This episode is about bringing legitimacy to your great idea or startup. Ok, so you have some great ideas, you’ve maybe even considered starting a business or have already done so. But how do others view you and your idea? Do they treat you like you are for-real, maybe even worth listening to? Or, like so often happens, do you just come across as yet another goober with a crazy idea? In today’s show I want to tell you why bringing legitimacy to your great idea & start up matters so much and how you can do it. It’s all coming up!
Hey it’s episode 7 – feeling lucky. What’s your predisposition?
As a reminder, the QI podcast is now aimed primary at innovators, startups, entrepreneurs, and anyone else who is quietly working on their own great idea. Here you’ll get the advice, tips, and inspiration you need to make it a reality.
All right, it’s all about, “helping you turn your great ideas into reality” so let’s get started. Because there’s a lot here today you can find detailed show notes posted at QI.com.
Before I start, let me remind everyone that I am not an attorney and you should not take anything I ever say as legal advice. Everything I ever say here on the QI podcast or in the blog is to be viewed as general guidance or my own opinion. You must always get the best advice you can and follow the guidance of those professionals who best know your personal situation.
1. Things Related to Your Idea That I’m Not Covering in This Episode.
These things matter – they matter a lot – and I will come to them in later shows. That stuff if more toward the merit of the ideas themselves which we’re not going to talk about today. Today is about the underlying structure that any startup must have.
a. Writing a business plan.
b. Raising capital.
c. Know your market and customer.
d. Have suppliers.
e. Know how you’re going to make your product or service.
f. Know what problem you are going to solve.
g. Have some idea of how you’re going to sell your product or service.
A lot of what follows will sound familiar if you’ve already set up a company. But there’s still a lot of tips and ideas you can use going forward so keep listening.
2. How do You Think People View You … And, by Extension, Your Ideas?
This is what I mean when I ask, does your great idea or start-up have legitimacy.
a. I know my view – there are cues and signals that I look for in sizing up someone’s new idea. This is an unspoken, very quick risk profiling exercise that professional investors do anytime we look at a new investment idea. Your potential customers or vendors
b. Think of taxi cabs in NY. Why you go for the yellow cab instead – legitimate, lower risk, recourse, predictable fares, safer (including insurance). Or the door-to-door chainsaw people that predictably show up after every storm and all through the summer here.
c. So which are you? Do you signal legitimacy, lower risk, recourse, predictable cost structure, safety? Most startups fail miserably in this regard. Or are you the guy holding up a hand-drawn sign, hoping someone hire you?
d. There’s no need to feel shame or need to hide that you are a startup. Early on with SEC Insight I did that all the time. It gave people a sense of understanding and expectations that I wasn’t some huge company with seemingly unlimited resources. The fact I was a legitimate company that’s done a lot of the things I’m about to walk you through now also gave customers, vendors, and future employees comfort about working with my startup.
3. Being Tight on Funds is No Excuse for Cutting Corners.
a. That’s still no excuse for cutting corners in ways that can really hurt your legitimacy.
b. Listen and listen carefully: If you are for-real about your great idea, your start-up, if you believe in your heart and all of your being that you’re onto something great then I want you to act like it.
c. If you aren’t willing to take your great idea / your startup seriously, to treat it like a legitimate undertaking, then why should others? Seriously, doesn’t your great idea deserve better?
4. What are Some Things That Signal Legitimacy?
These are the same things you need to be doing to get your great idea or startup off on the right foot.
a. Do you Have a Real Company? A million places to tell you how to do this. Start with the Secretary of State’s website in your home state or find out how one starts a company in the country you reside in.
b. What’s your Business Structure?
i. Just saying you’re in business for yourself and having people write check to you personally is amateur. It signals risk, lack of commitment, lack of confidence.
ii. Deciding on the structure of your business is not a decision to be taken lightly. Whatever structure you choose – a Limited Liability Company, better known as an LLC, a sole proprietorship or even a corporation – has meaningful liability, fund-raising, and tax implications. Don’t stress over this too much early on as you can change the structure later on. I did that when we got funding for Disclosure Insight.
c. Do you Have an Attorney? How About an Accountant?
i. I know, soon as you hear that you start worrying about the cost. But we already know there’s an array of tax and liability issues that have to be considered when starting a new business or non-profit. Failing to pay attention to these issues now could cost you a lot later on.
ii. The good news is you’re going to need a CPA anyway and they can easily tell you what type of structure to use as you get started, typically for a low cost.
iii. If you are going to start a company with someone else I absolutely recommend you consult with an attorney. At minimum, you have to form a partnership agreement and you don’t want to try freelancing that on your own.
d. Setting up the Actual Entity.
i. You can then save money by going to your home state or provincial website where it’s easy to find the links and online forms you need to get started. In Minnesota you don’t need to use an attorney to make this filing for you. In fact, I put a link to the Minnesota Secretary of State’s web page for starting a business or nonprofit so you can see how easy it is here. It’s pretty much the same in most other states in the US. http://www.sos.state.mn.us/index.aspx?page=92 Filing fees are about $155.
e. Do you have a Tax ID?
i. Once you get your official entity set up, if you’re in the US it’s time to go to IRS.gov to get yourself what’s known as an employer identification number(EIN). This is also used by state taxing authorities to identify businesses.
f. Get Your Business License and Permits.
i. Starting a small business is a pain in the butt. There’s paperwork, there’s regulations.
ii. Depending on what you’re planning to do, you there could also be environmental, health, or other issues that have an impact on your business. When I started First Watch in 2000 I had to get a license from the State of Minnesota at the time. It was the stupidest and most worthless process you can imagine, but it was also the law and I had to do it.
iii. But which are you – the goober holding the handwritten sign or the legitimate startup?
g. Set Up a Real Bookkeeping & Accounting System.
i. Keep your personal finances separate from business.
ii. You can’t and shouldn’t even try to avoid this if you’re serious. When dealing with a vendor, who do you trust more – the guy who scratched out a bill on a piece of scrap paper he pulled out of his rusty pickup truck or the company that took the time to prepare and send you a real invoice?
iii. “Simple” early on is fine. Even a spreadsheet and tracking things that way is ok when you’re just getting started. My guidance is that you absolutely need real accounting software by the time you file your first tax return for your great idea. I am a huge fan of QuickBooks and have used it for more than a decade with every venture I’ve started.
iv. Open a bank account for the business. This is part of clean and separate accounting. Get check stock when doing so.
h. Get Business Insurance.
i. As a new small business owner, you may need insurance, even if you don’t think you do. But this isn’t necessarily a conversation to have with your insurance agent first. For me, I ask my lawyer to help me first assess my exposures. If my attorney thinks my company poses risks I can buy insurance for, that’s when I bring in my insurance agent.
ii. Insurance premiums, like a lot of your overhead costs, feel like worthless expenditures of money. But let’s go back to the NY cab or the Minnesota chain saw guys – would you use them if they didn’t have it?
i. Use Care in Naming Your Business or Nonprofit.
i. If possible, make it short, distinctive and easy to spell. Watch spelling & complexity. Don’t be too cute – “Advice from Philly” not a good idea.
ii. North Woods Ventures, LLC types of names if the company name is not the brand. Disclosure Insight, Inc. if the company name is the brand.
iii. Research your name as best as you can to make sure it's not in use before you register it. Use the search engines where you registered your company, the US Patent and Trademark Office website, and even Google or other general searches.
iv. If you’re not careful in choosing a name, you could end up spending a lot of time, money, and effort to rebrand your company later if some attorney later on threatens to sue you because you are using someone else’s name or trademark. Do your homework!
v. Quick tip: I found if you can get a domain with the company name you want you may be onto something.
vi. If your name and /or company brand will be out there where website domain names and social media matters, you really want to try to keep the name to 15 characters or less – Twitter handle size. http://namevine.com is a great site to use for searching availability of domain names, twitter handles, facebook names, etc. I used it a lot in the past.
5. Set Up & Determine Your Business Location:
a. Don’t Sign a Lease if You’re Early On and Don’t Need the Space.
But I do want to talk about where you are going to work and get mail.
i. PO Box or Mail Boxes Etc. is fine. $90-250 per year, typically.
ii. Working from your home is fine, but you don’t want to be printing your home address on biz cards.
iii. Shared office space is a great option. It gives tdded benefit of a place to have meetings and maybe even work without the commitment of having to sign a lease. I’ve used shared office space in the past. You get a real address and a place to have meetings. They have different packages, so only buy what you need right now.
b. Get a Separate Phone Number for the Business.
i. Nothing worse than taking business calls on your home line. You also don’t want to spend a lot of money and effort to get your phone number out there only to have to change it later if your startup takes off.
ii. Second phone lines, separate phones are cheap – go figure it out.
iii. It’s not a confidence builder when the only line someone can call you on is a personal line – we may not be able to tell right away, but once we do figure it out your credibility as a legitimate business could get hurt.
c. Hire a Graphic Designer Like 99Designs.com to Create a Logo, Stationery and Business Cards.
i. 99designs (affiliate link) is great and I love them. You can sponsor a design contest for only about $350 (about that) and end up with over 100 designers from around the world putting forth their best ideas for your new logo or design for your brand. TOTALLY worth-it!
ii. Not a big fan of Vista Print – the only time I ever got business cards there, about two years ago, they were a touch smaller than standard sized cards (to save paper for them). They didn’t match our colors so well either.
Today I talked about legitimacy. Things that make a startup – and you – comes across as credible are entirely different. I’ll talk about some of them in future episodes.
To turn one of your great ideas into reality through starting a business you have to be idealistic. You also need to have to have a strong commitment, strong motivations, and good discipline.
So what do you think? Go to QuietInnovationI.com to learn more and leave your feedback. All social media links are here. I welcome questions or suggestions for making the show better.
If you want, call me at 763-260-4250 with your questions or challenges you’re facing in turning your own great idea into a reality. Maybe I’ll answer your question in a future episode.
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