In our Cost of Living series all this week, Call 6 Investigates Kara Kenney is digging into expenses you stress about on a regular basis.
INDIANAPOLIS -- Hundreds of Hoosiers are starting their own businesses, and if you’ve ever day dreamed about launching your own start up, you are not alone.
The Indiana Small Business Development Center helped launch 248 new businesses in 2016 and create 949 new jobs at small businesses.
Call 6 Investigates looked at what it really takes to start your own venture in Indiana, and the common mistakes many people make.
Justin Goheen started his own Indianapolis company, Tradecycle Capital LLC, as a way to get more fulfillment out of his work.
“I felt like I wanted to build something for myself, not just other people’s businesses,” said Goheen.
Experts say it’s hard to say how much money you need to start your own business, because it greatly depends on what type of enterprise you want to launch.
Goheen and his business partner had to raise a significant amount of money to start the business.
“For a finance company, my raw material is money,” said Goheen.
Goheen used his own money, his partner’s funds and they borrowed money to fund Tradecycle Capital LLC.
“I’m very happy with the way things are going,” said Goheen. “You need a lot of capital to run a finance company. The biggest thing for us was investigating in the technology and the software.”
Running a start-up and being your own boss has its downsides.
Goheen works alone in an office along Fall Creek Road.
“I’m a one man show right now in a pretty small office, and you will some of that camaraderie of having co-workers,” said Goheen. “I literally wear every hat right now. There’s no vacation right now.”
Records show Indiana has nearly 500,000 small businesses in operation, employing 1.2 million Hoosiers which is 45 percent of the state’s private sector workforce.
One study found a slight increase in startup activity and entrepreneurship in Indiana.
First Internet Bank CEO David Becker has started over a dozen businesses and said first and foremost you need a good idea.
“You need to find a problem, and come up with a solution,” said Becker.
Then, test your idea, gather feedback and see if the idea will really work.
"The ideal situation is keep your day job and start the business on the side," said Becker.
Fund your idea with your own money for as long as you can, said Becker, and then look for outside funding.
Groups like the Venture Club of Indiana and Verge can help connect you with outside investors.
"There's the rules of three. It's always going to take three times longer and it's going to cost three times as much as you think in the beginning," said Becker.
Avoid land mines up front.
"You need a good attorney, you need a good accountant, and you need a good banker," said Becker.
Call 6 Investigates stopped by a Venture Club of Indiana event where entrepreneurs and investors rubbed shoulders on a Wednesday night.
" The Venture Club of Indiana supports local entrepreneurs, connecting them with resources, specifically seed money and venture capital," said board member Kara Kavensky.
Kavensky started her own consulting business and owns her own Pilates studio.
"Now is exactly the perfect time to start a business," said Kavensky.
Successful entrepreneurs told Call 6 Investigates you should expect doors to be slammed in your face, but listen to why someone is telling you no.
“What do I have to change with my idea, what do I have to change with my concept,” said Goheen.
Goheen said with a wife and three kids it was scary to go off on his own, but he has only one regret.
"My only regret is I didn't do this 5 years ago," said Goheen.
Experts said you need to find out what your liability and tax issues might be when setting up a company.
Entrepreneur.com offers the following 50 tips for starting your own business:
1. Do a self-inventory
Not everyone has what it takes to start a company. That’s not to say that your idea is not brilliant, but are you ready for all the chores that come with it, like cold calling prospects and invoicing them until you're paid when you start getting clients? It just means that you may not have the personality traits to handle launching a company of your own.
Before investing any time or resources, evaluate yourself and see if you have some the typical traits of an entrepreneur. Are you motivated, able to adapt and confident? Are you resilient?
2. Develop an idea
Don’t just start a business because something is in vogue and you think commercializing it will make money. Develop a business concept that you're passionate about related to something that you have experience with. From there, come up with a product or service that you believe can enhance the people’s lives.
3. Test the plausibility
Once you’ve settled on an idea, figure out how you can make it become a reality. Is the product or service something that people want or need? Can you make a profit selling it? Does the product work?
4. Write a business plan
A solid business plan will guide you going forward, even if your plan is to be just a solopreneur or freelancer. It’s also needed for presenting your idea to potential investors. Your business plan should include a mission statement, a company summary, an executive summary, a service or product offerings, a description of a target market, financial projections and the cost of the operation.
5. Identify your market
Even though you may have detected some interest in your business, you need to do more homework. Assess the market, targeting the customers most likely to make a purchase. Perform a competitive assessment.
6. Determine the costs
Do additional research and find out the standard cost factors within this industry. Not only will this help you manage your business more effectively, investors will want to know this.
7. Establish a budget
Once you determine how much money you’ll have to work with, figure out how much it will take to develop your product or service and create a marketing plan.
8. Find the right investors
You’re going to need some sort of funding to start off, whether from your savings, credit cards, loans, grants or venture capitalists. Find an investor who shares your passion, someone you believe you can work with.
9. Listen to investors
Whether you like it, investors do have a say in your company. And you need to listen to their advice or suggestion. But that doesn’t mean you have to do what they tell you.
10. Set up a great support system
You’re going to be investing a lot of time and resources into your new business venture. Be certain that your family is on board. They must be aware that this process will be challenging financially and emotionally.
11. Determine the legal structure
Settle on which form of ownership is best for you: a sole proprietorship, a partnership, a limited liability company, a corporation, an S corporation, a nonprofit or a cooperative.
12. Select a business name
Decide on a name that best suits your business. Then check to see if the domain name is available online, as well as if it’s free to use in your county, state and in the country.
13. Register your business name
If your proposed business name is available, register it with the county clerk, have it trademarked at the state and federal levels and secure a domain name.
14. Take advantage of free resources
Numerous free resources can offer advice, training and assistance. SBA.gov is a great place to look at to find local resources.
15. Determine tax obligations
Now it’s time to wrestle with the tax obligations. In the United States, four basic types of business taxes arise: income, self-employment, taxes for employees and excise taxes.
16. Secure permits and licenses
According to NOLO, you’ll have to pick up a federal employment identification number(unless the company is a sole proprietorship or a limited liability company without employees.) Apply for state licenses. Pick up a local tax registration certificate. File for local permits, if required, such as a conditional use permit or zoning variance.
17. Buy insurance
Make sure that you arrange for the proper insurance for your business. This will vary according to the type of business. If you’re working from home be sure that your homeowner’s insurance covers theft or damage to business assets, as well as liability for any business-related injuries.
18. Set up the books
Figure out if you’re using a cash or accrual system, determine the fiscal year for the business and set up a recordkeeping system.
19. Choose a business location
Select a location that best fits the needs of your business, one that offers an opportunity for growth, the right level of competition and proximity to suppliers. It should also be accessible to customers.
20. Don’t worry about an office
If you’re not making any revenue, then don't concern yourself with an office or warehouse just yet.
21. A patent can wait.
Patents can cost thousands of dollars. Wait to pursue this route until you have a few customers paying the bills. A patent is less useful if you can't enforce it or have the money to see it through.
22. Be flexible.
Chances are that your original idea will have to be modified. Being able to pivot and adapt to create what customers want will determine if your business will fail or succeed.
23. Share your ideas with friends and family
Your nearest and dearest will most likely be the most honest with you about your business. Don’t hesitate to seek their advice and suggestions.
24. Ignore the naysayers
At the same time, there’s a difference between constructive criticism and someone's quick jab projecting that your business will fail. Follow the example of French Internet mogul Xavier Niel and ignore them.
25. Don’t become angry
If your idea is rejected by customers or investors, don't just succumb to anger. Find out what they didn’t like, make adjustments and go back to them when you’ve made the changes. There's the possibility that the timing was wrong as well.
26. Deliver the product or service fast
Your business is a work in progress and if you launch your product or service quickly, you will be able to build a community of customers who can provide valuable feedback that can help you improve the offerings. In the words of LinkedIn founder Reid Hoffman, "If you're not embarrassed by your first product release, you've released too late."
27. Offer new products or services
If you already have customers, be sure to hold on to them by providing new products or services.
28. Be patient
Always keep in mind that success won’t happen overnight. It’s going to take some time before you make a profit.
29. Overdeliver at first
Once you land a new client, be sure to go above and beyond the call of duty for at least the first month. You’ll have this customer hooked from then on.
30. Blog all the time
Don’t be ashamed to share both your triumphs and struggles. Customers will enjoy your honesty.
31. Avoid fights with partners
If you have disagreements with partners, then sever ties as soon as possible. In-house bickering will prevent you from focusing on growing the business.
32. Don’t worry about dilution
So an investor has required a stake in the company. Recognize the fact that eventually at one point or another you'll have to give up some control of the business. Accept it and move on.
33. Hire a copywriter
Unless you’re an excellent writer, hire a copywriter to compose emails for highly targeted customers. A copywriter will also prove handy for press releases and other pieces to spread brand awareness or provide business updates.
34. Prepare for meetings
When preparing for a meeting with a client, read up on everything that’s available, steeping yourself in information about the industry, that firm's employees and its competition.
35. Don’t fear the competition
Don’t bad-mouth the competition when talking to investors or customers. There’s no need to become an object of pity. In fact, talking in this manner might even point customers to a competitor who may offer a product or service that you don’t. Remember, when competition exists, there’s a market for your business. Use that knowledge as inspiration to outperform a rival.
36. Benefit from word-of-mouth
Nothing beats some good old-fashioned word-of-mouth marketing. Let friends, family members and influencers in your field spread the word about your product or service.
Don’t be afraid to get out there and show your face to the public, whether at a conference or just being out and about with friend on a Friday night. But try to stay local because travel can dwindle your budget.
38. Provide outstanding customer service
Interacting with people is a big part of the job. Your business may gain new customers because you made them feel important. For example, Zappos wasn’t the first online store to sell shoes, but the company perfected its customer-service department and won over shoppers.
39. Be sure your website functions
Potential customers want to know as much about your business as possible and they should be able to quickly access that kind of information on your website.
40. Don’t be overly concerned by the economy
Some of the best businesses have launched during a recession. In fact, half of the Fortune 500 companies listed in 2009 were founded during such times, according to the Ewing Marion Kauffman Foundation.
41. Make sure clients pay their bills
Always be certain to receive payment for your products or services. Instead of being taken advantage of of, establish a time frame for payment. It also wouldn’t hurt to accept credit cards and have an online payment system set up.
42. Find the right employees
Hire the right people for the job. Even though it's your business, you won't be skilled at every task, which is why you need qualified people to complete the work.
43. Assign responsibilities
Eelegate attainable tasks to employees. This is all about effective management.
44. Know that honesty is the best policy
If any issues with employees emerge, be sure that they are addressed. No one enjoys being talked about behind their back.
45. Remember that opposites attract
Hire people with skills and personalities that are the opposite to yours. They’ll challenge you and will bring different skills and talents to the business that you don't.
46. Say goodbye to your social life
You’re going to spend a lot of time devoted to the business. Even if you plan a night out, you may leave early because a light bulb just went off. Hopefully those closest in your life will understand.
47. Recognize that you'll be the final person to be paid
As the CEO, you’re the last to collect a check. That’s just how it works until there’s adequate revenue.
48. Arrive at a useful definition of success
Just because your business hasn’t made you a millionaire (yet) doesn’t mean that your enterprise is a failure. If you’re able to make some sort of profit doing something that you’re passionate about, isn’t that a success story?
49. Realize when it's time to move on
Failure is inevitable. If things aren’t working out and you’ve done all you can, then put aside your pride and close up shop. Something like this is not easy to accept. But it’s for the best.
50. Don’t just rely on the advice of others
Despite my offering up all of these tips for you, perhaps the most important piece of advice is something learned the hard way: While many people may offer a startup assistance, recognize that in the end you’re the person running the show and the one responsible for the company's success and failure. If you understand what worked and what didn’t, you’ll burnish the skills and knowledge to run your business.
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