How to Form a Business [Part 3]

This is Part 3 of our series on How to Launch a Business. You can read Part 1 here and Part 2 here.

OK, so you have the Articles of Organization filed with the Secretary of State, you have an Operating Agreement, and you’ve sent in your first payment to Uncle Sam, so now it’s time to get down to work.

Get a Physical Address Separate from Your Home

Many new businesses owners start by working out of their home, and that is fine most of the time.  If you do not have an office space outside of the home, I recommend getting a physical address separate from your home address to preserve your privacy and present an image of professionalism.

It is very easy for a prospective customer or business partner to look up your “office” address and see it is actually a residential neighborhood or an apartment building. With Google Maps, you can even see a street view of many neighborhoods, which tends to send a message that your business is not to be taken seriously.

A physical address which is separate from your home will also demonstrate that your new LLC is truly a separate legal entity.

There are many companies these days that offer virtual office solutions, which may include professionally furnished offices, phone answering service, mail routing, and a certain number of hours per month of conference room facilities and/of office space.

You can also start off with a lower package and increase your commitment as needed. This allows you the best of both worlds – you can work from home to save money, while meeting clients at a professional office space rather than your living room or a Starbucks.

Two of the more well known companies that offer virtual office solutions are Regus and United Virtual offices.

A second option is to rent a mailbox from a local UPS Store, or any other type of store that rents mailboxes, but not the Post Office.

The reason you should not rent a post office box from the Post Office is because often as a small business owner you will be required to provide a physical address and not a post office box.

When you rent from a UPS Store or other private mailbox provider, you can turn your mailbox number into a “Suite” number, and the address will be acceptable.

So, if you are assigned mailbox number 215 from a store at 22000 Market Street, then your physical business address might look like this:

22000 Market Street, Suite 215

Alternatively, you could use #215, Unit 215, STE 215 – whatever floats your boat.  You will be able to receive packages and deliveries during working hours rather than having to wait at home for a particular package to arrive, when you could be out building business.

Start a Website, Or Better Yet, a Blog

Now that you have your business entity up and running, and you have a physical address, you can get to work spreading the word about your business.

If you are setting up a brick and mortar store, then location and product offerings will be instrumental to your success.

If you are setting up a services business, then I highly recommend setting up a blog, which is flexible and dynamic and allows you to capture more potential customers by sharing information.

There are many options for “free” blogs, but most of them come with a more unprofessional URL such as www.KatysBestCookies.blogspot.com.  I highly recommend setting up a self-hosted wordpress site, which can be customized in an infinite number of ways and comes with a unique domain. You can also use a wordpress theme which will make the site look more like a website than a blog, while still making it easy for you to post new content.

There are a lot of hosting providers, but I recommend Bluehost.com because their hosting options are inexpensive and it’s insanely easy to install a wordpress site.

I’m not going to go through the specific steps, but I’ll share with you a great video that will show you how to set up a blog in 4 minutes or less:

 

Another important tip is y0u should set up a way to capture users’ email addresses so you can start building an email list of potential customers. Email lists are incredibly powerful because it’s a way people can self-select as having an interest in what you are offering. It’s a list of potential buyers that generates over time without you having to much work after the initial set-up.  You can also build trust and a relationship, with little effort on your part.

The key is to offer something of value in order for people to share their email address with you.  I suggest offering a free report or downloadable ebook. You can then set up a sequence of autoresponder emails which share valuable information, tips, advice, and build trust.

For example, if you are going into business as a financial consultant, you could offer a 5-week email minicourse on investing. If you are going to be an organizational consultant, you can offer weekly tips on getting organized.

Your readers read your tips, are reminded of your services, get to know you and how you think, and eventually a portion of them will buy what you’re offering.

Problems with LLCs

Even though a LLC is easier to operate than a corporation, there are still mistakes that can happen. It is by no means a bulletproof system.  Here are a number of the key mistakes to watch out for:

  • People often don’t separate their personal affairs from their business affairs, and instead opt to use the same bank account. Be sure to keep these matters separate.
  • Not getting enough insurance.  Work with your insurance broker to be sure you are adequately covered.
  • Going into Business with the Wrong Partners. I highly recommend doing your due diligence before deciding to partner up with someone. Make sure you are a good match and your respective strengths compliment each other. Two partners who have different strengths are better than two partners whose strengths and interest line up exactly.  Or else you will both want to do the same activities and avoid the same necessary tasks required to make the business a success.
  • It’s important to note that you can still incur personal liability, even if you have an LLC and follow the require formalities, such as if you are driving somewhere doing both personal and business errands and cause an accident or if you co-mingle business and personal funds. You could be sued and your business insurance may not cover you.
  • Not Creating a Custom Operating Agreement. As I mentioned above, if you don’t create a custom operating agreement, then chances are the operating agreement won’t specify what to do in the case of a breakup between business partners, or if the partners want to buy out one of the partners, or if there is a dispute over ownership of business assets. These things can lead to expensive disputes and/or litigation which could be avoided by investing a little bit of money on the front end to craft a custom Operating Agreement.

And that’s about it.  The rest is up to you. I admire anyone who is willing to roll the dice and start a new business, so kudos to you if you are thinking of doing so.
Did I leave out an important step of the process of starting up a new business?  I love your input, so let me know in the comments below.

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