October 11, 2001 1 of 32

Chief Executive Officerof

Diddly Squat

(or So you want to be the boss, are you sure?)

By Leeland Artra

October 11, 2001 2 of 32

Small Businesses

• Represent >99% of all employers• Employ 51% of private-sector, 51% of public

assistance, and 38% of high-tech occupations• Represent nearly all of the self-employed, which are

7.0% of the civilian work force• Provide ~75% of the net new jobs• Provide 51% of the private sector output• Represent 96% of all exporters of goods• Obtain 33.3% of all federal contract dollars• Are 53% home-based and 3% franchises

American Airlines saved $40,000 in 1987 by eliminating

one olive from each salad served in first-class.

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Why Are You Here?

You are thinking about starting a business.

By the end of this you should:

• Understand the basics requirements of starting, running and growing your own business; and

• Know where to go for more detailed information

There are two credit cards for every person in the United States.

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Why am I here?

• On and off consultant for 16 yrs

• On and off Director (Lead) 6 years

• Created and operated consulting, retail sales, IT outsourcing and services companies

• Raised by a CPA and a computer consultant

• Need some consulting referrals and thought this would be good marketing

• No one else volunteered

Men can read smaller print than women.

October 11, 2001 5 of 32

What Was Asked For, Legal

• What is required by law to set up and run a business?

• How you protect yourself from litigation• How do you patent/copyright/protect processes that

you might like to sell, that may have elements that are public domain (use publicly available tools).

• Where do you sign up to be a company?• Consulting contracts - any boilerplate examples?• Gotchyas of sole proprietorships, LLCs, Corps, etc.

By law, in Thailand, it is illegal to leave your house

if you are not wearing underwear.

October 11, 2001 6 of 32

What Was Asked For, Marketing

• How do you generate leads? (i.e. B2B, B2C, marketing)

• How to best get your name out there and get noticed?

• How do you determine price?

I never built a booby trap that didn't catch at least one booby.

October 11, 2001 7 of 32

What Was Asked For, Accounting

• What information do you need to provide to whom to get a tax number?

• How to keep the books straight, (especially if there is any software that runs on a real kernel).

• What's the difference between a tax number and a business license?

• Do you need, or should you have, a separate bank account for a sole proprietorship?

• Knowledge of everything about taxes, especially how to minimize them.

• Are there tax differences between working as an individual and operating a sole proprietorship?

It's Production or it's Not Exactly.

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Defining the Problem

So you want to be the boss. Why?• Tired of taking orders from someone who

doesn’t have a clue;• Tired of rush hour traffic;• Hate office politics;• Positive you can make a room full of money to

swim in; or• Want to make a little “side” money.

If you come up with the right business idea!If you come up with the right business idea!

Chewing gum while peeling onions keeps your from crying.

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Advantages of Being The Boss

• You’re the Boss• You make the business decisions• Greater feelings of self-worth• Flexible working hours• Higher income and equity• Direct contact with customers, employees, suppliers,

and others• Opportunities develop your own ideas• Living by doing something you truly enjoy• Common cause for the whole family

"How can they possibly understand what we need when they don't understand what we do?"

Manager of a credit approval department

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Disadvantages of Being The Boss

• Financial risk• Long, hard hours (Spare time?)• Spendable income?• The buck stops with you• Growing successful business means you

spend your time on:• Human Resources Issues• Legal & Contract Issues• Accounting & Tax Management• Marketing

"If everything is under control, you are going too slow."

Mario Andretti

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Take Some Time and Assess

Consider your knowledge related to these three areas of the business you will be starting:

• Marketing

• Technical skills

• Financial

• Marketing

Barophobia - fear of gravity.

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Don’t Fool Yourself

Starting, taking over or just adding a little “side” work with a business you can expect:

• Harder and longer hours;

• No days off or extended vacations;

• No free “Holidays”;

• 70-80 hour work weeks; and

• Little or almost no money.

“Be careful about reading health books. You may die of a misprint.”

Mark Twain

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Business Ideas

Before starting figure it all out (in writing)ANY idea can be a profitable business so long as:

• You know how to do it and can do it well;• You LIKELIKE to do it and will not mind doing it

day after day;• It has enough appeal to sell on a steady basis;• It can be sold at a price that covers all expenses,

overhead and profit; and• You have or can get sufficient funds to get

started and run until profits are available.

Anything worth doing is worth doing for money.

Ferengi Rule of Acquisition #13

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Initial Business Requirements

• Planning Preparation

• Reserve Funds (at least a years worth)

• Courage, Determination & Persistence

• Marketable Skills and/or Idea(s) and/or Product(s) and/or Service(s)

• Clients (they have to exist somewhere)

• “Network” of friends and colleagues

Once you have their money, never give it back.

Ferengi Rule of Acquisition #1

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Starting Up Requirements

• Required Skills

• Plan A

• Plan B

• An Attorney

• An Accountant

• A Bank

• An Insurance Provider

• Licenses & PermitsIt takes 3,000 cows to supply the NFL with enough

leather for a year's supply of footballs.

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Successful Business Skills

• Your “Product”

• Project Planning

• Writing & Grammar Skills

• Personal Hygiene (seriously)

• Dress Selection

• Communication & Negotiation Skills

• Constant Retraining

Insanity is doing things in the same way and

expecting different results.

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Legal Issues

By LAW:• You must apply for a license• You may or may not need a FEIN• You may have to file taxes quarterly• You have a lot of reading…

State of Washington

http://www.wa.gov/dol/bpd/startbus.htm

http://www.wa.gov/dol/bpd/operate.htm

Few things are harder to put up with than the annoyance of a good example. Mark Twain

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Litigation & Protection

• An Attorney is the best bet• Have your own contracts

• Try to use your contracts instead of clients• Patent / Copyrights (talk to your lawyer)

• Have NDA; or• If you talked about it to ANYONE you

have 1 year to patent it.• Treat your business like a business not a hobby

"99 percent of lawyers give the rest a bad name."

Unknown

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Structure of the Company

• Just you = sole proprietorship• All you have is up for grabs• Not a lot of extra requirements• Tax benefits are pretty good

• More then one person . . . Partnership, Corporation, or a Limited Liability Company?

• Your milage will vary, talk it over with your lawyer and CPA

• Research everything: Bank Accounts, Taxes, Liability, Securities exchange law, etc.

The purpose of the indentation at the bottom of a wine bottle is to strengthen the

structure of the bottle and to trap the sediments in the wine.

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Marketing

• Contributing is Marketing• Reputation is EVERYTHING

• “loyal, honest, trustworthy, prompt, etc.”• Current customer = 16 x $New

• Leads:• Get referrals from others• Recruiters• Cold and Warm Calls When Needed• SPAM and die

Keep your lies consistent.

Ferengi Rule of Acquisition #60

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Sales

• Set your rates correctly (read “36.8% Overhead or Money, the Bottom Line”, by Steve Simmons)

• Don’t be afraid to bill

• Don’t work for bad customers

• Don’t take bad jobs

• Don’t expect bills to be paid on time

Never let the competition know what you’re thinking.

Ferengi Rule of Acquisition #85

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When the Client Doesn’t Pay

• Call the manager

• Call their accounts payable

• Call their CFO / President

• Have your lawyer send them a letter

• Stop work at first sign of trouble

• Find a “collection” agency you can sell the debt to

Even in the worst of times someone turns a profit.

Ferengi Rule of Acquisition #162

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Accounting

• Keep everything• Write all over everything• Learn what you must have & do

• Get and read the IRS 1040 long form• Get and read the IRS 1040c (business

portion)• Little envelopes work great• Keep 5 years of data (make it a written policy

to destroy old records and DO IT)

Over 2,500 left handed people a year are killed from using products

made for right handed people.

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Accounting Software

• Find an accounting package and USE it• QuickBooks is both inexpensive and user

friendly for non accountants. Keeps billing information, Accounts Receivables, out of pocket expenses, and recording expenditures is just like writing a check, in fact you can actually print your checks direct from the package.

• Peachtree is a little more sophisticated.• If you have a CPA or accountant ASK what they use

to make moving data back and forth easier.

Right handed people live, on average, nine

years longer than left handed people do.

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FEIN

• Federal Employer Identification Number

• Tax ID like a Social Security Number for your business.

• Only sole-proprietorships do not need one

• If you have employees YOU MUST HAVE ONE

• Get one by filing a SS4

• http://www.irs.gov/pub/irs-pdf/fss4.pdf

The letters KGB stand for

Komitet Gosudarstvennoy Bezopasnosti.

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Tax Number vs. business license ID

• A tax number is your ID to the Feds, your state UBI number is just a “UID” for the state

• You business will also get an Unemployment Account number (this is pretty important)

One quarter of the bones in your body, are in your feet.

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Separate Bank Accounts

• The answer is always “YES”

• Keeping “company” money separate from your personal money provides some sheilding

• Cleaner “accounting” records

• Sole Proprietorships can start with a mixed account

• If your business has a FEIN it needs its own account

"If you don't have time to do it right you must have time to do it over."

Anonymous

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Some Excellent Internet Stops

• Small Business Administration:http://www.sba.gov/starting/

• SAGE Best Of Site (has some excellent consulting Articles):http://www.usenix.org/sage/best.of/best.html

• Excellent Venture Capital Library for new small businesses:http://www.abcsmallbiz.com/bizbasics/gettingstarted/intro_gettingstarted.html

http://www.abcsmallbiz.com/bizbasics/gettingstarted/bizplan01.html

http://home.earthlink.net/~fpearce/Craiseho.html

• Celeste and Peter Stokely are always a good resource:http://www.stokely.com/breadth.vision.html

http://www.stokely.com/rules.html

http://www.balsamfir.com/documents/bm_main.html

The cruise liner, Queen Elizabeth II, moves only six inches

for each gallon of diesel that it burns.

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Thank You To The Contributors

Paul English tallpaul@speakeasy.org

Steve Hastings steve@hastingsfamily.com

Robert Miller katchomko@katchomko.com

Leon Towns-von Stauber leonvs@occam.com

Bill Wichgers Bill.Wichgers@vykor.com

"The average person thinks he isn't."

Father Larry Lorenzoni

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Quotes

• All the quotes came from my personal collection gathered from lots of sources.

• Some places to find more quotes are:Witty Wisdom Quotes:

http://www.iol.ie/~taeger/wisdomqu/wisdomq1.html

Online Quotes:http://www.idynamics.com/quotes/

Witty Quotes:http://www.angelfire.com/ma/hubpoet/pquote.html

Witty, Thought-Provoking, and Humorous:http://www.tk421.net/essays/wit.shtml

Funny Facts:http://www.jokersweb.com/Avoid fruits and nuts. You are what you eat.

Jim Davis (Garfield the Cat)

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Bibliography“36.8% Overhead or Money, the Bottom Line on Consulting”, by Steve

Simmons, ;login:, Volume 21 #4.“There is light at the end of the tunnel: Profitable Strategies in Online

Retailing” Dr Jacques Bughin, McKinsey & Company and Free University of Brussels, Avenue Louise, 480, B-Brussels, Belgium , Jacques_bughin@mckinsey.com Michael Zeisser, McKinsey &Company, 55East 52nd Street, New-York, NY, USA, Michael_Zeisser@mckinsey.com.

Various Small Business Documents from the SBA Home: http://www.sba.gov/

“Being Your Own Boss” seminar given by Celeste Stokely at LISA '96 (Chicago, IL, Sept-Oct 1996): ftp://ftp.stokely.com/pub/lisa96.being.your.own.boss.slides.pdf.

Various articles and references at http://www.abcsmallbiz.com/bizbasics/gettingstarted/

With many thanks to The School of Hard Knocks.

"Copy from one, it’s plagiarism; copy from two, it’s research."

Wilson Mizner (1876-1933)

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In Conclusion

Peanuts are one of the ingredients of dynamite.