Category Archives: Starting a Business

Structuring the Entity

In the venture I find myself in, so far it’s been a great experience of learning new things. Starting the idea for a business is a simple part, but the recent articles that I’ve read about starting a business may have skipped over the legal paperwork side that needs to be done in order for you to be protected in case something goes wrong. I found myself in that situation when me and my co-founders decided to step forward with a business idea and start executing it.

One thing I can assure you is that it’s costly but very worth getting the legal structure taken care of by a lawyer that is familiar with the field. All of the founders get along but when the decision of how much of the company’s share-hold came up, we all brought a different side of us out. It took a few days to come to an agreement if it’s the best we all get equal shares or have one founder getting a little more. The operating agreement alone seemed so overwhelming that it consumed most of our time. Upon being finished, the bylaws and other legal matters had to be taken care of especially deciding what our exit strategy would be. We did however end up coming to agreement and worked things out correctly so that everyone is protected in case the idea doesn’t work out.

Having being done with the legal paper work side of the business, I’ve learned one of the foremost lessons to always set up a restricted stock purchase agreement with schedule vesting. This secures everyone especially the business in case one of the founders decides to leave early on. There won’t be any fighting going on about how much one should get because they left the business early to start another venture.

But again, a lawyer is helpful in setting up this case. There are ways to negotiate prices that can best serve you. A flat-rate fee of $2,000 is the average cost of having an attorney set up all the incorporated legal structure for the business. $600 for an LLC depending on what state, although in most cases, this can be done without a lawyer. But always seeks advice from an attorney that is familiar with the field.

Another tip I’ve learned is to do some research on what entity is best fit for your business you’ll be starting. Aside from speaking with lawyers, find events/articles that go over the pros and cons of each business entity and most important, the tax side of things (CPA is the best thing to guide you through). There are lots of videos online as well that go over the legal structure. A recent video I’ve watched covered over the mistakes a founder makes when setting up the business structure by Scott Walker.

I consider it very important that if you’re planning to launch a business, make sure you get the right protection you need. Once it’s done, then all systems are go. But what if you don’t have the funding to cover the attorney fees? From the advice I’ve received of people who have gone through this phase, this is what they stated me: “If you have $1500 dollars that you can only invest in legal fees, tell your lawyer “This is how much I have, what can you do with this much, to help me get started setting up my business?” They will find a way to help you.”

I’m sure to hope this helped as much possible when you decide it’s time to set up your legal structure. There are resources that can help you with more information towards structuring your business. The SBA are always there to give small business resources that are sure helpful and SCORE as well.

What can we learn from setting up the legal drafts of the business? Was it frustrating for you as well or did you go through it rapidly? What advice would you give out to those who don’t know about the legal protections of the business?

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Lessons at Work

Throughout the year I went out into the job market to study how it really is like working in a field that I did not enjoy. Having grown up and worked/made small projects for my parents, I’ve learned the complex life of working at a nine to five job. I decided to do this because I figured it might be a way to motivate myself to start my own business. Was it a good idea? More than likely yes. I want to share with you three of the issues that has build upon me throughout the year that I’ve taken noticed and what I have done to resolve them.

First and foremost I think we can all agree that depression takes a hit when you’re at a job you don’t love. I didn’t start noticing this as much until I began planning out other projects I had apart from my job. During the weekends, I would spend most of my time studying and finding ways to strategize a business project I wanted to start, but once Sunday night hit, it felt frustrating because I knew I wouldn’t have enough time over the week. Throughout the week I would just think about the project, any changes or when I get back I’ll look at other related projects. The frustration began to build up, not only because I didn’t want to be there, but because I felt like I had so many things going on at the same time and I wanted to get it done.

Depression tends to hit people hard. Your mind barricades itself from the outside world and it is difficult getting yourself out once you’re at mid-point. There are many helpful articles all over the web that helps you out of depression. I denied I was depressed and kept saying I was mostly frustrated, but it ended up being the same. So what did I do about this?

I was very fortunate enough to have read many articles about depression in high school, I had friends that would feel like this after a rough breakup in their relationships, and I would give them advice of my own what I knew at the time; if anything, to help. One of the very and most important things I had to do was to talk it out with someone whom could guide me out of it. I think this was key to getting out of it quick. I knew signs of depression was rising and once it hit, I had to talk to someone to give me their feedback about what they thought. If you have signs of depressions I would encourage you to talk to a therapist or someone that could guide you out.

Next, I’ve tried questioning why are people afraid to leave their jobs or why people rather waste time watching television after they get home rather than spending that time studying on something they want to achieve?

The answer is comfort! While working at my job, I began to really feel comfortable. What do I mean by comfortable? Comfortable by making expenses bigger than what I could afford, and the feeling of depending on that job.

I read helpful tips from Noah Kagan and wrote down what’s the worst that can happen if I left my job at this moment. What I came to figure out was that, money played a huge roll. We get comfortable with with our salaries that it gets hard to leave that to accept something much lower.

So what I had to start doing was change my habits. I started lowering my expenses dramatically, and saved my salary instead. Although there’s this issue I’m debating about that I stumbled upon with Robert Kiyosaki saying saving doesn’t work anymore, rather invest in things you will benefit from.

Finally, the people you don’t enjoy working with. Before being hired at the place I worked at, I didn’t know about this problem. I thought, no that can’t be true, I’m sure the leader in charge will solve that out get. Unfortunately where I was at, this was not true.

There were two particular people that I could not stand to be working with. Now as studying to be a leader, I would take steps to make the situation better, but I would say those two at first would not accept anything and go on with their own. I had to acknowledge the fact that there are people out there that carry a mind full of negativity and do not want help.

One very helpful way to resolve these situations is to always carry a positive mind. Perhaps it sounds cheap, but if you look at this from an outside prospective. If one person is angry and you show positive energy towards them, they’re going to want to bring you to their level by you responding angry as well.

They’re going to do things that makes you bring out negative emotions, and by doing so, your on their playing field; they’re taking advantage of you. Instead avoid that, show you are bigger by being positive and bring them up to your field.

These three issues I think are the biggest that I have noted and impacted me over the year while having a job. I’ve really learned a lot from this experience and I hope this post gives you some guidance on what to do and avoid as well. What are your experiences while working at a job you don’t enjoy? Would you agree that the feeling of being too comfortable at your last job was difficult for you to go out on your own and start your business? What steps did you take to let go of it?

Choosing the Right Idea

I’ve been coming up with so many business ideas lately and the problem that has arise to me is that it always comes to mind that the idea will not work. Similar to the first post, I’ve been keeping my mind open to all the options that are available in creating great ideas. But somehow this thing in the back of my mind somehow always comes up saying the idea probably won’t work.

I’ve been listening to great speakers talk about this issue and it’s very common. One of the speakers who I appreciate so much and would love to have the chance to meet is Jason Nazar. CEO and co-founder of Docstoc, he spoke about how we shouldn’t be worried if an idea will work or not. We actually instead should be worried if that idea exists within the market because if it doesn’t exist, then you won’t be able to sell it.

It doesn’t matter if the idea we have already exists or if it sounds stupid, we should take that idea and figure out how we can make it different and improve it to the public. And that’s what I think we have to put in focus, rather than fearing if our idea will work or not, we have to execute it. So how do we know if our idea will work?

There are several questions we must ask ourselves first in order to make that idea become a reality. Similar to a business plan with getting down to specifics, two questions that are important to ask are: Who are our audience? What is their problem?
Figuring how we can deliver it and create demand will come afterwards.

So how do you know your idea you came up with will work? Have you doubted yourself with that idea? One advice that has begun to get implanted into my head is that when we have an idea, lets execute it with the least amount of cost possible. That way you won’t risk a lot and you can start all over again with out the weight on your back from the previous idea.

It’s awesome coming up with many different ideas, but I think when we have the mindset of thinking if it will work or not should be forgotten. I always speak with my mentor about it and if you’re in that struggle of figuring which idea will work or not, I would suggest talking with a mentor to advise you which is best.

Coming with Ideas

Not everyone is creative in coming up with new ideas, especially when we’re thinking what business to start. I’ve struggled coming with new ideas but over time however, I have improved my ways on bringing in new ideas and yet I continue to expand myself even further for having a mind full of new creative ideas.

There are several ways I do that helps me come up with new ideas, and would like to help you out with the methods I use. These methods are the following:

Writing it Down: Doesn’t matter what time of day it is, I always tend to write down my ideas immediately. You can’t trust your mind to hold it throughout the day. Being at night or early morning, I recommend writing down any new idea you can think of, and looking back later on to see if you could add anything else to it.

Meditating: While being in a quiet room, I feel my mind is fully cleared and stressed-free. Being in this state, several ideas tend to pop out in an instant.

Jogging: I do this in the morning for 30 minutes to an hour. It clears the mind, helps stimulate the mind and doing this helps me come up with new ideas I have for a project or a business idea I want to look into.

Comfortable Setting: I enjoy being at a coffee shop. I concentrate better and and my focus on new ideas become on point. You could try sitting at the park or at a bookstore. Whichever you prefer, one of these settings I know will help you concentrate more on your ideas.

Reading: Perhaps this is the least of the bunch that happens, but while reading a business book and taking notes, my mind starts to randomly think of new ideas. I’m sure this may happen to you. I have been told reading a non-business book may also help you come with new ideas. Let me know if you’ve tried it.

Audio: And lastly which is one of my favorite ways to come up with new ideas, is by listening to an audio of either a seminar, lecture or podcast. I listen to a lot of podcasts, and right in the middle while they’re speaking I pop out Evernote and write the many ideas that come to mind. These ideas however while listening to an audio, they’re more motivating than the other methods I use.

I hope these six methods help you gain better ideas you can benefit from if you’re stuck not knowing what business or project to start. If you have any other methods you use and would like to share, feel free to comment below.

The Power of Positive Thinking

What favorite quote do you use when you feel let down, that nothing can’t be accomplished? Is there something in particular you look at to set your mind to think positive? The reason I ask is because I think we should all stick to a quote we can look to motivate and carry ourselves up again. I want to write this post especially for a friend that hasn’t learned how big positive thinking is.

This came about on a good evening where I was minding my own business when all of a sudden she mails me a message asking for resources of websites she could look at for job postings.

I gave her a listing and she told me she was scared of going to work for the first time, and didn’t know if she could handle the pressure of both school and work. I told her it doesn’t seem quite scary of going to school and having a job at the same time, but after you throw yourself in, you won’t know how it feels until you’re in it.

Later she complained she wasn’t confident enough and started putting herself as a let down. I told her no that’s the incorrect way to think. Anyone can be confident it’s not hard at all, it all takes practice. Her sister is a very well prepared and confident person but what I saw in her was that she is afraid of asking for help.

She later told me that it’s easier to say it then to do it. But what’s the problem here?

Of course it’s easy to say it, but it’s also easy to make it difficult. This is something that I’ve learned from the great Jim Rohn. It’s a habit that we create to make it easy for not doing anything.

When we let ourselves down and get stuck there, it’s one of the worst things we as humans can do. Our mind plays a very powerful role, that it affects how we choose to live our lives everyday.

Several things I’ve learned is that we should try having our minds set up high. Meaning we should always tend to keep ourselves positive. When you are positive and you get your mind influenced, you tend to do better things you thought couldn’t be possible.

For example if we lack in confidence, we should foremost focus on what is it that I’m good at in my social skills. If you’re good at listening, then obviously asking for help isn’t a problem. But again, what if asking for help seems terrifying? The only thing I have to say is that no man becomes successful in an island. It’s a great quote I heard from Og Mandino.

We all need help at some point in our lives and if we want to reach a certain skill or goal, we have to look at others for guidance resulting in a much higher percent success rate compared to going at it alone.

Again going back to the positive thinking of the mind, it can become very powerful and controlling. If we picture something we want, say a job for instance. If we focus on a particular job we want in our mind, it won’t be too long before we acquire it.

The reason being is because we then start to focus on the skills that is involved in that position, and soon instead of asking why can’t I have this job, you’ll be asking how can I get it? Who should I look for? What skills are necessary and how do I get started? You’ll put yourself even more closer to getting to where you want to get by preparing instead of sitting somewhere wishing for it.

Today’s post is something I wanted to discuss about to help a friend in need that hopefully now becomes motivated to start. By concluding this post I want you reader to ask yourself how has putting your mind on positive thinking helped you along the way? Has it overcome struggles? Has thinking big been a great success? If so, please feel free to share your experiences.

Planning Your Business

Planning your business is essential in order to keep it stable and successful. Either big or small, we can’t go out into the world and introduce our service/product without putting any organization into it. I’ve been asked what are the steps to planning, and I want to help you with a simple list to give you a better idea of how you can structure your business plan.

The reasons why you may need a business plan even if you think you don’t need it and you’re small, is because it’s something you can look back at to stay organized. Some of the questions you could ask when preparing this is, what do you want to do five or ten years from now? What are your dreams and vision with this? The length of this plan varies, it usually should be ten pages long, some may say it’s thirty pages, but that lands when a business is already formed and looking to expand even further.

Here’s a quick list:

  1. Executive Summary
  2. Market Analysis
  3. Management Team Description
  4. How you plan to Market
  5. Analysis of Company Strength
  6. Cash Flow Statement
  7. Revenue Projections
  8. Exit Strategy

From my understanding and the people I’ve talked with, your executive summary should stand out the most. Most startup’s probably only need this and investors will likely only observe this to determine if your business is worth investing or not. Your executive summary is basically an overview of what your business is. The mission statement, vision, what it serves, how it’s different, how it plans to market, it’s all described briefly in that summary.

Next is market analysis. You may spend a lot of time here studying your competition and where you and your product may fit into the market.

Management team description is describing about the team you will have. Their experiences and success’, who the key members will be, wages, and the number of hours they will contribute.

How you will market your product or service will also need to be examined. It narrows down to who your main target audiences are and how you can reach out to them.

When you analyze your company, you have to list down what it’s strengths and weaknesses are, alongside with any threats the business may face and how you may overcome them.

Cash flow statement demonstrates where the cash is going. It’s the accounting process of the business. Some may not be attracted to this, but this really helps you stay organized with looking at where your money in the business is.

Revenue projections is trying to estimate how much you will sell and gain during a period of time. I call it forecasting. Although it may not always predict correctly, it still gives you a good idea of what you want to aim for and what can be expected.

Lastly you want to have an exit strategy. Perhaps not the most prettiest part of the plan people are looking forward to, but planning this will have you prepared just in case something goes wrong. It can be either liquidating your assets, merging with another company or being acquired.

Hope this guide helps you gain a better idea when you’re preparing to create your business plan. I know most that I’ve talked with have skipped this process and would rather just dive in the water, but there is less risk when we prepare ourselves. If you are seeking more help and or are lost about your area, contact a professional CPA or lawyer to give you more details on taxes, regulations, and additional information on what’s needed in the process.

Funding The Project

There are many ways you can do to fund your business. Many people who I’ve spoken with had been fortunate enough with getting funds from venture capitalists and began building their projects from there. If you’re wondering or clueless of where to look to finance your starting business, I’ll give you a quick list of what I accumulated that helped me look into, that hope it can help you as well.

  • Bootstrap funding
  • Crowd funding
  • Loans
  • Family & friends
  • Angel investors
  • Venture capitalists
  • Grants

This list demonstrates the the options you have to finance your starting company, but me on the other hand, I find it difficult to see myself going to a venture capitalists or angel investor giving them my pitch of the company. You may ask why? Because I know I’m just a young guy with no experience owning a big company yet, asking for a certain amount of funds puts them at a much greater risk than one whose already create two or more businesses in the past. But I will keep in mind that having a great relationship with them can lead to great investment in the future. Banks? Nope, banks won’t do, I can for sure say they apply interests on their loans and you’d be lucky if they actually grant you one. Avoiding debt should be one of the things to keep in mind. Family and friends? I love my family and some friends may be so-so, but I’ve read about and witnessed this. The advice is that most of the time, doing this could result in conflict ending relationships with them. The only outcome I have as planned is bootstrapping my business.

What is bootstrap funding? In short words it’s personal money you’ve saved up. There are also several methods of bootstrap funding, but I personally have made the route of saving some income to accumulate it to a certain goal I made earlier this year. I find it complex because it’s the sweat and tears approach and I feel it takes longer than that of raising capital from investors. Yes I’ve heard the usual that you can start a business with up to a minimum of $350 cash, but what I’m willing to achieve is getting over that amount.

How do you come to this approach? What are your experiences with raising money to fund your business? Did you experience similar problems? How did you overcome this process?