As you know I'm in Insurance sales and what seperates me from the other is I have a working business plan and I stick to it and treat the customers the best we can. Thousands of people have the same business plan and concept but they fail to follow through with the plans so its not big deal.[/quote]


No, he no longer has access to our data or our collaboration site. I know it's all about execution but there is still concern about him making equity claims now or in the future. Hopefully it won't be difficult to get him to move on.

Re: Starting a Business
 

Just to give you guys an update...

I talked to the lawyer and he instructed me to send out an email that calls a mandatory meeting in which meeting attendance is explicitly tied to equity stake in the company. Basically, partners that don't show up forfeit their stake and the partner I was having an issue with didn't show up thus firing himself and relinquishing current and future stake in the company.

The best thing that could happen happened and now we can move on without him.

Re: Starting a Business
 

Good to hear.

That is good to hear. Good luck in the new venture!