NOOBS Guide To Starting A Business

Discussion in 'General Shop Talk' started by etnad0, Dec 17, 2011.

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  1. etnad0

    etnad0 TPF Noob!

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    I’m surprised this hasn’t been done yet, so I figured I’d help out the NOOBS that keep asking how to start a business of any kind. This specific guide applies to photography, but can be applied to almost all business ventures. While I won’t officially own a photography business until February, I know about business from running my own and I’m taking the same steps to start my photography business.

    1. Make sure you have a passion for the business. Think about working at a job you hate. If you start a business just for the money, but you hate the craft, you’re stuck with it. Your credit and financial well being are also on the line.
    2. Learn as much as you can about your craft. There are some things that only experience can teach you about running a business or being a photographer, but having book knowledge won’t hurt. School will definitely help, but it’s not necessary to be a successful business owner or photographer.
    3. Create a company name. You’re going to need a name to get your licenses unless you plan to work as a Sole Proprietor, which is a horrible business move for starters. Don’t call yourself Joe’s Dog Photos if you plan to take photos of other stuff. It won’t help your business to have a name like that if you want to get business other than dog photos.
    4. Decide on your company set up. You have several choices: Sole Proprietor (bad), Partnership (bad), S Corporation, C Corporation, and LLC. These are the most common types of business setups. With the exception of the first two, they provide protection for your personal assets in the case of a lawsuit.
    5. Start your business plan. Even if you plan to go into business by yourself, you need to have a solid business plan. If you don’t know how to write one, use Google and find out. If you don’t have one, you are planning to fail by failing to plan. Your business plan should address your company goals, slogans, logos, colors, manager experience, profit/loss projections, market research, competition, overhead, employee wages, exit strategy, product pricing, and quite a few more important business items.
    6. Write an Operating Agreement. In most state, failure to do this means your company falls under the default rules of the state. Here is why that is bad: If you contribute 90% of the startup capital and you own 90% of the company, but you fail to write your Operating Agreement, if there is ever a dispute and the company is dissolved, most states split everything 50/50 regardless of the investment of the individual. A well worded Operating Agreement ensures that won’t happen.
    7. Write a Marketing Plan. People in business don’t just come up with marketing ideas after the doors are open. They either hire people to market for them, or they lay out a plan well before opening the doors. Make sure you know how you plan to get customers in the door.
    8. Decide if you need partners. This is where your business plan comes in. If you need a partner or investor, they will want to read it. Don’t miss out on potential investment capital by skipping step 5.
    9. Build your website. In this day and age your website shouldn’t be an afterthought. It is the online version of a business card. Make sure your website at least has the basics like company information such as: address, phone number, and hours of operation.
    10. Start a mailing list. Put a mailing list sign up box on your website. Most companies don’t do this until after they’ve missed hundreds or even thousands of potential repeat visitors. I learned this the hard way a while back. Don’t SPAM your mailing list with daily offers because they will unsubscribe. If you run a Word Press based website, Feedburner is a great free mailing list manager that will update subscribers whenever you update your site. A mailing list is the easiest and fastest way to bring in repeat business with very minimal cost on your part.
    11. File your paperwork. You will need to fill out the correct paperwork with the Secretary of State, IRS, Business License Department, and anything else your state requires. This can cost hundreds or even thousands of dollars depending on your state laws. This includes business insurance as well.
    12. Location, Location, Location. By this time you are likely ready to find a space. Do some research on the area. Don’t open a photo shop next to K-Mart because they have their own photo service. I recently saw someone open a Dollar Store next to the 99 Cents Only Store. Dumb idea, and yes they are out of business.
    13. Get your material printed. This refers to your business cards, fliers, posters, CDs, DVDs, and any other promotional material that you will need. These are essentials in any business and they need to be finished before opening day.
    14. Buy your equipment. Whatever you need and don’t have, you need to buy before opening day. If you have a shop, you will need counters, cash register, credit card machine, finance book, paper, printer, computer, displays, receipts, and a lot of other stuff. The list can really get long depending on how you want your space to look. The same goes for photo equipment.
    15. Test your equipment. I heard that 15% of all equipment is faulty out of the box. I don’t know if that’s a sure thing, but don’t wait until opening day to find out. Test your equipment before you open.
    16. Set an opening day. Decide on the best time to open. Holidays are great times to open because you can get a much needed financial boost from the rush. Don’t open on the exact day, but open a few weeks before if you can, so you can get the word out.
    17. Sell what customers want. Don’t try to make customers want what you have. If you are selling 8x10 photos but don’t want to offer wallet size, and the majority of your customers want wallet size as well, you can either lose money and refuse to offer it or increase your options and make more money. With that in mind, draw the line somewhere. If you take pictures of pets, don’t let someone talk you into going into a lion cage to get a picture of their big kitty. Make wise business decisions.
    18. Learn from mistakes. Whether they are your mistakes or the guy next door. Learn from it and try not to repeat them. Example: I didn’t start a mailing list with a previous business, so there was no way to notify customers when we moved. All we could do is hope the neighbors would tell them.
    19. Do your accounting daily. If you let it pile up, you won’t want to do it. Do it daily and stay on top of it. It will also help you identify where your are wasting money and where you should be spending more money.
    20. Provide great customer service. People call their friends and family when your service is good. People write blogs and post on internet forums to tell the world when your service sucks. Don’t end up on the internet for the wrong reasons.
    21. Pay your damn taxes. If you want to lose your business and possibly go to jail, ignore this step. In most states you don’t pay tax on services or you pay very minimal taxes. Pay them if your state has taxes on services. Hire a CPA if necessary.
    22. Business is Business. Don’t get emotionally attached to your business. In the end it’s about money and if it’s not, keep it as a hobby and don’t waste time and energy starting a business. Starting a business is an expensive way to practice your passion if you don’t intend to make money. Once your business is no longer profitable, cut your losses, close it down, and move on. Moving on DOES NOT mean don’t do it again. It could just be waiting for the right time to try again. Don’t sink $30,000 to keep your business up and running if you’ve already lost $100,000. We have a saying at the casinos here in Vegas: “Don’t chase money you’ve already lost. It’s the fastest way to lose more money.” Refer to Step 5 again, which should include an exit strategy just in case things don’t work out as planned.
    If there is something that I failed to cover, you need to read Step 5 again. Your business plan should be 30+ pages and cover almost anything you can think of concerning your business, including who you plan to ship through, if you plan to ship orders, and if your employees can wear open toed shoes or not. Hopefully someone will sticky this for the NOOBS out there so they don’t have to keep asking where to start.

    Also, notice how much you have to do before opening your doors. The first 15 steps will probably take you 60+ days depending on how thorough you are in your planning. You should also work on your photography skills during this prep time. Skills + Business sense = successful business.

    For more information on business types, business plan templates, start up capital, small business loans & grants please visit www.SBA.gov (Small Business Administration)


     
    Last edited: Jan 5, 2012
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  2. pgriz

    pgriz Been spending a lot of time on here!

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    A few comments. Agree with most of yourpoints. Definitely, from a startup business perspective, you’ve covered the bases. I’d add a few more:
    7b) Pricing is a key element of any marketing plan. The pricing has to be calculated both from the bottom up (direct cost of providing a service/product times the turnover rate, plus overhead costs and contingencies and profit), and from top-down (competitive pricing, market demand, market share, market dominance). Getting the pricing right for your particular niche is a sign of business genius.
    23) Know your core competencies. That’s your competitive advantage and pricing advantage. Know also when you’re leaving your area of competence and are heading into less effective areas. It’s ok to do this to develop a new market, but it is a drain on energy and resources if those are more or less “one-off’s”.
    24) Every business gets some “bad” clients. Decide ahead of time how you will a) prevent the problems in the first place, b) control the situation if it arises, and c)know your legal recourses if things start getting out of control. Depending on the business, “qualifying” your prospects and estimating your risks in taking on that prospect as a client maybe a necessary step to take.
    25) Know the difference between working IN the business and working ON the business. And part of working ON the business is taking mental breathers to keep perspective and see what else is going on. Doing business 24/7 is not good for any business owner mentally,physically, spiritually or emotionally.
    26) Embrace change as a competitive edge. Nothing stays the same so part of adapting to the world as it changes is to keep changing with it. That means ongoing education in both the processes of the business, and on where your business fits in to the overall world. Being the most efficient and cost-effective buggy-whip maker is not a smart business move.
     
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  3. etnad0

    etnad0 TPF Noob!

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    Great points. Keep in mind that this should also be part of Step 5 and detailed in the business plan. Very good info.

    Also more great info. Thanks.

    Great advice that they should also add to their business plan if they haven't already. I haven't because it's in my head, but I think I'm going to put it down on paper now that you mention it.

    More great advice. Thanks for adding it.
     
  4. BlackSheep

    BlackSheep No longer a newbie, moving up!

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    What about insurance - liability & equipment? That should probably be included in the list somewhere, as it seems to be something alot of newbies don't think of.

    Nice job putting this all together.
     
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  5. etnad0

    etnad0 TPF Noob!

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    Thanks for the compliment. Check #11 insurance is there.
     
  6. Bitter Jeweler

    Bitter Jeweler Been spending a lot of time on here!

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    Now we'll see if this can get stickied!

    I wonder if people report it as "Sticky" material, will get it done?
     
    Last edited: Dec 17, 2011
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  7. camz

    camz No longer a newbie, moving up!

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    It tooks almost one year to write out our business plan when I put up a care home for the elderly and the mentally challenged at the age of 23 - and continously revised it six months after that. I sold it 4 years later at full capacity and the height of the real estate market in 2006. etnadO, this is really good, I honestly can't believe how many people go into business balls to the wall without even knowing a tenth of what you listed above.


    I nominate this thread to be locked ontop of the listings in the "General Shop Talk". It'll save people time, grief and alot of debates/fighting. And you know January is a coming...new DSLR purchases!

    Wadaya say OVERREAD & COMPANY?
     
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  8. bazooka

    bazooka No longer a newbie, moving up!

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    Question: Under what circumstances would it be better to be a sole proprietor? If none, why is it available as an option?

    Can you expand on each of these different type of business structures or do you have a link or book that you recommend that explains them?
     
  9. gsgary

    gsgary Been spending a lot of time on here!

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    Should be in step 5
     
  10. gsgary

    gsgary Been spending a lot of time on here!

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    That should be in step 5
     
  11. gsgary

    gsgary Been spending a lot of time on here!

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    That should be in step 5
     
  12. gsgary

    gsgary Been spending a lot of time on here!

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    That should be in step 5
     
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