By Page Heller, President Hopes Creek Startup Considerations

Introduction You have a great idea You want to start a company around the idea To maintain control To make the most profit To gain a reputation for success Have you covered all the topics that need consideration? Let’s check!

Do You Have Time? You will need a lot of time Starting a successful company is not an 8 to 5 job You will be devoting nights and weekends for some time You will not be in control of your time – circumstances will You will have many emergencies to handle You will have many documents to prepare Do you have that kind of time? Don’t get me wrong; it is a very rewarding investment But, too many new entrepreneurs are surprised by the amount of time needed to build a company

Do you have the money? You will need money for personnel, design, corporate papers, facilities, materials, office supplies, advertising and more Don’t forget the insurance Professional Liability Facility Key man You may not have the money yourself, but you need to know where it will come from

Is there more where that came from? It is very difficult to project all necessary costs of starting a business Something always comes up unexpectedly Plan on accessing only 50% of what you think you can raise

Financing Rule of Thumb Here’s a 2010 generalization of where funds could realistically come from. Of course, these numbers are very rough and there are many exceptions. All figures in U.S. Dollars k Loans, Friends and Family 100k-400k SBIRs or Angels 400k-1500k Angels 1500k-2500k dead zone 2500k-5000k Venture Capitalists >5000k Initial Public Offering The dead zone is caused by the unwillingness of Angels to part with that much in one deal and the cost of a VC doing the due diligence to make the investment. For a loan, you would be expected to put a lien on collateral of enough value that the loan represents perhaps 70%-80% of the value of the collateral. Talk to your banker.

Do you have a plan? Of course you have one in your head But, do you a true business plan? Product or service defined Management team known Marketing planned Financial needs understood Of course, plans change But, operating without a plan is financial suicide

Legal Structure What legal structure will you use? Sole proprietorship Limited liability partnership Limited liability corporation C corporation S corporation Have you considered the issues of liability? Have you considered taxation?

Governance Board of Directors Corporate Officers Articles of Incorporation Bylaws Don’t go solo. Get a trusted set of people around you to help with the corporate decisions. Two minds are always better than one. Get the rules established on paper before you begin.

Details State registration Company name and branding Employer identification number Licenses and permits Location Banking Letterhead and cards Organizational memberships Advertising

Accounting If you are getting investors, plan on using a third party accountant If the U.S. government is a customer or funding source, you need special expertise in an accountant When you get to be of sufficient size, consider who you will use for routine audits of your books You might need a separate tax consultant

Strategy Conserve cash Use outsourcing HopesCreekConsulting.com Your Source for Business Planning