12 Steps Young Professionals Need to Take When Making the Switch From Employee to Entrepreneur
By Jason Kelly
Okay, so you have made the decision to become an entrepreneur. You have the idea, product or service in mind, and you have a strong feeling there is a market for your goods. Now where do you start?
Well, if you're reading this, please do not accept my advice over the advice of a business accountant or attorney. But do understand that I personally have launched four companies in Arizona, some of them successfully, and overseen the launch of a half dozen of my clients' companies through my current company Phoenix AZ Ad Agency.
Like many of you when I was on my journey on how to get started, I fell for a lot of Facebook gurus, business consultants and email funnels and all of the nonsense that goes along with marketers who are just trying to take advantage of young entrepreneurial knowledge seekers. So, now that I am in a position where I can speak intelligently on exactly what you need to do in order to start a business without fear of screwing up or having to pay thousands to a business consultant, please take a look at the 12 steps you as a young professional need to take when making the switch from employee to entrepreneur.
1. Defining Your Product or Service Offering, Market Research and Competition Overview
In order to attract clients, offering a clear and defining product or service offering with a clear and concise value proposition is crucial. An easy to understand definition of your service offerings is key to the marketing and advertising of your company. The key to success is providing prospects with the ability to differentiate your company from the myriad of other competitors available to them.
2. Domain Name and Email Address
Establish your domain name first before you wait for the paperwork to come back on your LLC. This universe is just a bunch of vibrating strings of light interconnected through time and space. Just because you have that idea now and it doesn't exist online yet, doesn't mean that someone in Wisconsin doesn't have that same idea they are sitting on at the exact same time. Securing your business name and domain name should be your first step to securing your company and intellectual property’s future.
In my day to day business of building websites for construction companies and startups, I have seen dozens of companies over the years who have had to pay assorbant fees to domain brokers and ransom squatters because they didn’t bother to pay the thirteen bucks for the domain when they first had the idea. If you sell the greatest widgets and you forgot to buy the greatestwidgets.com for thirteen dollars and the Wisconsin widget team get’s to it first, you will want to kick yourself.
As soon as you have your domain name, establish a professional email. No, firstname.lastname@example.org or email@example.com are not professional email addresses. Grow up.Your domain email should have a catch all default email that gets all of the emails sent to misspelled email names on your domain.
My email address for my company is firstname.lastname@example.org (the catch all and website contact email), and my personal email is email@example.com. If you have more than one person starting the company with you, try to have the same style of email. A lot of companies go with firstname.lastname@example.org.
3. Set Up Your Corporation
Do not skimp on setting up your company. You either know how to do it from personal study and education, or pay an online law firm to do it for you. Depending on what type of corporation you start solely depends on how much money you think you are going to generate. If you feel your first year is going to generate $40,000 or more in revenue, you may be able to start the S corp right off the bat. You can talk to your CPA about what the exact advantages are, but the general rule of thumb is that the tax advantages of having an S corp outweigh the tax advantages of having an LLC at around $40,000 per year.
In Arizona, we have many lax rules about keeping your corporation legal. For example, other states require LLC’s to report quarterly meetings in order to keep their active status. Arizona does not. This can be advantageous at first, but there are things that require this ongoing and previous documentation to progress into further levels of the business community. For example, if you are a minority or female owned business and wish to be recognized by the city of Phoenix as such, three years of quarterly meeting minutes are required for submission.
4. Apply For Your EIN
Remember, in the United States, corporations are people, and like people, they have identification numbers which allow them to apply for certain privileges, services and differentiations from their human counterparts. One of these differentiators is the EIN. Your employer identification number is like the business’s social security number. Do not apply for this without your LLC first, as you can mistakenly attach your EIN to you as a person and doing this in the wrong order can forfeit some of the asset protections that come with properly setting up a corporation. The EIN plus the combination of your LLC will allow you to get number five.
5. Establish Your Business Bank Account
Your business bank account has to be separate from your personal bank account. If you do not do this, you have no asset protections against your funds should your company be sued. This mistake is made by contractors all the time. For example, Mark T. Smith General Contractor, who has a business called Mark T. Smith general contracting, may for some reason only have a single bank account for Mark T. Smith. Well, a determined civil suit attorney loves this situation because it can lead to a situation where there is no differentiation between a business and the person running the business. So do yourself a favor and jump through the hoops required to get a business bank account.
If you can, and only if you can, also get a business credit card that offers miles, cash back or points. If you can't, then fix your credit and start to work on getting a secured credit card to make the business purchases. You may not think that 2.5 percent cash back is a big deal, but if you are a business like mine, which purchases ads, materials, pays for content creation, web development and all kinds of associated costs on behalf of every client, that cash back can determine whether you can hire actual staff down the road. If you can, please, do yourself a favor and do not throw your money away on debit card spending. Make getting a business credit card with perks a priority.
6. Hook Your Bank Account up to Quickbooks or Hire a CPA
Just do it.
7. Get Your Logo and Brand Guide Designed
Your logo and the color scheme you choose are going to determine the future of your organization. Can you get away with a handshake only style of company? Sure. I’ve seen it. There are hundreds of baby boomers in Maricopa County operating multi million dollar businesses without websites or a logo. But like the baby boomers themselves, that practice is dying out. Which is why you must consider 21st century branding so much more than just a pretty logo and interesting looking advertisements.
Your brand is defined by a customer’s perception of your business. Your brand is the most valuable asset your company can own. Is your brand going to talk to clients in third person? Are they going to talk to people in the 1st person? What feelings do you want your branding to evoque? When driving sales is the key motivator, a brand story that stands out is a must.
Utilizing clear messaging your audience believes and recognizes is a powerfully winning combination. If you are interested in attaining a well designed brand guide, contact my company www.phoenixazadagency.com. Just FYI, the reason I started this company was because in Arizona, some of my competitors were charging upwards of $100,000 for a brand guide and website when in reality it’s not worth more than $20,000.
8. Get Your Arizona Trademark
While not necessary, it is a very common and professional practice to ensure your company has some weapons in the safe, which ensure the protection of your intellectual property. You may have a good idea, but what protection will you have when someone who does something similar files for a similar name in the same state? Without a trademark in place, there isn’t a whole lot you can do other than pay absorbent fees to an intellectual property attorney, who then has to go through the arduous process of proving who got there first.
With a trademark in place, it’s no longer a dispute. An Arizona trademark is great for establishing a logo and DBA. It, however, does not take the place of filing for an international trademark with the US trademark office. That process can take thousands of dollars and although should eventually be done and accepted as the cost of doing business, it is not something I have put on this checklist.
9. Get Your Liability, Professional and/or Speciality Insurance
As someone who wants to get rid of the entire insurance industry’s revenue cycle, I hate to have to include this, but it’s just the cost of doing business, and today's reality clearly states you need to make sure your business is properly insured. The insurance that covers your professional misconduct, theft, injury and fire damage as well your specialty insurance are crucial if you want to be taken seriously in certain industries.
For example, although it seems like every other ASU drop out has started a web design or marketing company in Arizona, not many have the professional liability insurance which would keep them from going broke during a lawsuit if for example they failed to meet a deadline on a website launch. It’s not required yet, but providing my clients with my professional liability insurance coverage of up to $1,000,000 per occurrence offers a peace of mind to my clients that very few of my competitors have.
Before she takes on a single client, a friend of mine is going to open a swim lesson training school out of her backyard and she'll have to have liability insurance, property insurance and swim school specialty insurance. So no matter what industry you are going to venture into, please look up the costs of providing you and your clients with the best protection you can afford.
10. Work on Your Policies and Procedures
There are several websites that will do it for you, but if you don’t want to be flagged for plagiarism by Google, you will have to heavily modify whatever you find online to suit your business. Try to make it as unique as possible otherwise your SEO will be penalized for duplicate content.
By this point, hopefully you have a well established sales funnel. Although not published, you should be able to lay out in detail exactly what the responsibility of sales, marketing, accounting, fulfillment and customer service is. Just trust me on this. It is much easier to take the time to write out in your company’s operations binder the defined role and required tasks for each of these positions before you get busy. Most of you will no doubtely wear all five of these hats in the beginning. Just winging it is one of the top reasons most businesses fail. Take the time and define your policies and procedures governing your entire business model.
11. Build Your Website
This is different from getting your domain name. A website is the combination of your story text, graphic design, branding, brand voice, logo, brand guide, testimonials, service offerings, videos, prices and portfolio tied together in one cohesive virtual location made specifically to help your business achieve its sales and marketing goals.
Have the entire site professionally translated to Spanish and have a button clearly labeled which will switch from Spanish to English. We are talking about starting a business in Arizona. If you don't think that native Spanish speakers can become a key demographic in your business, then you probably need to rethink your entire business plan.
As the owner of a website design company, I could include 2,000 words here alone on how to go about getting your website designed and what you as a business owner should care about, but I think I will save that for another blog post.
12. Setup Your Social Media
Stick with the basics: Facebook, Instagram, Linkedin, Twitter, Pinterest, Youtube, Google My Business and for you aspiring millennials out there, Tik Tok.
Facebook: Social Presence which has high SEO value, great for demographic research and offers a $25 billion a year Advertising Platform.
Instagram: Most important social media channel right now with a shift towards product sales.
Twitter: A reporting platform for company news and service offerings.
Pinterest: Have lots of product images and branded imagery? Build up a channel here.
Youtube: Not just for standard commercials. Company Diary, product videos, testimonials, etc. AdSense, Google Video Ads are America’s dominant video advertising platform.
Google My Business: Necessary for business. Fully utilize the built-in blog. Easy way into Google AdWords, the world’s largest advertising network.
Tik Tok: Be creative. Make a mascot. Create your own narrative. Cheaply made is not a bad thing on Tik Tok. Also has a growing billion dollar advertising network.
So there you go! Sure there are MBA’s out there that might have more input on this and you can go to any book store on Amazon and find tons of how to start a business books in the state you live in, but most of it is just fluff.
If you stick to these 12 clearly laid out items before you get too deep into your sales and fulfillment, you can find yourself on a path to success, which has been duplicated many times over by not only myself, but thousands of other successful Arizona businesses.
ABOUT THE AUTHOR: Jason Kelly is the owner of Phoenix AZ Ad Agency, a privately owned marketing and advertising firm formed in 2017 and located in Downtown Phoenix, AZ. They are proud to boast a strong team of designers, visual artists, writers, advertisers and web developers who thrive on rolling up their sleeves and solving your advertising challenges. They are on a mission to provide affordable and reliable advertising and marketing solutions for small to medium-sized businesses throughout the Southwestern United States.