Project-9945 – Introduction

What the heck is Project-9945?

Excellent question. Project-9945 is an experiment revolving around efforts to cultivate/grow the entrepreneurial spirit in others within close circles.

Detailing what is observed from those nearby with and without the spirit within.

Highlighting what can be transferred, taught, inspired and mobilized – by me anyway.

Can the path be carved out several steps ahead of yourself?

Will my children follow my path or can I slingshot them forward to ensure they outdo anything I’ll ever accomplish?

If encouraged one way will they walk the other way or are the already heading that way anyhow?

Those around me are well aware of the spirit and if it were embraced would have all of the support I can possibly give. Opinions on why  some do and some don’t.

Like so many things in life and experiments in general, the answers are not known and frankly, neither is the path to the answers.

I try some things and update accordingly, read and comment if you care to. I’ll put the posts in the category (Project-9945).

Preparing Tomorrow’s Entrepreneur

Who’s going to build the businesses of the future?

The economy is built and grown through the efforts of new businesses, small business and entrepreneurs. Are we preparing today’s youth to be successful as tomorrow’s entrepreneurs?

Reflecting back on the tools I had when I started my first business, those that made it successful and the very same that were required to build my current companies, I’m not sure that our kids are going to have what it takes. Maybe I’m just looking in the wrong places.

So what’s it take? In my opinion, to be successful in starting on your own and building without a bankroll, you need a broad range of skills, aptitude to learn anything, desire to learn as much as possible and a work ethic rarely seen these days.

I have to go back to my youth and remember what it was like, count my blessings now, counting the very things I cursed and hated when I was a kid. Tough love and physical labor, difficult financial times yet the support to earn what I need so that I may get what I want.

Growing up in an area surrounded by rural communities where most made their living off of the land and to gain was to work harder, maybe our future entrepreneurs aren’t coming from the communities where today’s entrepreneurs reside, rather from areas of the country where the tools are still ingrained at an early age.

I’ve often thought of where and how I could share some of my experiences to both help those that want to start their own company and to ward off those that think they do but won’t be able to cut it. While I could go to he “best” school systems or work with a business college, I have to think that my time and effort would be best spent at the grade school and high school level in an area of the state/country where hard work is still a part of life and instilled by the parents.

Words of advice to myself and others that want their kids to be something special in their future careers would be:

  • Put your kids to work (even for no reason other than to make them work hard). Do this consistently and with very little reward, if any, other than the thanks for pulling their weight.
  • Give them the tools and encouragement to learn a variety skills from accounting to technology, from listening to being accountable and an understanding that failure is required on the road to success.
  • Teach them the upside of personal sacrifice in pursuing a greater goal rather than just today’s wants.
  • Provide the means and/or encouragement for them to earn “it” on their own rather than getting for them as a reward for something they should be doing anyway.
  • Reinforce independence, common sense, decision making and self-awareness by teaching, noticing and acknowledging success in these areas.

It’s going to take a lot more than your experiences and financial resources for your kids (or mine) to be successful in business and in life without the right tools in the toolbox.

Business Owners Beware

Did you get snagged in the bear trap?

Relax
Relax

It’s pretty easy to get caught up in starting your own business, getting it running, keeping it running and making sure it doesn’t sink. I know, I’ve done it a few times and have indeed been caught in the trap more than once. If you are thinking about starting your own company or simply take your work too seriously, read along as it may well be worth the couple minutes of your time. If you already own and operate your own business, give this some serious thought before starting your day.

How often do you say things like “I don’t have time”, “I wish there was more time in the day” or “So much to do, so little time”?  These phrases should sound the alarm bell for a few things and might be signalling a need to make changes at work and in your personal life – both positive and negatives.

I’ll summarize in a couple of lists, feel free to ask if you want additional feedback.

Things to think about:

  1. Are you working to work, to fill your day or is each task productive?
  2. Are you working on what’s important to the future of your business?
  3. Do you remember what got you where you are and the reason you got there to begin with?
  4. When was the last time you went away and didn’t make work a priority each day?
  5. Can and will your work be completed in your absence or are you the required “secret sauce”?

What to do about it?

  1. Analyze your job, document what you do each day, drop the unnecessary tasks and focus on that which actually requires You
  2. Stop doing those things that are not important to the future of your business.
  3. Spend time to break down your tasks into basic steps, tasks that nearly anyone can complete with minimal training.
  4. Document the process and procedures you go through in order to complete your job such that a replacement could be sought and inserted should the need or want arrise
  5. Step away from work to see the big picture. More often than not people get caught up in the minutia and day-to-day, never looking at it from a distance to analyze, improve, remove or refine the role.
  6. Delegate. Get over yourself and empower others to be successful.

Find or make time to get away from it for a bit of time. Chances are pretty good that the business won’t completely fall apart and others will step up to the task when given the chance and without you as a crutch to fall back on.

Young Entrepreneurs – Corporation or LLC, Lawyer or Website?

So you’ve been working on an idea and you are ready to become an official company. For your first time around this block, even with the self serve packages and web sites out there, it will be worth your time to talk with a good corporate attorney before signing on the dotted line.

Self-serve Legal Sites (LegalZoom.com, MyCorporation.com, etc.)

These sites offer a lot of good advice, education, questionnaires and ultimately kits and/or assistance filing the right papers with the state and federal government. If you’re doing this on your own or you have business partners, it will help to get a lot of questions asked and answers documented before you speak with a lawyer and/or sign up for an incorporation kit through one of these web service companies. Some of these questions I pointed out in a previous post (Young Entrepreneurs – Get it in writing) others will be pointed out going through some of the education and questionnaire links on either self-serve website.

What type of company should I become?

This question comes up a lot and often depends on what you expect your company to become. The more common and new form for entrepreneurs is the Limited Liability Company (LLC). The LLC offers a lot of flexibility and is less restrictive when it comes to distribution of profits/losses, who can be involved in your company and who is responsible for what within the organization. I’ve had C-Corps, S-Corps and LLCs over the years and find that the LLC has been the easiest thus far. Your long terms plans and initial financial backing are two critical components of the selection process.

Expecting huge success and ultimately a public offering (IPO)? If this is part of your business plan and the path you are getting on, I would (though I am no lawyer) suspect you will want a more restrictive corporate structure that will permit a lot of shareholders and provide shelter for founders and owners down the line. If you are on this path, you should seek legal guidance early and will most likely want to opt for a C Corporation structure.

Entrepreneurs, Life-Style Businesses, Consultants and Freelancers. This is the category I have always fallen into. My companies have always been smaller; self financed (with help from time to time) and have not been the type of company that I had ever planned to take public. The S-Corp and LLC offer protection to the owners and in my opinion the LLC offers the most efficient structure for young companies and new entrepreneurs trying to figure it out on their won. You will learn a lot, make mistakes, change your mind, switch directions, gain or exchange partners and adjust your membership as times change and the company evolves. Choosing a flexible structure from the get-go may prevent headaches and wasted money down the line.

There are some potential negatives of being an LLC or S-Corp as well, so I urge you to have that quick discussion with someone more qualified to answer your questions. One quick example of this is that members in an LLC (in NY anyway) do not get a paycheck per se, they receive ‘guaranteed payments’. Not that you can’t take money out or receive funds on a regular basis, but you are not considered an employee with a paycheck and your taxes are not automatically withdrawn. There are immediately some potential tax implications within an S-Corp or LLC that you should discuss in advance with both your lawyer and your accountant.

So answer the question Sayers!

I was asked today, by a freelancer as well as an organizer of a hockey team, what structure should I be and can I use LegalZoom.com or MyCorporation.com. I wrote this ditty for them and others in their shoes. More important than the site you choose is the time you take to prepare for your business venture. Ask yourself the tough questions and get the answers and ideas on paper. Do the research, review the educational links and then go for it. I personally liked the MyCorporation.com site better though the pricing is pretty similar. Once you’re setup, there is nothing to say you cannot change your mind, adjust the structure or amend the documents at anytime. For both of you, the LLC would be fine and either site would work. If you need the name of an attorney to talk to in advance, let me know and I’ll hook you up.

Two other things: First, with both sites/packages, get the Federal ID number (FEIN) upgrade as you will need the number. Second, when you are setup and moving along, get a D&B number and start establishing your corporate credit history. You’ll need that too. Good luck!

Young Entrepreneurs – Get it in writing

If you have a business partner or plan on working with someone to build a company, do yourselves a favor and get things in writing.

I was having a conversation with a budding entrepreneur this evening and the topic came up about partner percentages, when to form the Corporation or LLC and setting the tone for who makes the decisions. Having been in a business relationship where the owner equity was 50/50, I have some experience there to pass along to those getting involved in business for themselves and doing it with a partner. This conversation came up right after my 10 year old’s middle school orientation which all ties in nicely.

  1. The principal says, “Tell your child not to give out their locker combination. BFF in middle school lasts for 1-2 weeks.” Point noted, I’ll have that conversation with my son.
  2. The young entrepreneur was explaining issues already coming to the surface with their business partner and their company has not even been formally setup. Nothing yet in writing to define roles or “what ifs”.
  3. My previous business partner (referenced in a previous post A tribute to a good friend, father and husband.) and I were 50/50 and it worked out pretty well. In his next business, which I was not a part of, he had two other partners with percentages changing over time based on capital and effort contributed. Here’s the rub.

When Bob (my former business partner) died unexpectedly, everything you should avoid came to the surface and continues to cause problems for the remaining business today. It turned out that being good friends with someone and working on words and handshakes vs. paper and legally filed documents only goes so far. When gone, you can no longer speak to your conversations, your handshake deals and your BFF relationships. There were conflicts and points of friction between these three but worked out in conversation and not necessary put into writing for future avoidance.

Stop and take time today to get things in order and done properly.

I hear this all a lot; “I don’t have time to get that stuff done, I’m too busy trying to get this business up and running” Look, things happen and more often than not the worst things are never planned for. It will be well worth it for you, your business associate(s) and your family or heirs if you take a day or two and get it all on paper. Work out your differences now and document the roles and responsibilities instead of glossing them over and saving that confrontation for another day.

Some things to agree upon and document whether your are legally incorporated or just planning on getting there.

  1. Get your ownership percentages documented. If you started it together and worked on it as a project, that doesn’t make you 50/50. The one who truly put in the extra effort and/or in some cases whomever put in the upfront capital or exposed themselves to risk, they are entitled to a different percentage in most cases. Be fair and avoid future resentment.
  2. Get your buy-sell agreement in line. Take the worst case scenario and document that actions to be taken. If your partner dies, do you want their spouse in the business with their share or do you want to buy them out and avoid that potential headache? If there are multiple partners and the spouse has to sell, how are the shares repurchased and how should they then be redistributed?
  3. Get your articles and corporate minutes up to date and current.
  4. Get your key-man insurance with the right beneficiaries. If your partner dies and the company is paying the insurance premium, should the spouse get the money or should the company be the beneficiary to pay for the spouse buyout? What is on the policy itself is all that matters and with no back up in your articles of incorporation or buy-sell agreement, you won’t have a leg to stand on.
  5. Document your responsibilities and primary functions. While it is easy to say, “I do a little of everything” and that may be true, but when there are multiple partners, each has their strengths and weaknesses and those should be documented early to avoid problems later.

Remember, just because you put it in writing doesn’t mean it has been carved in stone. You can always amend your business documents, but you can never create and execute them if a partner leaves or dies. Stop and document your future even though you don’t know what it holds.