Why Now Is The Time To Start A Business

I started my first business during a recession, and now, during this recession I am starting another one.
I think recessions are the best times to start a new business, especially a service business, and I am going to quickly tell you why.

#1. Rents are cheap.
You can tell yourself all you like that your clients don’t mind that you work out of your home, but I have found I get more respect, and more money from my clients when I have a professional business office. Right now commercial vacancies are high, and you can find good office space at bargain prices.

#2. Help is cheap.
Sometimes you just can’t do it alone. With unemployment at an all time high, it is easier than ever to find talented, qualified people to help you out. They are also willing to work on a temporary, contract basis, so when I don’t need them, I don’t need to pay them.

#3. It seems that everyone is willing to bargain.
I hate paying full price for anything. But often, vendors will say the price is the price. Recently I have been getting discounts on software and services just by asking. I try to give something back, and nothing talks like cash! My favorite line: Will you take $X for this if I pay you cash right now?

#4. You Have the time!
I was laid off from my job 3 months ago, and with unemployment over 11% where I live I probably won’t be getting a new job any time soon. It doesn’t take long to look and see that there are no new jobs I can apply for. So now I am using my considerable amount of spare time to get the new business rolling.

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When To Hire a Professional – Accountant

Starting a new business? Most new businesses are bootstrapping it, trying to get the business going while spending the least amount of money. But at what point does it make sense to hire a professional? This is the first in a series on how and when to hire professionals for your business.

After 20 years of offering accounting services I can tell you when most new businesses finally hire an accountant. It is when their business has hit it’s first growth spurt and they are running to keep up with business, their accounting system (or lack thereof!) isn’t working for them, and maybe they have even gotten a letter from the IRS. Things tend to be in chaos and the business owner(s) have no idea if they are making money or not. They are just trying to keep up. I’d like to suggest hiring an account before crisis hits. You’ll save money and maybe even your sanity. Here are some times when it makes sense to visit an accountant.

Right Before You Open Your Business

This is probably the most important time to consult with an accountant. During these initial first sessions a good accountant will give you advice on how to set up an effective accounting system, how to maximize your tax deductions, and which type of business entity is best for your business. (Corporation, LLC, Sole Proprietor, etc.) They will also point you in the right direction as far as what payments and reports you need to file with various government agencies.

Tax Time

You may be an expert when it comes to doing your own taxes, but the rules are different for businesses. Not only that, with tax law constantly changing, you are probably too busy running your business to keep up on the latest tax law. Often a good tax accountant will save you more in taxes than you are paying them in fees. At the very least, have an accountant prepare your taxes the very first year you are in business.

When You Are Looking For Investors

Smart investors with lots of money don’t get that way by trusting business owners. When you have an Independent Auditor review you books you give investors the assurance that financially everything is on the up and up. They then know that your financial statements are a true reflection of your business.

When Gross Receipts Reach $100,000

Preferably earlier, but once your gross receipts reach $100,000 you need professional accounting . At this point the accountant’s knowledge of money management and tax savings will almost certainly be cost effective. And your time will be better spent running and marketing your business.

Make sure that you are not “penny wise and pound foolish” when it comes to hiring an accountant. At the very least, consult with an accountant during these key times in your business. If you are searching for an accountant, one resource I found was AccountingAisle.com. They provide a service where they will match you with a local accountant based on your specific needs. You can also check with your local chamber of commerce, or ask other successful business owners in your area to give you a referral.

Starting a Business? Free Online Classes to Get You Started on the Right Foot

Free Business Classes

There is more to starting a business than having a great idea. Just to get started you need to learn about marketing, taxes, and accounting. Then you will find you want to know more about developing a website, writing a business plan, and how to get federal grants. Hiring employees or contractors opens another can of worms! You could go to college and get your MBA which is expensive and time consuming. You could purchase countless books, and spend hours reading about moving cheese without finding what you need, or you can take advantage of a couple of resources available to anyone with an internet connection. The IRS and the SBA! Yes! Your tax dollars actually provide some useful services. Now is a good time to take advantage of these free business classes and feel like you are getting some benefit from the taxes you are paying.

The Small Business Administration

The Small Business Administration is familiar to most people because of their small business loans. But they also have an excellent online education system. The Small Business Training Center is designed to “enrich, empower, and educate small businesses”. At first I thought this would be full of dry, government issued type courses, but it is not! While many of the courses are SBA courses, several are provided by private enterprises. My favorites are the mini courses provided by Trump University. Yes, you can learn from The Donald for FREE! Topics include “How to Write a Business Plan”, “How to Find Start-Up Funding” and even “How to Start a Business on a Shoestring Budget”.

Business Tax Classes at the Internal Revenue Service

Now that The Donald has filled your head with how to make money, now you need to go over to the IRS site and learn how to hold onto it! The IRS will teach you how to pay less tax. They have a number of different classes on taxation available at all levels. I recommend most business owners start with the Online Small Business Workshop. There you will learn everything you need to know about what taxes your business needs to pay and how to pay them. Then go to the Link and Learn section. This is where the IRS trains its volunteers and you have free access to the same information. There are all levels of tax instruction, plus special sections for military and overseas taxpayers.

Business Classes on TV at Small Business TV

Once the IRS has turned your brain to mush, you can watch news and information about business on SBTV. (Please note this is online TV and the audio starts right away. Be prepared to turn down your speakers!) SBTV has hundreds of videos on business how-tos, news, and business success stories. Today, April 7, 2008 they are featuring Jack Canfield on
7 Ways to Boost Your Business Just by Asking. SBTV also has a whole section on Tech Tactics, Making Technology Work For You After spending the weekend struggling with technology that is sounding like a very interesting topic to me!

Before You Launch Your New Business

Starting a new business is always fun and exciting! I should know. I have successfully launched 3 businesses and I am working on my fourth! But before you get carried away with the rush of starting a new venture, ask yourself a few questions.

#1. Is There a Market For My Product or Service?

Is there a market for your product? You may love it, but does anyone else? Can you convince people to part with their hard earned money? Check your competition. Is there lots of competition? Then how are you going to make your product stand out. No competition? That may be because you are the first, or it may be that there is no market for your product.

#2. Do I Have Enough Money to Get Me Through the First Year?

Do not expect to become an overnight success! It does happen, although it is rare. Starting a business can be very expensive. Just getting the word out about your product can burn through a lot of cash. Make a financial plan, assume almost no income for the first year, and make sure you have enough to cash to carry you through. Many businesses that fail, would have eventually succeeded if they had enough cash for their launch period.

#3. Do I Have a Plan?

Or maybe even two or three. You could have a marketing plan and a financial plan, but at the very least every business should have a business plan. It does not need to be complicated or long, it can be just a page or two, but it should be in writing. What are your goals for your business, and how do you expect to achieve those goals? How do you see your business one year from now, how about ten years from now?

#4. Who are my Advisers and Mentors?

Do not be a lone ranger and try to do everything yourself. Find a mentor who can give you good advice, and give a different perspective on your business. Find a tax adviser, someone who does more than just fill out tax forms. An excellent tax adviser will help you maximize the tax savings of your business, and will most likely save you more than their fees. Good legal advice will also save you money over the long term.

Answer these questions and you will be ahead of the game when it comes to starting a successful business.