Setting Up for Your Startup Business

1. Setting Up for Business

One vital decision you must make in year one is how you will set up for business. If you are going to have a back-end business that doesn’t literally see customers, like a retail store would, you have more options than if you do have a retail center or will be meeting clients regularly.

1.1. Office Space-Work from Home or Not?

This may sound all too familiar. You are sitting in traffic, it’s 6 P.M., and you’re no closer to home than you were 15 minutes ago. Your family is calling, warning of the impending coolness of your home-cooked meal and the kids’ bedtime rapidly approaching. Your clients are e-mailing you on your BlackBerry about a 7:30 meeting that you feel no more like going to than you did the business dinner last night, which kept you from the nightly bedtime story routine. Gas is expensive; the $100 per week you spend going to your own office is getting on your nerves—and hurting your wallet. You and your husband have contemplated his return to work for additional income, but the kids would be taken care of by a nanny—so you’re willing to sacrifice. The thought of working from home enters your mind, and many are doing it these days—as many as 30 percent of entrepre­neurs are working from home.

Every single business you ever decide to create can be run at home or in a busi­ness center, office, or retail site—but it should be dictated by the type of business you have.

So what are some pros to working at home? You definitely save money on gas, dry cleaning, and car maintenance. I only have dry cleaning costs for my televi­sion clothes; otherwise it’s just laundry for my gym clothes, worn 95 percent of my working day. I drive about 5000 miles per year, down from 20,000, which has reduced my insurance and car costs—and allowed my car to maintain its value.

I am stuck in traffic about 30 minutes per week to go to personal appointments, instead of 2 hours per day.

You also have the benefit of no dress code, which many of us aren’t delighted with—particularly those of us from the X and Y Generations. You also get the opportunity to work during your most creative times, not the times set by your manager. If you want to exercise in the morning, take your kids to school, start work at noon, and work until midnight, so be it.

In Corporate America, everything is fairly regulated for us. When a boss piles on more work you really have two options—speak your mind and risk getting fired, or say, “Thank you Ma’am, may I have another?!” What about the alternative … selecting which projects you will undertake by balancing your desires and need for income, and then making your own decision? This is what entrepreneurs get to do. The tasks that need to get done can be left to subordinates and contractors. When you have your own business, all of this changes and you are setting the ground rules. You may have some worries or some concerns; and you may feel isolated at times, too. These are all normal things and have solutions, but you must be actively involved in the answers.

Many people also report being able to add and delete jobs from their workload as they see fit, which is a great benefit. You can turn down contracts with people you don’t enjoy working with if you can financially afford to do so. The flexibility is really a great advantage.

Another big worry, particularly in the early stages of a new business, is the inability to have a regular paycheck, or the pressure of living project-to-project or client-to-client. This was very stressful for me, too, in the beginning. Eventu­ally you will have more consistent work, and this may require you to load up slowly and transition once your income is stable. You will need to be incredibly disciplined to manage your finances. Also remember that you should stick with what you’re good at, because taking on lots of extra work (particularly if the pay isn’t so hot) will stress you out to no end. Many of you will choose to work from home also, which will create an entirely new set of issues or concerns.

There are of course financial benefits even if you have a business losing money in the first few years. You may also find incredible tax write-offs in home-based businesses. If an area of your home is dedicated to your business, talk with your tax accountant about how to write this area off, including utilities and mainte­nance prorated by the percentage of square feet dedicated to your office.

Another great advantage for many is solving the childcare issue (although work­ing from home and taking care of children should be done at your own peril!) and gaining more time with family, particularly because of less commuting. This can be offset, though, if you work long hours like I do. I’m simply in another part of the house!

You may find yourself more invigorated and healthier if you work from home.

• have suffered for many years from severe primary insomnia, often going an entire week with less than one night’s sleep. Getting up in the morning for man­datory 8 A.M. meetings at my day job was grueling, not to mention taxing on my health. In my case, if I have a bad night of insomnia and work from 2 P.M. until
• A.M. in order to get rest in the morning, that is my decision. That pressure of knowing “I must fall asleep now” is no longer there. I have many friends who have left their day jobs for health reasons—to allow themselves more flexibility with when and how they work.

You also of course have fewer costs when you work from home: you are not pay­ing for expensive office rent, office furniture, business phone lines, and business Internet access. This lack of overhead will free up money for advertising and marketing.

As with anything, there are downsides. Like online workers and people that work for companies remotely (particularly home-based), you may find yourself craving human interaction. Most of my interaction now comes from travel and speak­ing engagements and trips to my local studio for live shots, rather than from colleagues who I develop relationships with. It takes a genuine effort on your part to create those relationships and to make time to interact with people. It is easy to hole yourself up in your house and just work all day. Sometimes the only “interaction” you get is with your online chat buddies, which can be tough and frustrating at times.

There are ways to help you out of the feeling of isolationism. For example, meet­ing friends for lunch and creating a real office feeling environment in the home can help. Making certain you maintain a routine, get up (take a shower!), and put on “real people” clothes before you begin working can help make you feel a bit less isolated. Going for a real lunch break outside of the home, even by yourself, feels a bit more like “normalcy,” too. I personally find that going to the gym in the middle of the day and then coming back to work also gets me out of the house and driving my car in the sunshine.

You may also find yourself distracted by the very reason you decided to work from home—your family. For people lacking self discipline or feeling torn between home and work responsibilities, or for those with young children, finding time undistracted by everything from laundry piling up to a sick child can be tough.

It might sound so nice at first! Not having to deal with co-workers and being able to wear your pajamas most of the day! Taking web calls with PJ bottoms and a dress top—ah the freedom! But there can be some loss felt without human interaction and without a team environment, so that is something you need to prepare for.

A common complaint or critique I hear from individuals who leave Corporate America behind for a home-based business is that they don’t have a clearly defined boundary between home and work. When they walk into their office area, are they officially back at work? Setting work time boundaries are critical to feeling successful and feeling as though you have control over your work—you need to set your “office hours” even if you are at home with your family. Others need to respect those boundaries so you can get your work done. You won’t ever “go home,” leaving work completely behind, unless you create that for yourself, which is not easy to do.

1.2. Retail Space

If your dream is to own a retail business and work with clients at a place like a boutique or a tanning spa, you will need retail space. Chances are, unless you are independently wealthy, you will be leasing this space for a period of time.

Find space adequate for your needs but accommodating for what your plan shows will be your requirement in two to three years. Changing a business location, particularly in a retail establishment, is not a good idea unless it’s a poor location. Also, be prepared to pay a pretty penny for prime real estate.

1.3. Laws and Regulations

There are of course laws and regulations that we’ve discussed a bit already that you need to take into consideration. Aspects that need to be analyzed when searching out your piece of the American dream include access to your target demographic, location relative to major freeways or thoroughfares, location relative to your competition and complementary businesses, applicable laws and regulations (e.g., an adult bookstore in many jurisdictions not only will require special permits but must be a certain distance from any registered or recognized school or day care center, and most areas take it one step further, requiring surrounding businesses and residential neighbors to “approve” of this type of business setting up shop), hours of operation relative to surrounding businesses, security issues, age and condition of the building, and more.

1.4. Commercial Property

Your business may require substantially more space than you had originally allo­cated, in which case your search will be directed toward commercial property: a strip mall or major shopping center, enclosed retail mall or outdoor retail mall.

If you wanted to open a large retail store, let’s say the size of a Target store, you may end up needing to search out a piece of land and build from the ground up.

2. Technology Needs at Home

You will need technology regardless of where you house your business—though depending on what you do you may not need much. You absolutely do need dedicated office space. I have been on hundreds of conference calls where I con­stantly hear other participants’ dogs barking, kids crying, and husbands yelling.

It is distracting for both you and your colleagues and can create stress that you didn’t have before—and even cause discord in your relationship. To get around this, set aside very specific work areas, and make it clear to everyone in the house that this is your office—your work! Install phone lines if you need to, buy more computers—whatever you need to be sure that your kid isn’t hanging out in the same room where you’re trying to write a business proposal. You may also have to teach children and spouses not to answer your business line and to stay away from your cell phone. If you need to meet clients in person, consider renting office space, which is usually available at everything from Kinko’s to large office complexes that rent conference rooms for that professional look. You may wear your pajamas all day but you can’t meet clients in them!

2.1. Computer Necessities

You first need to determine the reason why you would be using the computer and then determine which resources would be optimal. For instance, if all someone is doing on the PC is surfing the web, accounting, word processing, and presenta­tions using PowerPoint, there really is no need for investing in a huge hard drive, two gigabytes of memory, and dual processors. If you plan to use your computer to store large files like pictures, images, audio files, or video files, or if you plan to do audio, video, graphics, or multimedia production, then yes, the computer upgrades are going to be needed.

Your computer must be powerful enough to handle the many tasks that you may want to accomplish simultaneously—like checking e-mail, opening multiple browser windows, word processing, running malware scans in real time, and listening to music—if this would make you more productive throughout the day. This requires a powerful processor (at least two gigahertz) and enough memory (at least a gigabyte). Whether you have a Mac or PC really does not matter unless you intend to do heavy graphics or audio and video productions, in which case a Mac might prove better. Other than that, any affordable PC will do the trick. And instead of having a computer consultant build one for you, buy from the manufacturer; it may prove to save you a lot of money in support costs in the long run and preserve your business continuity.

When buying a computer, try not to get caught up in hype. Computer sellers tend to sell you computers that far exceed the power that you will need. If your business requires you to be mobile, you may want to invest in a laptop with dock­ing station and monitor; otherwise, a regular desktop computer would do the trick. If you are going to spend a great deal of time online, it may serve you well to invest in a bigger monitor and an antiglare screen for it. I recommend a 22” LCD monitor, and they run for less than $300. Do invest in disaster recovery plans to ensure that even if you suffer a hard drive or software crash, you will be up and running again within an hour.

In some instances it may even be a good thing to get two video cards and two monitors—especially in instances where you also have a web presence and you must constantly monitor your website. This can make it easier to multitask. For example, on one monitor you can have a browser open with your online support desk and on the other you can have the website up—but you are still running it off one computer and it is very easy to set up. It makes life easier for one person to manage two separate tasks. So this is a good scenario for a one-man show.

Another option is to have one monitor and two computers—especially if you are hosting your own website. Then buy a keyboard video monitor (KVM) switch— a good one won’t cost more than $50. This will let you connect to two different computers with one monitor, keyboard, mouse, etc. I use this all the time and it is very convenient—it all depends on what it takes to make you the most efficient while you are in your office.

2.2. Communications

You cannot completely depend on the Internet to handle all of your business needs, as used to it as many of us are. People still want to call and speak to someone about customer service, billing, or support issues. Having a reliable phone service is therefore important. Based on the type of business you are starting, you may decide if you want to use your cell phone as the main contact phone number, invest in a dedicated business line, employ the use of an auto attendant to answer your calls (whether or not you are available), or hire a com­pany to answer your phones for you. But people need to speak to a live person in many instances, so be prepared to accommodate that should the occasion arise. Another option is voice over Internet protocol (VoIP), which can be done through cellular providers (check out Sprint’s AIRAVE system) or through sys­tems like Skype or Vonage.

2.3. Electronic Requirements in Today’s Internet Age

There are many options out there in terms of Internet access: dialup or acceler­ated dialup (significantly slower than other options), DSL, cable, satellite (high speed). T1 lines, in the past reserved for highly profitable businesses, are quite affordable these days as well, and something you should look into through major telecommunications companies. In selecting a high speed Internet service, remember that speed isn’t everything; reliability is also important. It is a good idea to go with the more reputable providers, which can offer you a dialup account as backup in case there is a failure on your data line. Try not to skimp, and test out the upload and download speeds once you get your new connection. If you aren’t happy, move on. I recommend you always have a backup line, even a phone line you can use with a modem, in case something goes wrong and you still need to handle orders. Or consider a full scale backup provider—if you are using say, cable, then you might want a backup DSL line.

2.4. Web Presence from Day One

You will want to have a web presence from day one, which means you need to hire a developer at least six months in advance. Seek out sites you like and e-mail the owners to see who they use for development. You can usually look up the information of the owner by going to www.namesecure.com and using the WhoIs information button, or by going to www.WhoIs.net.

Be sure your website matches your business—if your business model is simple, keep it simple. If you are a jack of all trades, selling everything under the sun at wholesale, make the site easy to navigate, but get it all up there. Be sure that your

legal disclaimers are easy to find, as well as your security and privacy policies. You also want to make sure anyone who visits your website knows how to contact you. This is where keeping your “Contact Us” links visible and easy to find comes in.

Hire a web designer who uses Web 2.0 techniques so you are using the most current technology, include a blog and customer review and testimonial area that you check often, and ask your web developer to create your site to W3C compli­ance. The W3C is the World Wide Web Consortium, the group that is respon­sible for defining standards used in web design, like HTML and CSS.

Source: Babb Danielle (2009), The Accidental Startup: How to Realize Your True Potential by Becoming Your Own Boss. Alpha.