Sinanation

You have the idea and now you want to take the next step to turning it into a business. When we initiated the construction of artandseek.com in 2007 I wish I had other entrepreneurs to tell me the stuff I have learned along the way. So I would like to share some of the most important points I wish I knew before I started my own business:

1. You might think you have the most amazing idea, but turning it into a business that sells  is a completely different task. You please yourself with your amazing idea, but now you will have to please and appeal to other people who will be your customers. You will have to be completely harsh, critical and objective towards your precious idea. You will have to break it apart and mold it before it can finally take the shape that applies to the general public. Talk to business professionals and the people you will pick as customers. Know what they know and are looking for. Research the competitors and find their weaknesses. There will always be a competitor and a weakness. Make the Internet your best friend. My first intention for artandseek was for it to be an online auction house where artists could get an objective value for their work. It turns out that rather than putting their pieces in public auctions our artist members choose to fix the price to their liking and sell the art pieces in the “Buy it now” section.
2. Contact and be in touch with friends or friends of friends who know the legal side of business and computer programming. Lawyers are expensive and look busy all the time. They will charge you even if you meet up to ask a few questions. Computer programming is the most complicated thing for a person who has never learned it before. It takes years to be comfortable with and no books will get you ready to have a technical conversation with a programmer. If you can’t find any friends that are programmers, you are at the mercy of a programmer who will charge you by the hour and not get anything done on time.
3. Make sure the name you pick for your business  is not already used by a company that does similar things. Otherwise you will have copyright issues.
4. If you have partners, make sure you sign a legal partnership agreement with them stating all the shareholders responsibilities for the company.
5. Business planning is good, but bear in mind that it has no realistic value. Real life can’t be compared to anything you plan. The business model will help to give you a general timeline and an idea on how much funding you will need to start and keep the business going. You will miss the deadlines. You will need more money than you have planned. I recommend you make a business model that tracks the best and the worst case scenarios, keep it on the side and get on with the other requirements of starting a business.
6. Know when to stop and just go for it. Most of the time nothing will seem enough. You will feel like you need more research, funding and time. You have to make it happen at one point. Do not drag the idea to the point of denial.
7. Make sure you have done the research to pick most applicable place to establish the business. For example founding the company in New York will cost you a heavy annual minimum corporate state tax even if your business is not profitable. Picking Delaware for base will give you the benefit of much smaller minimum tax burdens. In some cases you might be required to have an active address in the state where you establish your company. In that case your hands might be tied.
8. Do not establish the corporation before you have the whole business ready. Once you go through the legal procedures and let the government recognize your company on legal documents you will be liable for minimum corporate taxes even if you do not have the business set up. We established artandseek, Inc. in early 2007, but our online site (the only means to our business) was up and running in July 2008.
9. For American corporations: What the heck is the difference between an Inc. and an LLC? This question has been eating my brain most probably until this week when a friend’s lawyer friend finally took the time to explain it to me. Although I had a general idea, I was always missing the whole picture.  LLC, a limited liability corporation is more expensive to establish, but gives its board members better protection from any future liquidation and is liable for lower annual corporate taxes. An Inc., incorporation, on the other hand is cheapest to establish, but is intented for much larger businesses. It is liable for higher annual corporate taxes.
10. Know when you are required to file taxes and do not miss them. Find yourself a good corporate tax preparer long before the filing date and get yourself an appointment.
11. It will (almost always) take so much time for the business to pick up. Do not get discouraged and believe in your idea just like you believed in it before you had the business. Be proud, positive and confident.

This entry was posted on Tuesday, September 15th, 2009 at 09:54 and is filed under DEBATES, IDEAS, ETC.. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.