How To Start A Business (General Overview)

A Whizkins publication
A Quick Guide to Starting Your Own Business

Topics Include:
Business Planning
Determining Financial Needs
Choosing a Legal Entity
Whizkins
And More!
How to Start a Business
Copyright 2014 Whizkins Corporation. All Rights Reserved.
M
Millennial
Made
TM
100% Made by Millennials.
Version 1.0
CONTENTS
A Whizkins Guide
Payroll Taxes
13
02
Create a Business
Model
03
Create a Business
Plan
04
Customer Discovery
& Validation
04
Financial
Projections
05
Determining
Financial Needs
06
Choose A Business
Name
07
Choose A Legal
Entity
08
Get
Protection
08
Permits, Licenses &
More
09
Select
A Location
10
Acquire Insurance
Coverage
12
Hiring
Employees
12
Manage Payroll
Taxes
13
Acquire Record-
keeping Tools
14
Lets
Wrap Up!
Retail
Creatives
Service
How to Start a Business: Introduction
Welcome to Whizkins! Were super excited for you, and we congratulate you on taking the frst steps towards
making a living from your passion. Our Whizkins team is always a click away if you have any questions.
Before you get started, if youre interested in building a team, check out some of
our member profles or Whizkins Pages to see if theres anyone looking to pursue
a passion similar as yours. You might just fnd that perfect match to join you on
your project, but if you want to ride solo, well be here to support you!
Just one more small note. Starting a business is a marathon and not a sprint. Teres a lot of material here, so
feel free to always ask questions and take breaks. No one expects you to knock everything out in one weekend.
OK! Are you ready? Take a deep breath. Here we go!
Well cover starting a business at a very high level since diferent businesses have diferent steps along the way,
and as you read through this guide, you can tweak things here and there to ft to what youre doing. When youre
ready, you can take in more of our resources on the Whizkins website for specifc needs.
If youre not sure about getting started or where to go, just log in and ask us, and well be glad to help you
along your way. While youre reading, you might fnd you can jump sections, please feel free to do so if youre
comfortable skipping. Remember, you have the whole Whizkins community behind you, and everyone at
Whizkins is here to help make creating, developing and managing businesses easier.
Again, welcome, and lets get started.
Step 1 - Create a Business Model
To begin, we recommend flling out our Whizkins exclusive idea-to-paper worksheet we call Eureka! Its free,
only 14 questions long and you can download a version of our Eureka! form from our online store.
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Above: Small businesses sup-
port the economic backbone
for many cities and counties.
02
So what does our Eureka! form do for you? It helps you quickly add more details to your idea without getting
you started on a full business plan. Essentially, the Eureka! helps you create a business model in a very easy way.
(A business model is just a description on how you will create and distribute value to customers.) Once youre
fnished with the Eureka!, we can help you start building on top of this business model by using some of our
other resources, such as a our business plan template.
Step 2 - Create a Business Plan
If youre on Step 2, great work on completing your Eureka, or completing another business model worksheet!
So whats next? We recommend creating a business plan. Yep, we said that word: planning. It wont be too bad,
though, because were here to assist you with it.
We have resources available on Whizkins for creating business plans. You can fnd the Whizkins Ultimate
Business Plan in our online store. If you want to use our business plan, you certainly may, or you might want
to fnd a professional on Whizkins who is ofering business plans
too. Whatever is the easiest for you. If you need our help, just let us
know.
So what does a business plan include? Here are a few items your
business plan should include:
Executive Summary - Brief summary of everything youre doing.
Organizational Plan - Description about your business model
you just worked on, information about your purpose/mission and
problems youre solving.
Services/Products - Description about the products or services
you will be ofering to solve your customers problems.
Intellectual Property - Tese are intangible assets, such as patents, trademarks and copyrights.
Strategic Plan - Description about your vision and how you plan to achieve it.
Marketing Plan - Description about the goals you want to reach, such as sell 10,000 units, and a description
about how you plan to achieve these goals.
Financial Documents - Tis section might include budgets, fnancial projections and use of proceeds.
Today, theres a push for skipping the business plan and go straight to the customers. We believe you have to
do both, so you can have a business plan to document and detail how exactly youll approach your targeted
customers and what youll be sharing with your targeted customers, especially since theyre going to have
questions, and youll want to have thorough answers.
Plus, business planning is critical for small businesses because it helps you think about various aspects of your
business in ways that might not have previously crossed your mind. Failure to plan is one of the leading causes
of why small businesses buckle, and the fact youre reading this says youre already on the road to success, and
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03
youll be diferent from all those other small businesses.
Teres a good chance that once you fnish your business plan, you might change it many times afer you complete
it. Tats OK! Tats good because it means youre being fexible, and youre doing whatever it takes to succeed.
Step 3 - Customer Discovery & Validation
Tese two items (customer discovery and validation) form the core of whats
considered the lean start-up. Its a great way to evaluate your market potential before
you start spending a lot of your time and hard earned money. With customer
discovery and validation, your business plan will come into play. Youll have a great
understanding of the people who have the problem, the problem youre solving and
how you plan to solve it. With this information, you can talk to potential customers
and try your idea out and change it as you go on. [As a small note, be sure to check
the category below called Step 8 - Get Protection before publicly disclosing your
idea. Tis privacy is especially important if you plan to obtain a patent on your idea.]
As part of your customer discovery and validation process, you might also want to
go ahead and build a prototype. Not sure how youll make your prototype? Weve got
you covered. On Whizkins, we have a few business professionals who ofer great services for obtaining patents
with your prototypes, and we also know of a couple of resources that can help you build your prototype.
If youre interested in learning more about Customer Discovery and Validation, please check out Steve Blanks
book, Te Startup Owners Manual: Te Step-by-Step Guide for Building a Great Company.
Step 4 - Financial Projections
We know math isnt a popular topic, and
spreadsheets are probably about as likeable
as a root canal, but we have to talk about
numbers for a bit. We know many people
dont like numbers, so well try to make
this as painless as possible. Using your
Eureka! form and business plan you can
start making a list of the items you might
need, such as materials, employees, sup-
plies, inventory, marketing expenses, ofce
space and any other key resources.
One way to keep your operating expenses
low is to make use of extra space in your home (we have a great article about the
home ofce deduction on our site) and, if youre selling products, a virtual retail
store, such as the ones we ofer members.
Lets talk about estimating revenue for a few minutes, as youll need this estimate for preparing fnancial
projections.
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Above: Excel Worksheets are
a great tool for planning &
analyzing your fnancials.
04
Prices
Estimating your revenue can be a little tricky. Your revenue is directly related to volume and price. A good starting
point for establishing a price is to check out your direct competitive products and services. Tis information will
be available in catalogs and websites. If there are no directly competitive products and services available, you can
use these methods to establish price:
Compute sales prices at a standard markup percentage above cost or a standard return on your
investment.
Set your prices intuitively to refect availability and value.
Set prices based on competitive prices in a similar market.
Volume
Determining volume is a little trickier than determining price, especially if theres no historical data for you
to make an estimate. In determining the reasonableness of your estimate on volume, you will need to evaluate
market demand for the product, the efect of existing products in the market already and your ability to produce
the estimated volume. Industry statistics and demographic data, such as the type made available by the U.S.
Bureau of Labor or U.S. Census Bureau, can also help you make an assessment on your targeted market. (Psst,
dont forget to check our articles, documents and blogs for information on determining your market.)
With your estimated expenses and revenue, you can create a prospective proft/loss statement to help you
visualize how your business might do when operating. When youre done with these projections, you will have
a tool to help you determine if the potential market youre trying to capture will make your venture worthwile.
Plus, youll also get an idea about how much startup and pre-operating costs might run.
We have some fnancial templates available to get you going on your fnancial projections, and as a Whizkins
member, you are always free to ask a professional online for advice or tips about putting together your projections.
Feel free to share your projections with a professional member online and receive feedback.
Step 5 - Determining Financial Needs
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Plenty of Money Here: NYC Financial District
05
Once youve gotten a projection together of what your expected expenses and revenue might look like over the
next year or two, you can begin to look into how you might fund your venture. With your fnancial projection,
you can fgure out the amount needed to get started and begin operations and subtract from amount needed
what you already have or might be willing to contribute, and the remaining amount is what you need to get
funded.
Tere are several routes you can go to fnd additional fnancing for your venture: partners, shareholders,
employees, social and family connections, vendor fnancing, customers, angel investors, venture capital frms,
banks and microlenders. For more information on which fnancing alternative might be best for your business,
you can search our articles, blogs, documents,forums, professionals and business directory for potential options.
Also, depending on your business, you might be able to take full advantage of our fundraising platform.
And remember, the Whizkins community is behind you, so feel free to check around with other members for
any thoughts or ideas on your business planning.
Congratulations
If youve completed Steps 1 - 5, good job! What do you think of the full picture? You have your business model,
a business plan, customers discovered and validated and a set of fnancial projections. With our platform, you
can put all this information into a single document, and share it with a mentor or professional. How cool is that?
Once youre done reviewing, you might be ready to rock and roll onto the next part or you might be think-
ing, hmmm, I dont know about this just right now, which is fne. Dont stop just yet. Find out what has you
rethinking the idea, and take a few minutes to go back over all of your hard work, and see if you can tweak it just
a little. Not sure how, ask Whizkins or one of our professional members!
Step 6 - Choose a Business Name
So heres another fun part of this process. What will be the name of your business? You may have done this early
in the process, and thats OK. If youre not sure just yet, here are a few tips:
Choose a name that clearly communicates the product or service for
your business.
Try to avoid using your name in the title if you think you might sell
your business. For example, a potential purchaser named Dave might
not want to own Bobs Bicycles.
Check with state and federal trademark registries frst because we would
feel bad if you found an awesome name, fled your documents, ordered
shirts and cool promotional products and then found out the name is
protected from use by you by the law.
Feel free to have a business name diferent from what you plan to name
a legal entity, if you decide to choose one. For example, Bobs Bicycles might actually be the business
name for Robert International, LLC.
Learn more about trademarks below (or in our articles, blogs and documents). We have some great
articles about picking business names.
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06
Step 7 - Choose a Legal Entity
Trying to choose a legal entity can be confusing, which makes sense because
there are several to choose from, but well break it down for you. We have
a lot of tools that talk about the choice of legal entity, such as articles, blogs
and documents. Plus, you are always welcomed to chat with a professional
to fnd out which entity suits you best and have them work with you on
fling your document with the appropriate state government ofce.
Te choice of entity is important because each provides various benefts
(such as the few we listed to the right) that might be benefcial for the type
of business you might want to run. Tere are 5 basic options:
Sole Proprietorship
Partnership
Limited Liability Company (LLC)
C-Corporation
S-Corporation
Its not that one is better than the other, some are just better suited for
diferent purposes. For example, if you plan to have a large company
with shareholders, a C-Corporation might be the best option. Te more
complicated the legal entity, such as a C-Corporation, the more fees that
will probably be required to maintain the legal entity status.
For example, with a C-Corporation, you will have board meetings, board
minutes and higher incorporation fees. (More information about legal
entities can be found in our articles, blogs and documents.) Tere are also
certain tax implications involved with selecting a legal entity. So while
youre thinking about which type might work best for you, please feel free
to check with some of our professional members who can help you set up
your legal entity.
Once you decide on a legal entity, you may check out your respective states
corporation division for fling the right paperwork. If you want to work as a
sole proprietorship without a legal entity, you might have to register a DBA
or trade name with your state, county or local ofce. Te DBA or trade
name registration is used to let others who transact business with you know
who is doing business with them, such as Bobs Bicycles being the DBA for
Robert International, LLC.
Lastly, for tax purposes, youll want to fle a form SS-4 with the Internal
Revenue Service, which is a form for receiving an Employer Identifcation
Number. Tis number acts in a way very similar to your social security
number and will be using for communicating with the IRS and certain oth-
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Sole Proprietorship
Partnership
LLC
C-Corporation
S-Corporation
Unlimited Liability
Income Taxable to Proprietor
Unlimited Liability (GP)
Limited Liability (LP)
Income Taxable to Partner
Limited to Corporate Assets
Income Taxable to Member
Income Taxable to
Corporation
Income Taxable to
Shareholder
Learn More
about Legal
Entities by
Signing Up for
Whizkins!
07
er public agencies.
Step 8 - Get Protection
Trademarks, copyrights and patents. Navigating the waters with the United States Trademark and Patent Of-
fce can be tricky, but there are a lot of resources and people available on Whizkins to help you. Trademarks,
copyrights and patents can work together to protect brands, written and flm works, products, processes and
designs. Youll need these to keep your competitive advantage against competitors. Intellectual property helps to
set up barriers of entry, which will make it more difcult for competitors to close in on your market. Just think
of how great it would be to have a product that no one else can build without your permission and everyone on
the planet wants to buy it. Awesome, right?
Trademarks/Servicemarks
Trademarks and servicemarks are used to identify a good or service from a particular origin. Te value in these
marks come from the goodwill associated with them. For example, think about Nike and wherever you see its
name or Swoosh logo. What type of image does it portray in your mind? Wouldnt you like your name or logo
associated with a particular value in your customers minds? When you get that value, youll want to protect it
from others who want to make money of all of your hard work in building that brand name, and that is what
trademarks and servicemarks do.
Patents
Patents are rights granted by the federal government to an inventor. For a specifc number of years, the federal
government permits you to have a monopoly over your invention, giving you permission to license it or to not
license and take legal action against anyone who makes, uses or sells your patented invention during the patents
lifetime without your consent. In short, the patent must be novel, useful and unobvious. Tere are several
businesses available on Whizkins to help you obtain a patent.
Copyright
Copyrights protect creative works that are literary or artistic. Sofware falls under copyright protection as
well. Copyright law protects creative works by preventing other from reproducing, reprinting or copying the
creative works without permission of the author. Copyright protection is granted as soon as the author puts the
works into a tangible form. For added protection, we suggest you fle an application with the U.S. Register of
Copyrights.
Step 9 - Permits, Licenses & More
Depending on the type of business, you might have to register for fre permits, business permits and special
other licenses to operate. You can check our business directory for your city halls and county ofces, or speak
with a local professional about permits your business might require. Public ofces and certain professionals will
have the information regarding the appropriate licenses you will need to obtain before opening your doors.
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08
Please be mindful however, that your state and, sometimes, federal governments might be responsible for issuing
permits, licenses and certifcates before you can operate. For example, a CPA license is issued by a state board
versus a local ofce. Additionally, states generally issue sales tax certifcates, and for some states, they might be
responsible for collecting county and local sales and use taxes too, but be sure to check to see if the county and/
or local ofces dont administer their own sales and use taxes.
As an employer, you will most likely have to register for state employer identifcation number with your state
department of labor and/or department of revenue. Tis number will be used for communicating with respective
state ofces for purposes of fling information.
Step 10 - Select A Location
Depending on the nature of the business, you may or may not need a place of business away from your home.
A few things to consider are proximity to your targeted market, availability of labor, trafc fow and possibility
for congestion, availability of signage, presence from the street, proximity to competition, zoning and building
restrictions, compliance with various federal laws, such as the Americans with Disabilities Act and proximity to
mass transit hubs. Here are a few other tips to consider for your business:
Retail Business
Visibility
Trafc Flow
Proximity to popular stores, such as anchor stores, i.e. big department stores
Proximity to competitors
Proximity to complementary stores, such as locating an active wear store next to a gym
Service-Based Business
Proximity to customers (however, this is being changed with Whizkins!)
Accessibility to properly skilled labor
Image the location gives
Availability of storage capacity
Proximity to transportation networks, such as interstates, rails or waterways
Manufacturers
Accessibility to properly skilled labor
Accessibility to raw materials
Proximity to transportation networks, such as interstates, rails or waters
Capacity
Afordable land or space
So once youve fgured out a location, there are some other items you might want to review about your
location:
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Will it accommodate expansion?
Does the layout work with your business?
Will the facility meet your utility demands?
Does it comply with the Americans with Disability Act?
If it does not conform with ADA, will you have to make the changes?
Is there adequate parking?
How close will you be located to police and fre protection services?
Who manages waste?
Te Whizkins platform has several resources for helping you fnd a location,
such as a listing for real estate professionals. Tese professionals, along with
accountants and attorneys will be able to help you determine the rights that
come along with the property, whether you should lease or purchase, key
clauses in your lease or purchase agreements and more.
If youre interested in trying to navigate your location selection on your
own, please take a few moments to search our articles, blogs, documents,
and forums for information on lease agreements.
Here are a few items to pay special attention to while youre evaluating your options:
Term
Cost
Actual rentable square footage
Tax responsibility
Maintenance responsibility
Insurance responsibility
Flexibility
Exposure to risk
Step 11 - Acquire Insurance Coverage
A must have in any business is insurance. Insurance not only protects the assets of your business, but it also
protects your customers from any unfortunate accidents. Te key is to get just enough insurance, which can be
a bit tricky. You dont want to underinsure, which will expose you to risk of paying out of pocket for what your
insurance does not cover, and you dont want to overinsure where you are paying more in premiums than you
need to pay. Tere are are several types of insurance (not all are required) that you might encounter:
General Liability
Workers Compensation (mandatory with employees)
Business interruption
Product liability or malpractice
Car Insurance
Key Person Insurance
Health Insurance
Disability Insurance
Fidelity
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10
With Whizkins, our website will help you avoid one of the major pitfalls that accompany obtaining insurance:
the failure to shop around for the best insurance value. Fortunately, not only can you shop around in one place
at Whizkins, but you can send us a request to look around for you, have instant chats with members who are in-
surance agents or fnd insurance providers in our directory. How cool is that! You can also talk with them about
their fnancial stability, which is a good thing to do with insurance providers because the last thing you want is
for your insurance provider to go under right when you need them.
Another common pitfall to watch out for is spreading yourself across several carriers. Many insurance providers
ofer price discounts for carrying all of your insurance needs with them. Plus, having one or two, instead of four
or fve, insurance providers helps reduce the risk you are purchasing redundant insurance coverage. Having
only a couple insurance carriers mean you wont be paying twice for the same coverage.
Evaluating your risk can be a tough task for an entrepreneur, but no need to fear! We have resources available
for evaluate your risk exposure. As youre working with a professional or reviewing documents, blogs or articles
on Whizkins, here are a few things to keep in mind:
Identify your exposures.
Determine the magnitude for each exposure.
Identify the coverage you will need for each exposure.
Try to lump coverages together by similar events, for example, general liability and automobile
property might be one carrier and business interruption and property might be for another. Tis will
make the claim process easier.
Evaluate deductibles and premiums with potential insurance providers that might cover your exposure.
Evaluate the prices and stability of the insurance providers.
Make sure the exposure with the largest risk of loss is covered frst.
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Step 12 - Hiring Employees
Once you move from non-employer to an employer, the business game changes a bit in terms of regulatory
requirements. Here are a few items you might need to keep in mind as you start your hiring process:
Preparing job descriptions
Advertising available jobs
Reviewing applications
Interviewing prospects
Checking with references
Complying with the American Disability Act and citizenship requirements
Informing new hires of personnel policies
Informing federal government of new hires
Fortunately, we have a lot of resources on the Whizkins platform to help you manage the hiring process. We
have personnel policies, such as Drug and Alcohol Policies, Equal Employment Opportunity, Vacation Policies
and more.
Hiring can be a fun process, but youll have to handle it with care because a lot of rules surround the process
of hiring and working with employees. Te requirements above might also change if you are working with
contractors. Contractors might have agreements that list out responsibilities and obligations of the contracting
parties. Contractors are less of an administrative burden, but you generally will not have much control over how
they go about doing your work.
Whizkins is also a great hotbed for fnding talent. With our individual and student profles, you can learn about
the type of work members truly love doing. All you would have to do is search for those certain qualities, review
their profles, ask a few questions and set up an interview. Tis process helps stop you from losing money from
pricey recruiters and other talent search fees.
Step 13 - Manage
Payroll Taxes
Ok, we will admit. Payroll taxes arent the
most fun part of the operating process.
Guess what though! We have plenty of
resources to help you do them (search our
documents, blogs or articles), or if you
want, you can fnd someone or a company
to administer them for you.
Tere are plenty of payroll processing
companies that take out all the headaches
of withholding state and federal payroll taxes and fling the respective returns on time. Plus, we might have some
members available who have experience with managing payroll taxes, and they might be looking to help out
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part-time or full-time.
If youre going to try to manage payroll taxes on your own, we salute you! Tere is a signifcant amount of
information about withholding and fling returns out there. Weve tried to condense some of that information
on our platform with our articles, blogs, documents and forums. Here are the items youre going to be looking
for:
Quarterly Returns
Form 941 (employers quarterly payroll tax return)
State and local quarterly payroll tax returns (check to see if you are required to fle monthly)
State unemployment returns.
Note: some states have other tax requirements, such as employment development and training taxes.
Annual Returns
Form 940 (employers annual federal unemployment tax return)
Form 944 (employers annual payroll tax return)
Forms W-2 (employment wage and tax statement)
Form W-3 (transmittal form)
Forms 1099 (these forms are required for specifc types of payments above certain minimum amounts,
e.g. above 600.00 for contractors)
Form 1096 (transmittal form)
State and local annual payroll tax returns
State annual unemployment tax returns.
Step 14 - Acquire Recordkeeping Tools
For all that work youve done, youll want to make sure you keep up with the
revenue youll be generating from it and the assets you use to generate that record.
Tere are a variety of programs available to help you keep track of recordkeeping,
such as an accounting information system.
Tese are systems on your computer that keep track of your bookkeeping
and fnancial reporting. A lot of our business solutions providers online ofer
afordable services to help you keep track of your records. You can fnd more in
our business directory.
Before you start operating, youll also want to have in place procedures and
policies surrounding inventory, cash and other assets that are critical to your
operations. We have articles, blogs, documents, and forums available to help you
pinpoint how to best protect your assets.
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Lets Wrap Up!
Now, if youre in the retail industry or restaurant industry, youll have a few more steps to go, such as acquiring
inventory, purchasing food supplies, training employees, and more. We have more information on things to do for
specifc industries in our articles, blogs, documents, and forums. Please be sure to check your fellow members as
there are professionals, experts, businesses and indivduals who might be able to help out, if you need it.
So gearing up is a lot work, but this is what Whizkins is here to do: make this process easier. For each step, the
resources are all available on Whizkins to help. No more searching other websites or pulling out dusty materials
from the library. You can work on your business idea and pull resources and talk to professionals on Whizkins as
needed.
Disclaimer: Our solutions are designed to provide you with quick, reliable and afordable information in regard to accounting, fnance,
law, management, marketing, tax, technology and other business areas. We are neither a public accounting frm nor law frm and, as such,
we are prohibited from providing both public accounting services and legal advice. If the services of a public accounting or attorney are
required, please seek the assistance of a licensed CPA or CPA frm or attorney, respectively. Some information provided on our website
may originate from third parties. Such information is not guaranteed by the owners, operators, administrators or otherwise of this site to
be accurate, complete and compliant with statutes, guidance, best practices, rulings or any other form of regulation. Content provided on
this site shall not be deemed to be tax, legal, fnancial or other advice and we encourage you to confrm the accuracy of the content. By
your use of this site and any of our products, you hereby accept and understand the foregoing statements. For more information on our
terms and policies, which are incorporated herein by reference, please refer to our privacy policy and terms of service. LDA #167,
Exp. Date: July 3, 2015, Santa Clara County, CA
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