Small Business Week: Starting Up and Staying Competitive
Wednesday, May 20, 2009; 12:00 PM
Rieva Lesonsky, the CEO of GrowBiz Media and former editor of Enerepreneur magazine, was online to answer questions about how to start your own business on Wednesday, May 20 at 11 a.m. ET.
Rieva, who is the author of the best-selling book "Start Your Own Business," was a featured speaker at the Small Business Administration's National Small Business Week conference taking place this week.
For more from our Small Business Week series of live discussions, click here.
Reston, Va: I am considering starting a business as a wedding photographer. I have a list of equipment needed to start the business: cameras, lighting, and so on.
Once I make the final decision to go for it, should I contact the SBA or the local chamber of commerce? Will someone be able to walk me thru the process of applying for a business license.... And where to go for insurance just in case a client isn't satisfied, or equipment malfunction?
Should I wait until I am granted a license before purchasing the equipment in order to deduct from earnings on tax?
Rieva Lesonsky: Wedding businesses are smart choices to start right now, since I believe we're on the verge of a big increase in the number of marriages. The echo boom, started in 1987 (meaning 4 million kids a year were born) and we've been at, or near that number ever since. The average age women get married in the US is 25, so we're only 3 years away from the start of a wedding boom.
That said, if you're concerned about the paperwork you need, you can take advantage of free information offered by the SBA and their resource partners SCORE and the SBDCs. I wouldn't even wait for the final decision, go there now. They may be able to help you with the critical thinking you need to make that final no/no go decision. You can find the nearest SCORE office at www.score.org and the nearest SBDC at www.asbdc-us.org.
Chevy Chase, Md.: I'm having a big problem writing a business plan. Do I really need one? If I do need one, is there software that can help me write one?
Rieva Lesonsky: I am a big believer in business plans. Even if you're not using one to raise money, it's a great way to gather your thoughts, understand your challenges and lay out a way to get to your goals.
Writing a business plan isn't as hard as you think. Get some business plan software--it will essentially lead you through what you need to do and what you need to know. Working with the software, you'll also be "forced" to do market research, find a way to set prices and come up with an overall strategy.
Go to www.bplan.com for more help and information.
Chicago, Ill.: Do you think it's worth time and effort for a small business to have a blog, Twitter and use other social media tools? Are you really at a disadvantage if you don't get on that bandwagon? Do I need to find a social media specialist to help me develop a strategy?
Rieva Lesonsky: Understanding and using social media is essential for every entrepreneur today, no matter the size of your business. It can seem overwhelming to navigate your way through the SM landscape, but it's not as difficult as it seems.
Twitter is all the rage right now and I personally have used it (and still use it) with great success. The key to Twitter and Facebook is setting some time aside to learn and listen.
I was frustrated by Twitter until is started using 3rd party applications (all free) to help me manage the flow of conversations. (I love Tweetdeck for the desktop and Uberberry for my BlackBerry.)
There's starting to be a cottage industry developed around books about social media. The easiest way in for me was to ask my friends and colleagues who use social media effectively and asked them to mentor me.
I was on a panel yesterday at the SBA's National Biz Week event on social media, and believe me there are a lot of business owners in the same boat you're in.
Before you hire a specialist, I would make sure you're familiar enough with the SM out there, so you know what to ask.
SM also includes things like You Tube, podcasts, writing blogs, etc. Do some of your own research first, but do it now. You're missing a lot by not participating.
Bethesda, Md.: I have several friends who have started selling their crafts/wares on etsy.com, which seems like a great place for people who want to take their hobby to the next level. What do you think of sites like that? Are they helpful place to begin? Or are they too big to really get your name out there?
Rieva Lesonsky: I know many people who love etsy.com, but it has become quite large which means there's a lot of competition on the site. However, it's still the go-to site to go for selling handcrafts.
The key is to make etsy a part of your selling strategy, but not the only part. You should have a Web site of you own, which you cross-promote on etsy. Also do some research and see if you can find other popular sites that specialize in the niche you're in. Again cross promote. Make sure you business cards, brochures, even email signature) points potential customers to all the places they can find and buy your products.
You should supplement this on-line activity with some in-person sales events if you can. Craft fairs, etc. where people can see and touch your products help spread the word.
Arlington, Va.: I depend a lot on credit cards to keep my dog grooming business afloat, but I don't want to. I want to expand but I can't get a decent loan. What should I do?
Rieva Lesonsky: Money is really tight these days, so getting a loan is not that easy. You didn't say if you're solely dependent on the cards to get you through each month. In other words, are you actually bringing in more money than it's costing you to run your business?
If you are and you're in a tight situation these days due to the slow economy there might be some help from a new loan guarantee just announced this week by the SBA. You have to be a viable, going concern to take advantage of ARC. ARC loans are essentially bridge loans designed to help biz owners get through these tought times. The loans are for up to $35,000 and available from commercial lenders. They are 100% guaranteed by the SBA and interest free. If you get a loan, you have to start paying it back 1 year after you receive the money and have up to 5 years to pay it back.The program is scheduled to kick off June 15th. Go to www.sba.gov to see if you might qualify.
It's not a good idea to indefinitely depend on credit cards. So you might need to look at your business and see where you can cut costs.
Washington, D.C.: Does every small business need an "elevator pitch?" Isn't it better to explain a business in more detail? Where are there some good examples of this kind of pitch?
Rieva Lesonsky: Yes, every business needs an elevator pitch. Of course you need to be able to explain your business in detail, but in order to get a meeting where someone wants to hear all about your business, you first need to give them a reason to want to know more.
That's what an elevator pitch is all about. Essentially it's a 30-90 second summary of what your business is: what you do, why you do it, who your target market is and what your USP (unique selling proposition) is.
You might run into someone at a Chamber event, an industry meeting, or even a Little Legue game who asks what you do. A smartly crafted elevator pitch will hopefully convince them they want to know more--and then set up a follow-up meeting where you can explain and explore your business in depth.
Practice your pitch, it's a lot harder than it sounds to distill the highlights of your company to several seconds.
Rockville, Md.: Can you recommend any good business books about getting started? Where should I look for start-up money if I want to start a hair salon? I have experience as a stylist, but not a lot of actual business experience.
Rieva Lesonsky: There's a lot of startup information available. You can go to www.allbusiness.com (where I write a regular column). Also the Web site of the government agencies are chock full of really useful startup info. Go to www.sba.gov, www.asbdc-us.org, www.business.gov and www.score.org. Visit your local SCORE chapter or SBDC office.
Also, there are trade associations that deal specifically with the the salon business. You can find them through a Google search or by looking in the Encyclopedia of Associations. The trade association can give you lots of information about what you need to know, have and do to start your own salon.
Oakton, Va.: What problems did you not anticipate when you started your own business even though you were editor at Entrepreneur?
Rieva Lesonsky: That's a great question. One of the most frustrating things for me was doing all the initial research finding the best phone system and Internet provider. There's so much available and it's hard to know, from a lay person's perspecitive what you really need.
Also the decisions about what form of business you should be. C corp or S corp or LLC? We made a few mistakes (thankfully small and not very costly) and realize now we should have consulted with a lawyer or CPA BEFORE we did anything.
I have long said, starting a business is a time-intensive endeavor. But even I under-estimated that during year one, I've averaged about 5 hours of sleep a night.
Still, having just passed our 1st anniversary of being in business, it's the smartest move I've ever made and I only wish I'd done it sooner.
Philadelphia, Pa.: As a two-person shop, I think I need to hire more help. How do I know if I can trust someone and what if I can't afford to pay them benefits? I'm not a stock-option kind of company.
Rieva Lesonsky: First determine what kind of position you need. Do you really need a full time employee? Will a part-timer do? Can you outsource the work to an independent contractor? You need to be careful there, the IRS looks closely at companies that misclassify employees as independent contractors. There's a free checklist available at www.irs.gov.
The good news is there's a lot of talented, skilled people in the workforce right now, looking for work. That might make it easier for you to find someon.
Many people are still looking for benefits thoughc an team up with others in your industry (some trade associations offer access to benefits)
You also might try interns, but make sure you give them meaningful work. Check state laws, some states require interns be paid
Anonymous: Blank Question for Rieva
Rieva Lesonsky: It was so great talking to you today. This is a great time to start a business or grow the one you have, as counter-intuitive as that seems.
Thanks you all for taking the time to talk to me. You can always email me at firstname.lastname@example.org if you have other questions.
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