World’s Easiest Startup Business Tax Tip

Let’s face it, most tax tips are either really time consuming to understand or hard to implement.  Here is one that isn’t.  And, as an added bonus, it can help you get credit for your business later too.

When starting a new business, many entrepreneurs self-finance.  That is, they pay for things out of their own pocket.  There is nothing wrong with this per se, but it can cause some difficulties, usually with tracking expenses or income.  Sure, you can go back through your bank records, but how do you know what is business and what is personal for that day you deposited your spouse’s paycheck (they have a corporate job — poor fool), and that $50 your friend finally paid you back, AND the check that small client you just did the one job for sent you?

This tip won’t help you with keeping your income records, but it can help with your expenses.  First off, the IRS wants to make sure you aren’t deducting regular expenses as business expenses.  For this reason, they look harder at small business tax returns, particularly those with Schedule C.  Second, if you happen to forget to keep a receipt or jot down a note, you need a way to remind you and your accountant that this was a business expense.

The easy way to kill two birds with one stone?  Use that second address field on order forms for your business name.  For example, this morning I ordered two memory cards for me and my spouse (who is also my business partner on one of my ventures) for our phones.  Why?  Because I needed her to do a review of something I wrote up for a client (it was Legal-ish and she is an attorney), but she had trouble because the memory that came with the phone isn’t enough to hold all the stuff and download and edit and keep a copy, and etc., and hold the new stuff.  Now, there could be some question to the IRS or my accountant about whether or not this was for personal use.  I keep good records, but as an added form of proof, I put the business name on the shipping information.  So, now despite using a personal credit card (and collecting more points, thank you very much), I have written proof that it was for the business.

(Another tip, only do this on the “Shipping Information” section, or your credit card company might deny the charge as part of its automated fraud protection)

As an added bonus, if I ever need credit from the supplier and I want it in my business’ name, I can refer them to all the orders I’ve made that have already been for the business.  They’ll see the business name on all those orders in their own system.  This won’t always work, but it can definitely help, especially if you’ve done a lot of business with them in the past.

There you go.  Easiest thing you’ll have to do today.

The Tax Man Cometh

Image via Wikipedia

If you’ve been an entreprenuer for more than a year, then you know a little bit about how big of a bite taxes can take out of the unprepared business owner. When you have a regular payroll job, the employer takes care of a lot of taxes for you. In addtition, they handle most of the administrative hassles as well. As an employee all you have to do is fill out a W-4 form and then wait for the payroll department to take out whatever the government asks for based on your number of deductions and claimed withholdings. For the small business owner, things are much more complicated.

First, there is no withholding. You have to pay into the government via quarterly payments. Second, what non-business owners don’t realize is that those taxes they see disappear out out of their paycheck each wee are only half the story. For every 7.5% they take in FICA from an employee paycheck, the employer pays another 7.5%. When you are self-employed, you are on the hook for the whole 15%. Add in Medicare, State, and any local taxes and most business owners turning a profit are looking at a 50% tax hit. Luckily, there are some ways to reduce those taxes.

Remember Only YOU Can Prevent Too Much Taxes

I don’t have a cartoon tax bear to help here, but it’s true. Many entrepreneurs rely entirely on their friendly accountant to handle all things tax for them. While this ensures that you are in compliance with the law, it does not minimize your taxes. Too many business owners make the mistake of assuming that tax planning is nothing more than holding on to your receipts all year and then handing them over to an accountant or plugging them into TurboTax. Don’t make this mistake.

It is up to you to understand your taxes and how to help make them lower. You probably already know the basics, things like recording your mileage and saving receipts from taking clients out to lunch. But, there is much, much more you can be doing.

Plan For Taxes Year Round

Seriously, a 50% tax rate is a nightmare. Bust your butt all year long to build a successful revenue stream just to flush half down the drain. It almost makes you want to go back and work for The Man. You need to be playing this game and dodging the bullets year round.

The first thing you want to understand is your tax responsibility when it comes to quarterly payments. When you worked for The Man, it was taken care of by withholding your taxes from your paycheck according to a table matched up with your W-4. For the business owner the rules are a little bit different. Basically, if you underpay over the course of the year, the IRS will ding you with substantial penalties and interest. After all, it’s no secret the government is not very responsible with those tax dollars. They can’t wait until April 15th next year to get more income. Servicing all of that debt and ongoing spending require massive inflows of cash. They get them by requiring people to in pay all year long.

So, how do you know how much you have to pay over the year? The answer is that you have to pay 85% of whatever your total taxes will be for 2008. See a glitch? In order to know your taxes for 2008 you need to know your reviews and expenses for 2008. Don’t get me wrong, I plan ahead, but I’m not magic. (I’d be in a whole other line of business if I was.) Fortunately, there is a second way. If you pay in 100% of the previous year’s taxes then you are considered “safe” no matter how far off you are on this year’s taxes. This can be a big advantage when your business is growing fast. If you paid $10,000 on $100,000 of revenue last year, and things are going so well that you fully expect to clear $500,000 this year, you are still in the clear as long as you pay $10,000 in 2008. Unfortunately, you can’t just wait until the end of the year either. That’s why your accountant makes you pay quarterly. Quarterly is the lowest allowable frequency.

Theoretically, you could pay in each quarter only the taxes you owe on that quarter’s taxable receipts. Of course, in order to do this you also need to determine that quarter’s tax deductions including breaking up any annual deductions into fourths. Obviously, this is a nightmare for you and your accountant, so unless you have the kind of business that only makes money during the end of the year (Christmas ornament shop) don’t even consider going this route. Instead, the “safe” system is to divide the 100% of last year’s taxes by four, and make equal payments each quarter.

Although the amount you are paying is mostly set, that doesn’t mean you should stop tax planning. Saving receipts is good, but taking it another step will ensure a lower tax bill come next year.

Business Only

A mistake many business owners make is to assume that if they “bought it for the business,” then it is deductible. That is usually true, but there is a catch. You want to make sure that your business purchases are used 100% for your business in the year you buy them. There is a special small business deduction that allows you to take a full write-off all at once during the year you buy equipment instead of depreciating it over time which results in a much lower deduction this year. The catch is that it has to be used 100% for the business during the year it is bought. If your daughter uses that laptop for one week during finals, you’ve lost the ability to take that deduction.

I always get asked, “How can they tell?” Truthfully, they can’t but, it has be reasonable for you to both claim and defend the 100% use. So, if you buy a new computer, don’t load games or let your kids do homework on it. Don’t save recipes or balance your checkbook on it either. In fact, take pictures of your kids and spouse using the OTHER computer so that you have proof. Also, do not throw out or donate your old computer until after the end of the tax year so you can claim that it was the “personal use” computer.

The good news is that after that first year (not 12 months, but through December 31) the item only has to remain 50% used by the business in subsequent years. The catch though, is that it must remain at 50% or more use through the full time it usually takes to depreciate. So if that item normally has a 7-year depreciation schedule, then you have to keep it around for 7 years. Don’t give the IRS ammunition by buying a “business” computer and then two years later writing off the same computer as a donation to charity. Make sure you keep the computer in your business premises until the depreciation period is over, even if you have to stick it in a closet. Remember 50% use doesn’t mean you have to use it 50% of the time, it means that out of the use that it does get, 50% or more must be for business. So, if you turn it on to make sure it still works during business hours in your office and then put it back in the closet for the rest of the year it was still 100% used for business if no one else used it.

Mileage

You can deduct more than just driving to and from a client. Driving to the office supply store, taking equipment in to be serviced, attending trainings, and more can all be used as milage deduction. The rule is that you must have a “contemporaneous” record. That means you have to write it down as it happens. Keep a notebook, or buy one of those special mileage records, in your car. Write down the starting and ending mileage of EACH LEG of the trip. That is write the starting and end TO milage and the starting and ending FROM mileage. You can fudge this, but make it as ironclad as possible and there will be no reason to look any further should someone come knocking. I tell my clients to switch pens and ink colors each quarter when they pay their quarterly taxes and once or twice more than that if they think of it. Nothing looks more contemporaneous than writing in several inks and pencil. Your accountant can’t add to this record at the end of the year even if he discovers something, so they probably won’t even bother to say anything. It’s your job to keep the record all year.

Charity

Your business can deduct donations to charity just like you can. It is sometimes possible to deduct services performed for charity. In my writing business at ArcticLlama, I build up ties in the community by doing grant writing and other services for non-profit organizations. In order to have a chance to deduct it, you must keep track of it like a paying job. Set an hourly rate that you are donating (something in the middle of your usual rates is safest), and then keep track of the hours. If you use any materials or resources you usually charge for, include those as well. When the project is finished create an invoice. You don’t need to send it to them, just keep it for your records. Most non-profits will send you a thank you letter. Keep that with the invoice as proof that you provided the services described. Also, make sure you can produce other invoices for paying clients that contain similar charges and rates to back up your deductions. If you never charge anyone else for faxing, don’t try and write off faxing for your charity project.

Research

There are many more opportunities for year-round tax planning. Call your tax advisor now, if you have one. Now that April 15 is past, they have much more time for planning with you. If you don’t use a tax professional, go to the web site of the computer program you use, or look for books that discuss tax planning. If possible, try and get something specific to your type of business. What may be very deductible for one kind of business may be very risky or flat out illegal for another business to claim, so it pays to be specific. Avoid books with silly titles like “Pay No Taxes Ever” or “Super Secret Tax Strategies”. These books are for the unsophisticated person who wants something splashy. You don’t want splashy, you want solid. “Tax Planning for Architects,” sounds more like what you are after.

Follow the year round planning doctrine, and come December or January, your accountant will have a lot more ammunition to fight the tax dragon. You’ll thank me when you pay less next year.

Grad School - Reverse Cold Calling

Our business graduate school program’s final course in the area of client acquisition is on Reverse Cold Calling. It is the toughest course to master though the techniques are not difficult to teach. What is Reverse Cold Calling? Regular Cold Calling is when the business person calls others in order to ask for their business. Reverse Cold Calling is when the customer calls the business to ask for their services. It is the holy grail of business marketing, and perhaps the toughest to achieve. What makes reverse cold calling so difficult is that you can’t do it. Every technique you’ve learned up to now involves you doing it. You make the cold calls, you go out and network with people, you go out and advertise. With reverse cold calling you can’t be the one who does it. So how do you implement a technique that you can’t do? The answer, is found in the Olympic sport of curling.

If you’ve seen people on an ice rink with brooms sweeping in front of a moving disc-thing, that is curling. Basically, curling is like shuffleboard, only after one person on the team pushes off the disc, other team members can influence it’s direction and speed by using brooms to change the structure of the ice in front of the disc. (I don’t know anything else about it, so don’t ask.) By sweeping more on the right, the disc will trend over to the right because the ice is smoother and easier to glide over. Sweeping more makes the disc go faster and so on. The key is that once the disc has been released, no one can touch it, all you can do is influence its path.

In order to implement effective reverse cold calling you have to make the ice silky smooth all the way to your business. Then, those new clients will just slide right on up to you.

Referrals

So, how do we make the ice smooth for this process?

In traditional marketing, you ask current clients for referrals. This is more effective than many other strategies but it does have some potential problems. First, many clients will feel put on the spot by your question. This ends up making them blank out on people that might be good referrals. Second, people don’t like to make decisions for other people, even their friends. So, just because Bob thinks you are the greatest guy since Abe Lincoln doesn’t mean that he wants to make that determination for his good friend Frank, who may or may not think the same about you or the service you provide. The harder you push on something like this, the more it seems like you care more about your next client than you do about your current one.

The easiest referral happens when Bob is at a Barbecue with Frank and Frank says, “Man, I love your deck, who built it?” Bob will be more than happy to recommend you at this point. However, if you sit around waiting for this to happen your business will build very slowly. A slightly harder referral is for Bob to be at Frank’s house and say “You know, you could have an awesome deck out here. I know a great guy.” Even harder is for Bob to just pipe up at lunch, “Hey, Frank do you need a deck?”

In order to sweep the ice you need to give Bob all the tools he needs, plus put the idea in his mind that he can and should be telling his friends and coworkers about you.

Reverse Cold Calling Plan

The first step to making all that ice sweeping effective is to evaluate where someone will be pushing off a disc. You will eventually try to turn all of your clients into people who market for you, but you should start where you have the best odds. The best clients to start with will be those who have big networks of their own and tend to be social. You can tell by how your client is with you. Did he tell you all about his business and his hobbies the first time you met? Does he routinely tell you about his weekend or friends. Does he ever try to market to you? Jackpot! If Bob sits in a chair in your office and says something like “Your rug looks a little worn. I have a friend who…,” then you have found your man.

Now that you have the right person it’s time to give him the right tools. Forget business cards. Have you ever stashed away 5 business cards from someone else to give out to others? Even if you did, what are the odds that you had them when it actually came up? All you need is to make sure that Bob has ONE of your cards, the one he keeps. He’ll write down, or email the info to the next person. The tool Bob does need is something easy to remember you by.

Your web site is best: www.awesomedecks.com is really easy to relay to someone during a conversation and really easy to remember. No one has to write down anything.

Some key tips on your web site:

• Always have the .com address. You can have the others too if you want, but when someone recalls a web site from memory they will almost always try .com. I can’t tell you how many people have asked me why “del.icio.us DOT COM” doesn’t work! If your web site does not have .com make sure you really emphasize that with Bob. “Bob, just remember it’s DOT NET. Tons of people screw up and go to DOT COM. So remember, DOT NET sounds more like DOT DECK.”
• Next, make absolutely sure that your homepage is friendly to someone who has never heard of you before. Don’t make your homepage all about current clients with a button over on the side somewhere that says “Are You a New Customer” Also, skip the flash, the animations, and anything else you think is clever. Someone, somewhere, blocks that stuff, whether with NoScript, or disabled by the company IT department. Only really web savvy people will look at your site and go, “Oh, it uses something that is being blocked.” Everyone else will think it is just broken, or dumb. And if you can’t even get your web site right, how will you get their business right?

A web site is good, but it isn’t enough. Your great-aunt isn’t so web savvy, neither is that one cousin. You need another way to remember your business so they can call later. A simple name seems like it might be easy to remember but it isn’t as good as you think. Tom’s Decks is simple. The problem is that if Bob tells Frank about Tom’s Decks, and later Frank meets a guy named Bill, he might remember Bill’s Decks.

Simple is good, but distinctive is necessary too. My professional writing business is ArcticLlama, LLC. You don’t have to remember the LLC to find me, so no problem there, and llama is unusual enough to trigger a memory, so is arctic. The two together are truly odd, but not so odd that someone will think bad about it. (”Die Skate Punks”, is memorable but probably not the kind of thing that inspires confidence in your grandmother.) Llama can be a little tough becuase of the two “L”s, but it is also the kind of thing people will think that they just misspelled so they’ll keep looking. If you misspell on purpose, “Amy’s Krafts,” they might give up when they can’t find you unless you really emphasized this to your clients, “Krafts with a K.”

Now Put Out the Honey

If your business info can be passed on and remembered during a conversation that is good, but you still have to make the conversation happen. For that we turn to go old fashioned bribery. Tell your clients that you are expanding your business again. Always say “again”. This makes it sound like you aren’t always expanding your business, and also that you have done it before. Both things inspire confidence and make it a little more urgent (after all you might not be expanding your business later.) Then, tell you client that for this expansion, you are doing a special deal. You will give your current client 10% off his next order, or baseball tickets, or a free hat (or somethings else as long as it is worthwhile) for each person that calls and mentions how he heard about you. Also, and this is the key, mention that the new client will also get the discount or gift if it’s in the next couple of months.

Be vague about how long. You want to make sure that there is some urgency (”only a couple of months”) but you don’t want it to come up after a little while and it seem too late (”it was four months ago and he said a couple of months, so it would probably be ok”).

The goal is, that with a good incentive, Bob will actively look for opportunities to mention you instead of waiting for them to come up. That means he will mention your business a lot more. Even if that doesn’t translate into more customers now, it does make Bob someone that knows a good provider. So, when down the road Frank’s wife mentions how nice it would be to have a deck, Frank will remember that Bob knows a good deck business and he will ask about it. Then your phone will ring. Welcome to reverse cold calling.

Grad School - Networking 511

In Last Semester’s Course: Cold Calling 502, you learned how to approach a total stranger, usually over the phone, and ask for their business. This semester in Networking 511, we’ll be learning how to approach a total stranger, turn them into an acquaintance, then into a friend, then maybe into someone to do business with.

If this were a business course on campus that I was teaching, I would spend the entire first week on the first point. At the end of that week, I would have a test. That test would be worth 50% of your grade, because it is so important and it is where most people fail in real life. Ready? Here it is: Networking is not a quick way to get new business.

Exam 1 (Pass/Fail only, no partial credit):

1) Is Networking a quick way to get new business?

2) If you need 3 new clients by Friday is Networking a good way to get these clients?

3) If you want to measure your Networking success using any metric is one month or less a good time frame to use?

If you answered Yes to any of the above questions, re-read the highlighted sentence above the exam. Do not keep reading until you can pass the exam with a 100% score.

Networking Spam

If you look at it the right way, you’ll find that almost every interaction between people has “spam.” Let’s take a look at networking spam. Rodney is a new sales professional. He has recently been promoted and is eager to prove himself. After reading some of the big-name, highly recommended, sales books, he decides to try networking. Rodney attends the local Chamber of Commerce event. At the event, Rodney goes up to everyone. He shakes their hand, asks them what they do, then tells them what he does. Then, he hands them a business card and gets their business card and moves on to the next person. Over the next week, Rodney calls everyone he met at the meeting and says, “Hi, we met at the Chamber of Commerce…blah, blah, blah. Is there anything I can do for you right now?” Rodney doesn’t get any new clients. Not only that, but for those people who remember Rodney, they add him to their internal spam filter and if they see him coming next week, they’ll make sure and move away. Rodney tells anyone who will listen that networking doesn’t work.

So, if networking is so great, why didn’t Rodney get any clients? Because, he never took this class, or he dropped out after failing Exam 1. Rodney is not networking. What Rodney is doing is List Building by collecting information in person. This is not networking. The phone calls he is making are cold calls based on the list he built.

Now that we understand what Networking Spam looks like we can move on to what good Networking looks like.

Networking = Making Friends

Recently, I wrote about some reservations I had about using Twitter. My biggest hangup was not completely understanding their concept of “Friends.” Let’s review. You already have friends. If you think about it you actually have several kinds of friends. You have some friends who would fly down to South America to bail you out of jail, and you would do the same for them. For some people, if you aren’t like this, then you are not “friends.” This will obviously make your Twitter list very small, and make Twitter not very fun or useful.

For our purposes you are going to have to broaden the definition. You have friends at work that you have never done anything outside of work events with. They are still friends, they just aren’t close friends. For our purposes, “friends” means anyone that you like (and who likes you) well enough that you would save them a seat at a conference that you both were attending and they would want that seat, because you would like to sit together, not because it is the socially polite thing to do. Notice in the example above, nobody will want that seat next to Rodney.

So, with the above definition in mind, networking is nothing more than making friends on purpose. If you think back, you’ll notice that most of your friends you made by accident. They went to your high school, they lived in your dorm, they worked for the same company, they were friends of Bob and Sue. In networking we are going to remove the accident factor. Instead, we’ll be intentionally making friends. This is why networking is not fast. Every once and a while you will make an instant friend, but usually it takes some time.

How to Make Friends (a.k.a. How to Network)

In order to make friends and network you have to meet people. Since we’ll be making friends on purpose, we should put some effort into making the most beneficial friends we can. This is where attending Chamber of Commerce meetings comes in. If business owners and managers are the kinds of people who would be useful friends to have then the Chamber of Commerce is a good place to start. Attending a Chamber event is easy. When you get there, think about making friends, not networking. Imagine that you are going on a trip into space and the event you are at is with the other people who will be making the trip. In other words, if you want to have any friends once you get into space, these are the people who will have to be your friends. There is no need to talk to everyone here. After all, if these people are the kinds of people you want as friends, this won’t be the only time you come to one of these events. There is no urgency, and especially no desperation. How would you feel if a total stranger showed up at your 10 year reunion and begged to be your friend? Don’t be that guy.

Mingle by going up to people who aren’t currently talking to other people. This way, you aren’t interrupting. Say something like, “Hi, I’m Brad,” and offer your hand. They’ll shake your hand and tell you there name. Then say something like, “This is my first one of these. Are they always so <whatever>…” If it’s their first one too, then you have something in common. Go from there. If not, they’ll tell you something about themselves while answering your question. Go from there. No sales, no business cards, no nothing. After a while excuse yourself by saying, “Well, I don’t want to keep you all night…” and move off to someone else. If someone happens to come up while you are talking with Brad, he’ll introduce you to that person, and now you’ve met two people with only one effort.

Remember names first, everything else second. A helpful way to remember names is to repeat it back to the person out loud. “This is Joe.” “Hi, Joe, I’m Dave.” Then, SILENTLY in your own head associate their name with their most noticable characteristic. “Big Nose, Joe.” “Pregnant, Sally.” “Three-eyed, James.” Meet as many people as you feel is natural, but set a goal of at least 7. That way you won’t be tempted to skip out after just meeting two people.

Ignore advice to write down everything you find out. Do write down names and companies but only do this after you leave the event. While you are sitting in your car is good as long as there aren’t tons of people walking by wondering what you are doing in your car creepily writing. Don’t be tempted to be the “super memory” guy. It is actually unnerving for someone you barely know to ask “How is your wife, Sally doing? And little James and Becky? James just had a birthday, didn’t he?” This doesn’t make you a good networker, it makes you that guy from the Robin Williams movie where he is the photo developer obsessed with that family.

Now, go to another event that has similar people. If you are REALLY lucky someone you met before will be there. Make a beeline for them and re-introduce yourself and make a “small world” type comment. Talk to them for a while and then meet at least 7 people. Make sure that you go back to the original meeting event (Chamber of Commerce) so that you can meet them again. Soon, they’ll start to associate you as someone they know. Then, as someone they are friends with. Now you see why this can take a while.

Network Now

One of the big networking books uses the phrase, “Dig your well before you are thirsty.” The message is that you can’t wait to start digging a well until you get thirsty and expect it to be a good thing. It takes a long time to dig a well and you’ll need to find water somewhere else before the well is done. Same thing in networking. It takes a long time to network and you’ll need to find clients somewhere else before you have a network. So whether you plan to start a business in 10 years or you started one 10 years ago, the time to start networking is now. In fact, networking is easier when you do not need it. You will naturally be less needy. After all, you don’t need anything. But, when you do need something, you’ll have these people to draw on. So, grab your local business jornal and start going to those Chamber of Commerce events. Join one of the social charities (Rotary, Elks, Kwanis). Also, become a member and volunteer at one institution in your city (Museum, Zoo, Theatre). You’ll start making friends and before you know it you’ll have a network.

Why You

The difference between a network and a six-degrees of seperation game is helping. You aren’t the only person who volunteers at the art museum. But, if you are the guy who is always helping, that makes you someone special compared to everyone else. When you talk to people listen for opportunities to help them out. Not necessarily with your business (although that would be great), but anyway you can help. If someone mentions refinancing and you know a great mortgage guy, let them know. Make sure it is helpful not pushing business to a friend. “You’re refinancing? I know a great guy. He’s in Rotary with me. He did my home equity loan. I can get you his card or email his info or something if you want.” Remember helping is offering. Selling is following up. If they don’t say yes, don’t pursue it.

The great sunny day will come when one of your new friends comes up to you and says, “Hey, you’re in insurance, right? My sister just had a baby, and they need to talk to someone about life insurance.” It won’t happen tomorrow, but it will happen. As an added bonus, you get to use your network in reverse. “Connie, you guys remodeled your kitchen last year and we are thinking about doing ours. Did you like your contractor?”

Online

I started a freelance writing business this year. Well, actually I’ve been doing it for a very long time. More accurately, I quit my “regular” job this year. As someone who has lived here for a long time, and someone who was a consultant for a lot of different companies, I actually have a bit of a local network. However, I think I could do even better online and would love to build up my business on the Internet. The answer? Networking. It works online too.

Networking online works the same as in flesh and blood. Instead of Rotary, there is Digg. Instead of Photographer Friends of the Museum, there is Flickr and so on. The process though it no different. Start going to Digg (or Furl, or Technorati, or…) and start meeting people. Read what other people posted or bookmarked. Find people who could be useful or you could be useful to and meet them. Same rules. No business, no desperatation. Instead of talking, you email. “Hey, loved that bookmark about albino flammingos doing ballet.” Hopefully this strikes up a conversation. If not, then just like in real life, move on. Talk to someone else.

Again, avoid Neworking Spam. Posting three-hundred bookmarks to your own web site and emailing everyone “just to say hi” won’t win you any friends (or get you a network). Just think, is this useful? Would I be glad if someone did it to me? From the above example, “You might want to check out my Digg page on ablino flammingos playing violins” is good; “You might want to check out my Digg page on hot naked co-ed iganuas” is not good.

In the Mean Time

So, what do you do while your network is building? Everything else. Check out the Cold Calling class, advertise, reach out to friends, offer to help non-profits for cheap, whatever. Keep going though, because you are going to have this awesome network and you don’t want to have nothing for it to do.

Practice

If you want to practice, network with me. I’m a professional writer, a Certified Financial Planner, a former Microsoft Certified Systems Engineer (MCSE), a business owner, a business and management coach and consultant, and I’m pretty sure I’ve come up with a better way to do search engines (but I need to do some research). I also have gotten addicted to Wordpress, I’m trying out Twitter, and I’m also seeing if I can figure out which of the millions of social networking sites will be useful (and fun) for me. I’m selling my house (without a realtor), I’m considering moving to the west coast except I can’t figure out how to make the cost of housing work. I’m a new-ish father, a husband, and I live in Denver.

Spot anything? Send me an email. Remember, start a conversation (I like this, what do you think about…), or offer something useful (When I moved to Portland three years ago…). Soon, we’ll be friends. Then you can say, “Hey do you know anyone in the market for puce belly-button rings forged out of yak lint?”

[For more networking tips, check out MarketingHackz "Networking - The Key Element to Building a Brand"]

Write Your Business Plan - Later

Meet Jerry. For as long as I’ve known Jerry he has been talking about starting his own business. He does a certain kind of technical engineering or something that apparently is not only in high demand, but it’s one of those kind of things where people really care more about the individual doing the work than the company they work for. Jerry is very well respected. He could moonlight on the side for himself by doing the smaller projects that are too little for bigger companies like the one he currently works for.

Over the last six months or so, Jerry has talked about this big event happening where he lives. It’s a national conference and it happens to be in his city this year instead of across the country somewhere. It would be an amazing networking opportunity and one of his best chances to really get his name out there.

He didn’t go.

You see, Jerry has been reading books. Now, I love reading books, and frankly every skill I have these days I developed either from the beginning, or moved to expert level, by studying books. But some people give books too much credit. Jerry is too smart to read something in just one book and consider it the truth, but he did read in several books that before he does anything with his new business he should have a business plan, and he hasn’t written it yet, so he hasn’t made business cards, registered a domain name, or setup a web site. Because of that, he had nothing to network with.

Someday, I’ll write the definitive guide on how to know when to follow what you read, and when to ignore it, but for today, let me instead make sure that what happened to Jerry doesn’t happen to you.

A business plan is a very important document. Frankly, it is a critical component of you business’ long term growth and success. But it is NOT your start up permission. If your new venture involves a large bank loan, venture capital, or even risking your family’s livelihood, then yes, your business plan should come first. The analysis you do there will not only convince others to invest or lend you money, but it will let you know if you are making the right move. On the other hand, if your business does not require a large amount of start up capital and especially if you can do it on the side without quitting whatever it is that currently puts food on your table, then you can write your business plan later. In fact, it might be better if you do. After all, after a few months of running your business, you’ll know a lot more about how things work.

Entering into some sort of lease, spending thousands of dollars renovating space, and spending even more to build an inventory can mean that Day 1 of your new business involves a very big financial commitment. If this describes your new venture, then start with a business plan. Today though, a lot of entrepreneurs are starting up service oriented businesses, many of which can be run out of their home with a minimal outlay of capital. If this is the case for you, then your motto is, “Business plans? We don’t need no stinkin’ business plans.” Instead, register your domain name (today), start building your web site (today), print up plain cheap black and white business cards (today), start networking (today), and then write your business plan (next week).

Jerry still hasn’t started his new business, but he told me about a great new book he got about marketing. I can’t help but wonder if Jerry isn’t afraid to actually start his business. I mean, a marketing book? What can you market if you haven’t started up? Don’t let your business plan be your procrastination excuse. Remember the Law of Inertia from physics class? (Don’t worry, I’ll help you out.)

An object in motion tends to remain in motion unless acted upon by an outside force. An object at rest tends to REMAIN AT REST unless acted upon by an outside force.

That outside force isn’t a new business book, and it isn’t your business plan, it is your passion. Point that passion at your basic cheap startup tasks. Once you get your business rolling, it will keep rolling (remain in motion). One day you’ll look around and think “Where do I go from here?” The answer? Sit down and write your business plan. Until then, go to the damn conference!