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September 2010 Archives
It really irritates me how few people providing advice to small businesses actually have ever run a small business. Take my word for it, there is a huge difference between being paid by some government agency or huge corporation to tell other people how to run a business and actually starting a business yourself.
Yesterday, Erich commented that we should do a workshop or provide consulting for people who want businesses. He added,
"But we should tell them how to do everything right from the very beginning. Get a CPA. Write a business plan. Decide whether to incorporate as an LLC or other type of corporation. There are so many things we should have done that we didn't"
And here is where I disagreed with him. Erich is a pretty smart guy and I got to thinking that if he was thinking this way maybe it is the same type of mistake a lot of other small business advisors make. It's kind of like that old children's story about the emperor's new clothes, where no one wanted to admit they couldn't see the clothes because they didn't want people to think they were stupid.
I reminded Erich that although the accounting firm we hired - Hamen & Remer in Grand Forks, by the way - has been immensely helpful to us in a lot of ways, the fact is we were in business for years before we hired a CPA. We made a few hundred thousand dollars before we incorporated.
Here's the truth- both Erich and I started as what they call "micro-entrepeneurs", back before the word existed. We did business using computers set up on our kitchen tables. Over time, we got more business. After several years of working as consultants and at corporate or university jobs, first one and then the other of us quit our "day jobs" and worked for the business full time.
We never got a small business loan, although we did at different points run up our credit cards or pay employees out of the salaries from our other jobs.
We sought advice from various organizations set up to help small businesses, and frankly, most of them were pretty useless. One place that DID help us was the Small Business Center at the University of North Dakota, especially the wonderful Steph Blair. They gave us a $1,500 Phase 0 grant, which freed up enough of our consulting time to write a Phase I Small Business Innovation Research grant, which we received, from USDA, for $75,000. It was also Steph that recommended our accountant, who has been a godsend.
We were in business for several years before we had a business plan. When our business started to grow, we did sit down and write one. It was a few pages long and it was useful early on when we needed to make decisions about whether we wanted to continue a contract, pursue a particular type of work. I don't believe no one can start a business without a business plan.
Yes, Erich is right that there are a lot of things we could have done differently. On the other hand, if I had to wait until I had done a business plan, marketing plan, SBA loan application and moved into a Business Incubator to start my company, I'd still be
Here is all of the business plan you need to begin:
Yes, we have a kitchen table.
Our plan is to make money by XXXXXXX .
People will pay us money to do XXXXX because XXXXX.
We are going to charge XXXXX.
Fill in the X's.
That's good enough. Get started