You want to work for yourself, but are you armed and prepared for the business world? Get a plan, get help to guide and protect you for the “what if.”
With the complexities of today’s market, it is just simply not enough for one to think that because they are the best designer in the world, the world will beat a path to their door. The wake of history’s starving artists serve as a bleak monument to this. We have debated the best business entities for our firm, networked and examined the need for marketing, ferreted out clients, landed the contract and managed the award-winning project. What else is there? Is this enough? The simple answer is “no.” There is still much to cover this week from drawing our roadmap for success to surrounding ourselves with people who can drive us down that road with us to help us be successful.
A key point to remember here is to start building that relationship before you actually need the services. This is smart to do with all of your power team members, this helps your team have a sense of who you are, what matters most to you and your business and opens the line of communications. When we are under fire, we don’t always present ourselves the best under stress. The lines of communication prior to an issue will go a long way in them helping you champion your case.
The old cliché “people don’t plan to fail, they fail to plan” is as true today as ever, with one significant detail. Today it will become more readily apparent a whole lot quicker. When we go through the trials and tribulations of setting up a company that we knowingly are going to put countless hours and endless energy starting, doesn’t it make sense that we should have a plan? The business plan is a document that defines several areas including:
- State the mission statement
- List our company goals
- State how to achieve those goals
- Background information on the target market(s)
- Background information on key people and departments within the organization
- Expectations on profits based on quantifiable research (what the market is doing now).
This document is especially important in its creation due to the fact that it forces the people involved to “think it through” in rational terms, not just hypothetical rhetoric. It also becomes valuable should the principals seek out investors if funding to start the company is required.
In contrast with the Business Plan, the 5-Year Plan or strategic plan as it is frequently called, is more of a visionary process that is ongoing. The business plan is more of a startup document, but can also transition to a 5-year plan quite easily. There are sometimes variations on the 5-year plans for specific reasons, for instance, if a re-branding of the company is on the horizon, the 5-year plan may have more of a marketing plan perspective.
In any case, the 5-year plan is more strategic than tactical. Think of a strategic plan as the place you want to be in 5 years. What will it take to get you there? Five years may seem like a long time, but you can break down the goal into smaller tasks to achieve the goal. For example, you want to have 100–midsized clients in 5 years. This could be as simple as saying I will have a goal of 20–midsized clients each year. Not so fast! It will be difficult to do that in year one, for example, if you don’t have a track record, so you may have to adjust your approach so that you don’t get discouraged and can still achieve your end goal in a manageable fashion.
Staffing vs. Outsourcing
Here is the dilemma of business today. There are certain indispensable services that a business needs to operate. Although they may be indispensable, they may not be needed on a day-to-day basis. Should the business owner “carry” or pay for these services to the detriment of the business when they aren’t being used, or should they be hired out as needed? This doesn’t mean that a job is being done away with, it is no different than the freelance independent consultant that is occasionally hired for occasional work, then relies on other customers to fill in the gaps. The design firm also recognizes that every client doesn’t have a constant need, that’s why it is important to have more than one client.
Take a look at what skills are needed for your firm and also take a look at the roles that each person fills (on the design side and the operations side of the business), and if you are considering employees or temporary solutions, you must consider the following:
- Do I have enough steady work to keep them challenged and motivated
- Including benefits, payroll and other factors such as insurance, worker’s compensation, sick time, would it be cheaper to source out the role, or is the role critical enough that I have to have a dedicated employee in that role?
- What if I hire someone and they don’t work out? What do I do then?
The point here is to anticipate these questions and know the answers before committing to one solution or the other. It’s in your best interest to address them now rather than react to them under fire later. It is also a matter of shopping around for staffing agencies, just as in all businesses, there are highly reputable firms and ones that aren’t. Ask for references just like you would of an employee candidate for the same role and it pays to have a clear understanding of what the role is supposed to do:
- 1. Have a written job description and what the expectations in terms of value to the company are when considering candidates that will fill that role
- Are they motivated?
- Are they a good corporate cultural fit to your company (personality-wise)?
- Do they have the skills you need in this role and what other skills do they bring to the table?
- What drawbacks will you have to accept if they are the best candidate (availability, pay rate, special schedule accommodations, etc.)?
- Do they meet all requirements to be legally hired?
- Is there a probationary period that the candidate will be asked to work through?
Business owners often fail to understand that they are not in the business of hiring people, many times this is outside of their core competencies. Business owners, need to fill roles that are critical to the success of our business, although this may sound a little cold, it is the reality. Staffing firms can assist with this process, whether it is temporary help, temp-to perm help, or permanent placement, but this service comes at a price, know what the price is before agreeing it is the best course of action for your company.
Accountants vs. Bookkeepers
There is a lot of confusion on when a bookkeeper is perfectly fine to use and when the services of an accountant or CPA (Certified Public Accountant) are required. CPAs are highly trained professionals that can also act as consultants for your business well-being. Their experience and insight come with years of training in very specific matters of the tax law and how it related to business. Preparing taxes at all levels, reports for tactical and strategic needs and helping determine the best course of actions financially are all within the scope of services of the CPA. Budgeting may be an area that the CPA can assist the business owner consider for better use of existing funds or better rates of return on investments (from a tax strategy perspective, not one of a stock broker). CPAs are more expensive than bookkeepers, but their level of expertise and consulting insight typically commands this added cost. This can prove invaluable if you work remotely and you perform work in another country or derive income from several countries.
On the other hand, many businesses may have a bookkeeper, either as an employee or contracted in a vendor relationship that maintains the operational needs of the business on a day-to-day basis. Generating invoices, maintaining accounts receivable (money coming in), accounts payable (bills to be paid), payrolls, making deposits, balancing accounts and general business recording is certainly important and well within the role of the bookkeeper. Taxes are sometimes handled by the bookkeepers, depending on the skill level as well as certain other tasks. It is not uncommon for the bookkeeper to also be in charge of the employee records (human resources) in smaller firms since there is certain sharing of sensitive information needed to perform their role.
What services would be required of retaining or hiring an attorney? There are several times that we may need representation of an attorney, even if we don’t think we need to or if we feel the other party is at fault. As we stated before, even though we don’t look for negative outcomes, we do need to plan for events rather than react to them. Here are a few situations where you may be at risk and require the services of an attorney:
- You have a client, all goes well, the project is successful, but suddenly the client simply refuses to pay. From a contractual standpoint, what are your options?
- You have an employee that slips and falls in the workplace and then sues you for damages and negligence, what do you do?
- Someone accuses you for stealing their client and decides to sue you for lost revenue, how do you defend yourself?
- You have a client that as part of the terms of awarding you a project, has a contract they want you to sign. Do you know all the legal ramifications of that document and how it can affect your firm, now and in the future?
These are all perfectly valid reasons that you would want to have an attorney as part of your power team. This is not to say that you would want to hire an attorney as an employee, but referrals to several attorneys may help you in the final selection when it comes time to seek out these services.
Here is the one area that can potentially save a business with the least amount of effort, “should something happen” and is frequently ignored or deemed too expensive. Just like in the case of needing an attorney, your insurance team member is your safeguard for many areas.
First we have to consider what insurance is. Insurance is the transfer of risk for consideration of payment (an insurance premium). What this means to the business owner, that the possible risk of loss or damages that the business could suffer could be carried by the insurance company through what is called an insurance policy. This policy states that under certain circumstances, the insurance company will handle the claims of someone seeking relief (money) from the company as the result of something happening. In other words, if someone comes into your business and accidentally hurts themselves, your insurance policy may cover the medical and other expenses to help them get well.
There are several areas of insurance that you need and some you may not be aware that you need:
- Business Liability Insurance
- Worker’s Compensation
- Business Auto Insurance
- Renters Insurance (if you rent studio or office space) Commercial Insurance (if you own studio or office space)
And additional requirements may expand from there, (for example, flood insurance or elevated life insurance for the owners), this is the area of expertise that your insurance representative brings you. As in all cases, when you are starting up, shop around and seek the companies that are the strongest for the long term, have the best value on insurance based on your needs and although price is a concern, make sure that you are getting what you think you are getting by asking lots of questions.
Now you know you suddenly have some extra “to-dos” on your startup checklist. Sure, some of these come with costs, but you stand to lose a lot more if you don’t have the right controls in place or the right setup the first time.
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