Readers advise startup wannabe
Charles Evans, the newly unemployed engineer who has been thinking about starting his own business, received lots of truly good advice from readers of both this column and my Business Owners' Blog newsletter.
Many of your e-mails, all of which I've forwarded to Evans, were long and thoughtful. Here's a summary of some of the advice:
* Decide early how you want to price your service and stick to it. Either you are a high service and quality shop with a corresponding hourly billing rate or a low cost-high volume shop. If you choose the high quality-high billing rate route, stand in the mirror and say "My hourly rate is $250" until you can say it with confidence, eyeball-to-eyeball.
Bill Fanning, President, Fanning & Co. CPAs, Vernon Hills.
* Are you prepared to sell yourself? Literally, nothing happens until a sale is made. No matter how technically adept a person may be, if they are not comfortable selling themselves, it's all for naught.
David Gay, Manager, Illinois Small Business Development Center, College of DuPage, Lisle.
* Be prepared for the fact that you will not be paid within 30 days. I've found that businesses seem to run their bills to 90 days regularly, especially in this economy. Now, when you're the owner and the bill collector, you're in a precarious position. You want the money, but you also want the future business. So you have to use your judgment as to how you handle each account. I would suggest that you do not charge interest on any of your accounts.
Aaron Degler, Degler Design, Inc., St. Charles.
* Talk to as many experienced entrepreneurs as possible about your plan. If they can't honestly pick you apart (or if they ask if they can invest or get involved), you may have something.
Mike Tatge, Managing Partner, JumpFly, Inc., Elgin.
* I hate to be a wet blanket, but it is a long process to start a business and become successful enough to support one's whole lifestyle. Six months' expenses are not going to take him anywhere.
Donna Zoellick, Global Sourcing Specialists, Inc., Carpentersville.
* An exit strategy should be part of the business plan. A disaster plan should be part of the exit plan. The exit strategy will help determine the transition points if success is attained. The disaster plan will identify fiscal points, from the pro-forma, that Charles should consider closing the business.
All too often startups think and plan for success and, therefore, are not prepared to handle any degree of failure.
Thomas J. Walter, Tasty Catering, Elk Grove Village.
* An alternative is to consider acquiring an up-and-running, successful company. The necessary systems - accounting, payroll, inventory control, key employees, customer base and vendors - are in place.
Linda J. Purcell, Purcell Associates, LLC, Palatine.
Questions, comments to Jim Kendall, JKendall@121MarketingResources.com.
© 2009 121 Marketing Resources, Inc.