Posted: 10/25/2016 12:32:28 PM EDT
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I'm in the very early stage of planning to start a mobile shrink wrap business. Since I've never done this before, I'd like to ask a few questions.
What are some good resources to learn more about starting small businesses? I'd like to learn more about S Corp vs LLC, tax IDs, liability insurance, business licenses, etc. As a mobile contractor, do I need a business license for every city I operate in, or only where my physical location is? What are good business credit cards? What software is good for creating invoices? Are there any recommended business card printing companies? This business will have relatively low start up costs at about $5k. It will be a two person operation initially. I figure in the worst case, I have the tools and equipment to shrink wrap my boat. |
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https://www.sba.gov/starting-business/write-your-business-plan
BTW, many people think they don't need to write a business plan if they're not asking for a loan. That not right. You write a business plan to force yourself to think things through and consider all the challenges. The more work you do on the business plan, the fewer unexpected roadblocks you'll hit. |
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https://www.sba.gov/starting-business/write-your-business-plan BTW, many people think they don't need to write a business plan if they're not asking for a loan. That not right. You write a business plan to force yourself to think things through and consider all the challenges. The more work you do on the business plan, the fewer unexpected roadblocks you'll hit. The business plan is going to happen. I'm an engineer by schooling and definitely have the research and analysis portion down. I more need to know what all I need to put in place to make it legal. Making it legal will involve costs that I need to budget for. A large part of that stuff I have no idea what it costs or what I actually need. |
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The business plan is going to happen. I'm an engineer by schooling and definitely have the research and analysis portion down. I more need to know what all I need to put in place to make it legal. Making it legal will involve costs that I need to budget for. A large part of that stuff I have no idea what it costs or what I actually need. Quoted:
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https://www.sba.gov/starting-business/write-your-business-plan BTW, many people think they don't need to write a business plan if they're not asking for a loan. That not right. You write a business plan to force yourself to think things through and consider all the challenges. The more work you do on the business plan, the fewer unexpected roadblocks you'll hit. The business plan is going to happen. I'm an engineer by schooling and definitely have the research and analysis portion down. I more need to know what all I need to put in place to make it legal. Making it legal will involve costs that I need to budget for. A large part of that stuff I have no idea what it costs or what I actually need. Those are the sorts of questions that will be answered in your business plan. Dig into that SBA website I linked and you'll see. BTW, every state has different requirements. When I opened my pawnshop I paid the Secretary of State $7.50 to create an LLC. I think the sales tax license was either free or nominal, IIRC. My local pawnbroker's license was $50. I had to have a fire inspection. It cost $70 for the permit to change the sign on my building. Other than my FFL, that was all the legal stuff. |
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Well this thread is a month old but oh well....
We use CapitalOne for business CC, pretty good rewards or cash back for small business. Quickbooks is the software you seek, do you have any accounting experience? Starting out it might be beneficial to have a CPA or someone with accounting knowhow to setup the file and accounts for you, maybe teach you how to do several different types of transactions in it. Trust me, it will be worth a few bucks to get this squared away at the beginning. From there, Q'books is super easy to follow. I have seen older generation people with no accounting knowledge or experience pick it up. I just ordered a new batch of business cards from Vista print, they have a good sale right now. Get the standard signature matte card, it's thick and a quality print. $14 per hundred. Can't help you on the licenses, I'm unfamiliar with the requirement. Good luck, nothing quite as rewarding as growing your own small business. |
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Chase is a fantastic bank to do business with as a small business... and their credit card options have travel rewards that I have found to be life-changing. (The wife and I travel internationally 2-3 times a year strictly because of reward points)
Use Quickbooks. Pay a CPA to get it set up for you and consider paying for someone to do data entry. If you don't feel like you can afford it, keep in mind that accounting is one of the first things you should unload when you can - it's repetitive and there are plenty of professionals who will do a better job at it than you can. Also, you should pay someone to do your taxes and reconciliations. Make sure you understand what they're doing though. One of the worst mistakes I ever made was having an idiot do my book-keeping and taxes for a year. I spent thousands upon thousands of dollars fixing what he fucked up. Make sure that your wife/girlfriend/other is down for the struggle. Understand there will be lean times and there will be fat times. Learn to control your panic when the lean times come around, and make sure you can financially survive them. If you are inflexible in your lifestyle, being a business owner may be hard on you. Pay a lawyer and/or an accountant a few bones and get your legal entity set up correctly. It isn't that big of an expense and it is worth doing right the first time around. Consider paying a branding company to do professional cards and signage. We did, and it was money well spent. |
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A few tips I learned after the 1st year...
1) Yoir best asset will be an accountant, find one, retain his/her services, then take him/her to lunch a few times a year. You will want this man/woman to pick up the phone when you call with questions. They will be able to structure your company for the best possible tax benefits. 2) You will most likely have a state business license and unless each township/city/county requires a speciality permit or license (like plumbing or electrical) you should be GTG. 3) Capital One Spark is a great starter credit card. Start there. 4) Quickbooks for everything billing, invoices, POs, etc... work closely with your accountant. 5) Vista Print for about everything promotional including business cards. 6) Do NOT go cheap and have a custom website built by a pro. This is the businesses window to the world and you want to be visible. 7) Keep your nose clean and your books straight, once you fall down the rabbit hole of bad bookkeeping it is very difficult to get out. 8) Don't screw around with taxes, keep that money separate from your operating funds, don't touch it, and pay your taxes on time. 9) Be prepared for the business to consume you, embrace it and grow it, it will pay off. 10) Enjoy the ride, it can be stressful at times but damn if it isn't exciting and rewarding. |
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Chase is a fantastic bank to do business with as a small business... and their credit card options have travel rewards that I have found to be life-changing. (The wife and I travel internationally 2-3 times a year strictly because of reward points) Use Quickbooks. Pay a CPA to get it set up for you and consider paying for someone to do data entry. If you don't feel like you can afford it, keep in mind that accounting is one of the first things you should unload when you can - it's repetitive and there are plenty of professionals who will do a better job at it than you can. Also, you should pay someone to do your taxes and reconciliations. Make sure you understand what they're doing though. One of the worst mistakes I ever made was having an idiot do my book-keeping and taxes for a year. I spent thousands upon thousands of dollars fixing what he fucked up. Make sure that your wife/girlfriend/other is down for the struggle. Understand there will be lean times and there will be fat times. Learn to control your panic when the lean times come around, and make sure you can financially survive them. If you are inflexible in your lifestyle, being a business owner may be hard on you. Pay a lawyer and/or an accountant a few bones and get your legal entity set up correctly. It isn't that big of an expense and it is worth doing right the first time around. Consider paying a branding company to do professional cards and signage. We did, and it was money well spent. Op, for a bank you need to shop around. Banks vary by the month, loan officer and number cruncher that actually approves the loan. If they need to cut back how much money is on the street, you'll go bankrupt while they drag their feet. When i started my second business, i visited with 6 banks and found the best one that offered flexible financing or long term expansion. I lost my first business and my life savings when chase didnt feel like lending, by the time i established a relationship with another bank it was too late, i never could catch up. The company i work for now nearly went under in a similar situation. Bank was overextended and trying to get out of our industry. We had a lot of equity but they stopped letting us use it. Capped our credit line at 50% without notice so we couldnt pay bills. Cant pay bills you sure as hell cant find a new bank. They wouldnt even release titles on pickups so we could sell or trade in old vehicles. Told us to refinance with a new bank if we wanted titles. We had 5 vehicles parked by the time the lawyers got them released so we could sell them. They had starved is out to the point that the gas company came 3 times to shut it off. Vendors we used for 20 years put us on permanent cod. The bank didnt care. If we went under we had several million in equity built. They would come out great. Found a bank that saw what was going on and wanted to lend. They lent 6x what we had from the other bank and did it in less than 9 days from the first meeting we had. A little long term planning can help a ton. I also would agree with using a lawyer and accountant to set it up right the first time. It shouldnt cost much. |
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Biggest mistakes I see in business, and certainly in startups, are would-be entrepreneurs fretting about this shit. Spend a dollar on it and move on. Jacking around with business card logos, whether or not to tax your LLC as a S Corp, and all that other stuff is playing business, not being in business.
I spend less time on a leveraged buyout of a business with millions of dollars in distressed debt than do some people on whether their small one-man-show business will be a corp or LLC. I promise you will not make the kind of bucks that demands all this finesse and tax planning in year one. And if for some reason your business just explodes and you are pulling a million a month in, then hire a firm to worry about it for you then. There are a gazillion ways to handle that stuff after the fact. Typical startup budget in a business practically guaranteed to fail: Budget $20,000 Costs: CPA Consultation $1500 Legal Consultation $2000 Legal fees for draft of NDA for uber-valuable business idea $500 Business Cards $200 Logo Design $200 Website and domain name $500 IP Attorney to protect imaginary intangible assets $2000 or Patent lawyer (this one is always good for a laugh) $10000 Remaining funds to actually start business $5100 Presumed initial loss to fund $0 (of course) Marketing budget $5.25 Laptop, cell phone, printer $1000 ......get the picture? You can start shrink-wrapping with no business card, no website, no Google Ad Words budget, and no Facebook Fan page. It's about Sales. Start selling, and use that money - once you've pivoted your idea a few times and honed in on what exactly you are selling and to whom - to fund all the frivolous shit. This is not to say you don't want great ad copy, well done cards, and nice signage. It's just that people spend tons of time and money on this shit, and it's far too easy to get stuck in that rut. Get it done, and move on. Nothing against CPAs in any of this, I am a CFO in a prior life and form probably 5 entities per year, but damn don't get wrapped around the axle with this shit. And your banker knows jack and shit about this stuff too. Forming an entity takes like 5 minutes. Don't let them tell you it's some black art. |
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The company i work for now nearly went under in a similar situation. Bank was overextended and trying to get out of our industry. We had a lot of equity but they stopped letting us use it. Capped our credit line at 50% without notice so we couldnt pay bills. Cant pay bills you sure as hell cant find a new bank. Quoted:
The company i work for now nearly went under in a similar situation. Bank was overextended and trying to get out of our industry. We had a lot of equity but they stopped letting us use it. Capped our credit line at 50% without notice so we couldnt pay bills. Cant pay bills you sure as hell cant find a new bank. Which bank was this? I may know the backstory if it was a large regional midwest bank and you were in manufacturing or related to the auto industry. There could certainly have been other factors going on as well. A bank would almost never do that without notice unless the company was afoul of covenants or showing signs of distress. If the line was capped, there must have been cash levers the company could pull to free up cash flow, unless it was truly in distress and showing degradation of the bank's collateral. If the bank totally, truly, threw the company into a situation like that, there would have been some legal process as a result. They wouldnt even release titles on pickups so we could sell or trade in old vehicles. Told us to refinance with a new bank if we wanted titles. We had 5 vehicles parked by the time the lawyers got them released so we could sell them. They had starved is out to the point that the gas company came 3 times to shut it off. Vendors we used for 20 years put us on permanent cod. The bank didnt care. If we went under we had several million in equity built. They would come out great. That equity was worth far less in a wind-down situation, even in an orderly liquidation things go to hell fast. As the senior secured lender, they were right to prevent you from paying unsecured creditors like trade lines and even utilities. Their concern is their collateral, and when they see it eroded through losses or balance sheet issues, they aren't going to be ok with junior lenders getting paid while they wait. It may not make sense for the business, but it sure made sense for them. Also, for a bank, uncertainty is bad. If they weren't getting timely financial reports from the business or the communication from management was poor, then they tend to worry to an irrational extent. Once a bank puts a company into workout ("special assets") they aren't going to release collateral (titles) and then trust management to sell them and not do anything underhanded. Par for the course, and special assets groups seldom (a) trust management one iota, or (b) act rationally. Found a bank that saw what was going on and wanted to lend. They lent 6x what we had from the other bank and did it in less than 9 days from the first meeting we had. 9 days? No field exam or asset appraisal? How big was this company? Did the owner come through with a PG or throw some assets at it? Or was it a MCA loan or some uber high interest ABL? |
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Which bank was this? I may know the backstory if it was a large regional midwest bank and you were in manufacturing or related to the auto industry. There could certainly have been other factors going on as well. A bank would almost never do that without notice unless the company was afoul of covenants or showing signs of distress. If the line was capped, there must have been cash levers the company could pull to free up cash flow, unless it was truly in distress and showing degradation of the bank's collateral. If the bank totally, truly, threw the company into a situation like that, there would have been some legal process as a result. That equity was worth far less in a wind-down situation, even in an orderly liquidation things go to hell fast. As the senior secured lender, they were right to prevent you from paying unsecured creditors like trade lines and even utilities. Their concern is their collateral, and when they see it eroded through losses or balance sheet issues, they aren't going to be ok with junior lenders getting paid while they wait. It may not make sense for the business, but it sure made sense for them. Also, for a bank, uncertainty is bad. If they weren't getting timely financial reports from the business or the communication from management was poor, then they tend to worry to an irrational extent. Once a bank puts a company into workout ("special assets") they aren't going to release collateral (titles) and then trust management to sell them and not do anything underhanded. Par for the course, and special assets groups seldom (a) trust management one iota, or (b) act rationally. 9 days? No field exam or asset appraisal? How big was this company? Did the owner come through with a PG or throw some assets at it? Or was it a MCA loan or some uber high interest ABL? Quoted:
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The company i work for now nearly went under in a similar situation. Bank was overextended and trying to get out of our industry. We had a lot of equity but they stopped letting us use it. Capped our credit line at 50% without notice so we couldnt pay bills. Cant pay bills you sure as hell cant find a new bank. Which bank was this? I may know the backstory if it was a large regional midwest bank and you were in manufacturing or related to the auto industry. There could certainly have been other factors going on as well. A bank would almost never do that without notice unless the company was afoul of covenants or showing signs of distress. If the line was capped, there must have been cash levers the company could pull to free up cash flow, unless it was truly in distress and showing degradation of the bank's collateral. If the bank totally, truly, threw the company into a situation like that, there would have been some legal process as a result. They wouldnt even release titles on pickups so we could sell or trade in old vehicles. Told us to refinance with a new bank if we wanted titles. We had 5 vehicles parked by the time the lawyers got them released so we could sell them. They had starved is out to the point that the gas company came 3 times to shut it off. Vendors we used for 20 years put us on permanent cod. The bank didnt care. If we went under we had several million in equity built. They would come out great. That equity was worth far less in a wind-down situation, even in an orderly liquidation things go to hell fast. As the senior secured lender, they were right to prevent you from paying unsecured creditors like trade lines and even utilities. Their concern is their collateral, and when they see it eroded through losses or balance sheet issues, they aren't going to be ok with junior lenders getting paid while they wait. It may not make sense for the business, but it sure made sense for them. Also, for a bank, uncertainty is bad. If they weren't getting timely financial reports from the business or the communication from management was poor, then they tend to worry to an irrational extent. Once a bank puts a company into workout ("special assets") they aren't going to release collateral (titles) and then trust management to sell them and not do anything underhanded. Par for the course, and special assets groups seldom (a) trust management one iota, or (b) act rationally. Found a bank that saw what was going on and wanted to lend. They lent 6x what we had from the other bank and did it in less than 9 days from the first meeting we had. 9 days? No field exam or asset appraisal? How big was this company? Did the owner come through with a PG or throw some assets at it? Or was it a MCA loan or some uber high interest ABL? A few of my customers have lawsuits against this bank over similar things on a bigger scale. The colateral was almost all real estate in an area with no real dips or spikes. The value isnt a mystery. I not 100% sure but what i believe was claimed by the bank was that 1 of my customers they shut down had sold livestock during that last few months that still existed on the their books for the borrowing base so they basically shut down a company with cashflow issues that they thought had positive equity and they actually had negative equity and took big losses. After that they worked quickly to get out of our industry and every customer we had with them had similar issues as what i had. If what i was told was true, they probably lost 2 to 3 million on that one deal. That was a double edged sword because our customers are large but few, they might spend 40 to 80k a month with us. When you have a few customers that always pay in 20 days on a twice monthy billing go to 80 days and the bank wont lend, theres nothing you can do to pay bills. You got backwards on cash 1 or 1.5 million in 60 days when that happens. The people that were shut down claimed there were a lot of rules broken on forcing them into bankruptcy when they werent at that point. That had nothing to do with us but it sure changed their attitude towards the industry. We had sold some rentals to pay down the note, had never sold anything that we didnt use to pay down the note. I handle most of the real estate and vehicle sales. A lot of times i would take the check in and ask them to apply it to our loc over the years myself. We are big enough have to send in monthly financials by the 15th, we have around 40 employees. I had called on the 1st vehicle i wanted to sell. I had just sold enough real estate to cover 40% of the loc in the 2 months prior and he got really rude with me about the title on a 4k dollar pickup. Thats the craziest thing about it all. We were actually having good times back then. The amount of money we owed them was very little for a company our size with our assets. Even the company owned house that i lived in was worth half of the note after we sold some rentals and they still acted like that. 19 years in business and we've never had that kind of experience before. I could see it in a year like this year, prices are shitty, profit is tough. I would be worried if i were the bank. Those were easy years back then. Tons of cash coming in but we sucked it all up trying to pay off our debts that really shouldnt have needed to be paid off. It was 9 days after our first meeting and field walkthrough. We had already been submitting paperwork before that for maybe 30 days. They gave us the okay after 9 days but it still took 30 or 60 days to actually get the money and finish paperwork. Apparently they were in the wrong at least to some degree bc once the lawyers talked to them and sent letters for about a month they went from openly confrontational to distant but at least willing to follow some semblance of rules and protocol. I still dont understand completely what their motivation was and i dont pretend to know. I was a partner back then and handled enough of our financial workings to believe that they were in the wrong and we werent. We arent perfect but we have always kept good books and submitted financials every month. Inventories done on time. Ive passed every in inventory spot check theyve ever done. I really think the main motivation was the bath they took on that one customer. I see our bank accounts and all financial information every day, its the first thing i look at every morning. If we had went under and the bank sold our real estate at half price and trashed our inventory they still would have made out like bandits. Our debt was that low. If its any indication, there are only 2 banks that lend to our industry in this region anymore. Wells fargo took a big bath and got out 6 years ago, one guy went to prison for fraud over that (sold hay and embezzled the money, left hay on the books. Entire fields of it, also sold calves and claimed them as death loss to get cash out beyond the cap he was allowed to take out in a year). Chase got out 12 years ago. 2 of the local banks got out after 1 shut a guy down and found out a lot of their tractors they lent money on were parked in the weed row or sold). Now there is one local bank chain that lends and one national speciality bank. Every single guy uses those 2 banks now. |
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Interesting. Was this bank the one with the name that's an improper fraction? Quoted:
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(snip) Interesting. Was this bank the one with the name that's an improper fraction? No, its a small regional bank that has one of the most common bank names in existence then the town name. 
First national bank of... Not sure if its just our neck of the woods but almost every town has a first national bank of ... one chain has 4, one has 7, a bunch of them have 1 or 2. Now everyone uses rabo bank or a small local chain that focuses on big ag. |
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......get the picture? You can start shrink-wrapping with no business card, no website, no Google Ad Words budget, and no Facebook Fan page. It's about Sales. Start selling, and use that money - once you've pivoted your idea a few times and honed in on what exactly you are selling and to whom - to fund all the frivolous shit. All good points except I disagree with the business card comment. If you're in business, you need business cards. You can't make a sale unless the customer knows your name and how to contact you. I'm guessing you meant don't go out and spend hundreds on graphic design and printing for cards and I would agree with that. Spending $10 or $20 at VistaPrint for a couple of boxes of cookie cutter business cards would be a requirement to me though. |