What would you do for the next 6 months working 18 hours per day even if you could not get paid for doing it?

I often have to answer the question “Can you help me start a business?”. The headline is my response.

Let us forget for the moment the minimum capitalization requirements, the potential entrepreneur’s prior background, and whether the potential entrepreneur has basic sales skills.

If the entrepreneur can’t answer this simple question, she is simply not ready for the next stages.

Let us assume that you are in fact willing to work for no income for 6 months

The second question usually tends to be “But what about taxes?”.

Let me state this very clearly – you absolutely want to have the tax problem! You want to owe as much in taxes as it is possible.

Here is the conventional business startup model:

• Figure out your business name
• Endlessly debate C corp vs. Sub-chapter S corp vs. LLP vs. LLC vs. Sole Prop vs. General Partnership (you would be wise to avoid the particular can of worms that is represented by the GP business structure)
• Hire an attorney to create a corporation or an LLC or pay an incorporation service
• Endlessly debate whether to call yourself CEO, President, Member, Chairman of the Board
• Pay state corporation filing fees, pay business taxes, pay licensing fees
• Acquire various insurance policies, such as errors and omissions
• Pay additional legal, accounting, and other professional fees
• Pay logo designer, pay copywriter, pay graphics designer and wind up with snazzy marketing materials
• Pay business consultant, pay marketing consultant, pay CPA, pay tax professional, and wind up with an awesome-looking business and marketing plan that is neatly bound and full of financial projections, pie charts, and other material investors will want to see, at least that’s what the consultants told you
• Print business cards
• Pay for association memberships, pay for mailing list databases, pay for e-marketing
• Pay for a mediocre website
• Pay for an e-commerce solution
• Pay…pay…pay…

You would have spent thousands of dollars, have no customers, have no idea whether the business will work, and have no revenue!

Let us think about this for a moment. Does that approach really make sense? I know instantly when someone is talking about starting a business for the very first time. The first things they mention have to do with taxes.

Let us look at the reality of business. We want to be as profitable as possible, right? That necessitates reducing all expenses during the startup process.

Do not try to launch a megabusiness as your very first startup. It can work, it can be fun, but your goal is to extend your financial runway as long as it can possibly be.

Many influential writers of business books, such as Robert Kiyosaki, will suggest trying network marketing or MLM as your first business. In my opinion, you will make more money with less effort if you start a more conventional business.

Any offer that tells you “Start a business, no need to sell anything” is really an oxymoron. Don’t fall for it. In one way or the other you will have to do sales to run a successful business.

Some of you may have ideas to launch a purely Internet store front and other purely home-based businesses. Yes, it can be done. Ask yourself whether you would prefer to compete with fewer than 100 local competitors or literally thousands of global competitors.

The best way to think about an online business is that it is a traditional business where you have the convenience to complete the business transactions through the Internet. Building a purely Internet-based business where you have no inventory, no overhead, and no employees is incredibly hard. It can be done, but if you are reading this article it is probably not possible with your existing skills. You would have to give Internet users a reason to come to your store and not buy from an established giant such as Amazon or eBay.

Professional help is great, but it’s really a luxury. Oh, and don’t quit your day job. The process I will show you allows you to build a business with a substantially reduced startup risk and without having to quit your current position.

Here is what you really need to start a business

1. Business cards with your company name, phone number, e-mail address, and website on them
2. Website with a related domain name
3. Passion

This is really all you need. Don’t worry about anything else for now. You can get free business cards from Vistaprint and a free website from Microsoft Office Live.

Step 1. Identify potential business ideas

1. Why do people come to you for advice?
2. In which areas, based on your background, are you considered to be an expert?
3. What else can you learn that is both fun and profitable?
4. What are your passions?

If your passions mix with the first few points, you have a potentially viable business idea. Starting a business just for the money without loving that business is not going to be a lot of fun. Of that I can assure you personally.

Step 2. Identify potential customers

The goal here is to understand which market niche is ripe to consume your product. For instance, I sell convenience store point of sale systems. You may refer to them as electronic cash registers. My solutions are also applicable to every other retail outlet, but I chose to focus on convenience stores for several reasons.

1. Chain stores, such as Lucky, Safeway, Walgreens, and others of their caliber already have existing relationships with vendors such as IBM and NCR.
2. Department stores are simply too complex.
3. Mom & pop small boutiques do not have a sufficient sales volume and product variety to support my solution. While they could benefit from my solution, it is far too expensive and typically an overkill for their needs.
4. The business owner spends a lot of time doing inventory management. My system frees them from the burden. In sales, we refer to this as identifying a “pain point”. If there is no pain, there is no sale.

Let us talk about your potential customers.

1. If your answer to “Who are your potential customers” is “everyone”, you fail.
2. Think about everyone who asked you for your advice in the past. Do you have their contact information?
3. Think about who might be a supplier to your customers.
4. Do your potential customers have trade associations? For example, if I wanted to reach all Realtors in my area, I would become a member of my local association of Realtors, such as Bayeast in my case, and sponsor their weekly sub-association marketing meetings, such as the Tricities Marketing Group in my case.
5. Who else might benefit from your services?

Start building relationships before you are ready to start the business. If you are selling point of sale systems to convenience stores, for example, become a loyal customer of your local convenience store and get to know its owner. You will be more successful if you talk to him as a friend who is interested in solving his problems rather than as a random salesman.

At this point you should order some business cards. Keep them simple. Don’t worry about logos or corporate identity. Be sure to include your e-mail, phone number, and website address. Also do have some sort of a title on the card, such as “President”. The reason for including the title is because contact management systems, such as Outlook, will ask the user to enter it anyway.

By now, you should also have a website. You can’t have a website that looks awful. Fortunately, there are plenty of professional turn-key website templates that cost less than $100. Running a well-known easy to use website system, such as WordPress, with a premium WordPress theme makes the task of running a professional website extremely simple.

Do not attempt to make a website from scratch! That is an incredibly complex process and you really do not want to have an ugly website.

Your website must have a feedback form and directions to reach you. This really is a huge topic and can’t be covered in this article.

Step 3. Train yourself in essential communications skills.

Whether you like it or not, the essence of business is sales. You will be the only salesperson for your business for the foreseeable future. You won’t be able to afford to hire sales help. As salespeople are typically among the highest paid in any organization, they are difficult to attract to an unproven startup.

What you lack in sales experience, you will make up for with your passion and communications skills. After all, selling a product really means that you are able to explain its features and benefits and how they address a pain point that your prospect is battling today.

There are several ways to become a great sales person. Let me help you identify their traits.

1. Driven. A salesperson will strive to complete the sale under any circumstances.
2. Not afraid of rejection. A salesman knows that he will not get every sale and considers it as part of doing business. A good salesman will take copious notes about the event so as to further streamline his sales strategy when faced with a similar prospect in the future.
3. Not shy. A saleswoman knows that she needs to be open and engaging with the prospect. She needs to transcend the barrier from being a stranger to being a trusted expert in the prospect’s eyes.
4. Patient and comfortable with a multi-stage sales process. When you come to a restaurant, a waitress will typically offer to start you off with a drink. Purchasing that drink accomplishes several things: you make an easy decision to order from a limited soft drink selection, you open a business transaction with the restaurant, you often do not care about what the price of that drink might be as you expect it to be insignificant at the time of final bill settlement, and you commit to the next stage of the sales process. As you are sipping your drink, you typically have a much larger selection from which to compose the rest of your dinner. The waiter becomes a trusted expert when you ask him to help you suggest what to order next.
5. Comfortable with taking advantages of up-sell and cross-sell opportunities. This is where restaurants get it wrong. The question “Is everything OK?”, which is what waiters use to initiate an upsell opportunity, is very weak. I can answer is as “Yes” and end the opportunity. Instead, that question should be “Thank you for choosing XYZ. How can we make your lunch with us today more enjoyable?”. Answering this question would require the customer to think about how to benefit your restaurant as well as provide her the opportunity to order more items. When it comes time to offer the dessert menu, again most restaurants will ask “Would you like some dessert?”, which is also very weak. I can answer “No” and that will end the upsell opportunity. Consider “Today, many customers enjoyed a slice of strawberry cheesecake with a glass of Clementine Izze drink. We thought you might be interested in our ideas for a delicious dessert. Here is the list of other interesting dessert options or we can go ahead and bring you that delicious cheesecake with the Clementine drink, if you’d like.” and hand them the dessert menu. I can still say “No”, but I am far more likely to review my list of desserts, which are typically higher margin products than my main entree.
6. Lets the customer decide when to finalize their order. In case of restaurant, I can add items to my final bill at any point up to the point when I decide to leave. No smart waiter will ever offer to bring you the check, although in some instances it becomes obvious.
7. Ready with a list of pre-defined choices to help the customer make a decision faster. This is where the special offers come in. “Our special of the day” is a very powerful tool to quickly sell something without having the customer go through a long decision process.
8. Asks open-ended questions that can’t be answered with “Yes/No”. In case of waiters, “Is everything OK?” is a yes/no question. “Here are a few of our desert suggestions” is an open-ended question. A good open-ended question will not have “No” as one of its answers.

You will notice that most of these skills are simply the ability to explain a product’s features and benefits, waiting, and upselling.

There are many ways to acquire proficiency in communications, including options as diverse as earning Master’s degree from Stanford in mass communications. I personally strongly recommend becoming proficient in presentation skills. One of the easiest ways to do that is to join your local Toastmasters International club. I am President of one such club in the Milpitas, CA area. We are called ArtICCulators. At Toastmasters, we teach our members how to become expert speakers. You will learn how to not be shy, how to clearly express yourself, how to improve your English language proficiency, and how to be able to talk about anything for at least 2 minutes. Other Toastmasters also tend to be very interesting people who can frequently help you with building your business.

It usually takes about 8 meetings, which is 2 months, to visibly improve your communications skills. It is very inexpensive to become a Toastmaster.

Step 4. Test market your idea.

Start talking to your potential customers. For example, if I am selling a point of sale system for convenience stores, I will go to a convenience store and ask to speak to the owner. Quite often, that person is the owner. A few good questions to ask a prospect could include “I think I may have an idea how to improve your business, but I am not ready with it just yet so I have nothing to sell to you today, can you tell me about what is most painful about running your store?” and then “So as I understand it accounting and inventory control are pretty big problems. What else would improve your profits?”. You will learn how to ask this kind of questions from good books on sales.

Step 5. Define your product and your offers.

Now that you have good communications skills, we need to focus on your marketing skills. Read a few books on marketing. Your ideal books would be related to the target industry. You need to understand how to position your offer in such a way that it is appealing to your prospects.

Talk to your friends in the target industry and ask for their opinions about your offers and how they would improve them.

Create very basic marketing materials. You can’t afford professional brochures and videos just yet, but you can probably figure out how to make some demos of your product that are playable on a customer’s DVD player. The less effort the prospect needs to spend to review your offer, the more likely she will do it.

See if you can do a co-marketing campaign with a larger company. For example, if I am selling a Microsoft Point of Sale product, I can ask Microsoft for assistance. They can give me ready-made marketing materials, allow me to use their name and reputation of the product, and so forth.

It is easier to sell someone else’s product than your own unless you can create a very compelling product on a zero budget. These days, that’s only possible on the Internet and only if you are a skilled Internet expert and you don’t count the value of your own time spent in your budget.

Step 6. Begin approaching prospects.

I advocate the direct sales approach when beginning the launch of a new product. There are books on direct sales that you should read.

Create a list of prospects. For instance, if I am selling my point of sale systems, I can go to yellow pages and create a list of every convenience store in my area. Then I would enter that data into my mapping software and create a route. I would then personally visit my prospects and find a way to have them review my offer.

Use a CRM system, such as Microsoft Outlook, to manage notes about each prospect. This can get very fancy and so CRM systems are beyond the scope of this article.

Step 7. Ask for the order!

If you don’t ask them to buy, they will not buy.

Summary

It is possible to start a business with reduced risk and very limited budget. The secret is to assess the risk before committing capital to the idea. You will need to improve your communications, sales, and marketing skills to be successful.

Do not be attached to the concept of a perfect business plan or to the original idea. Most business plans are either living documents or hopelessly out of date. Most businesses goes through a lot of refinement of the original idea.

A great domain name is important, but you can always buy a better one when you have the budget for it. Do register many names so you do not have to pay a lot more for them later.

The better you are at marketing, the less effort you will need to spend on sales.

No one cares about your business while it is tiny. Sometimes it makes more sense to start a business, make some money, and then make it legal by paying for the business license, incorporation costs, and other required fees. If the penalty for not doing it before startup is not very high, it may make sense to pay the penalty and to use your limited funds to grow the business first.

You can always hire an accountant and a tax professional and an attorney to formalize your business and its books once you are up and running.

Oh, and why did I suggest that you want to have tax problems? That means you are making profit and for it to matter you would have to make huge profits. Most failed startups never do. You can easily afford to hire the help you need to fix those problems at that point.

How we can help you

We have an incredible team of web designers, copy writers, and business consultants to help you bring your business to the next level. When you started a business and have a marketing budget, talk to us and we will help you get to the next level. Please do talk to us first before you begin experimenting with web advertising and search engine optimization. There are all kinds of interesting things we can tell you about it. We enable business owners to reach the next level faster and our fees are much lower than the increase in sales we bring in by getting involved with your business.

I am very interested in your feedback and have enabled comments for this article. You can also follow me on Twitter to be informed about other articles like this and what is happening to the rest of my businesses.

Thank you very much for reading about how to start your business. I wish you nothing but enormous success and I truly believe in you.

Sincerely,

Leonid S. Knyshov, CEO

Crashproof Solutions, LLC

510-282-1008

http://www.knyshov.com

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