By Page Heller, President Hopes Creek Startup Considerations.

ByPage Heller, President

Hopes Creek

Startup Considerations

IntroductionYou have a great ideaYou want to start a company around the

ideaTo maintain controlTo make the most profitTo 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 timeStarting a successful company is not an 8 to 5 jobYou will be devoting nights and weekends for some

timeYou will not be in control of your time –

circumstances willYou will have many emergencies to handleYou will have many documents to prepareDo you have that kind of time?

Don’t get me wrong; it is a very rewarding investmentBut, 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 insuranceProfessional LiabilityFacilityKey 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 businessSomething always comes up unexpectedlyPlan on accessing only 50% of what you

think you can raise

Financing Rule of ThumbHere’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.0-100k Loans, Friends and Family100k-400k SBIRs or Angels400k-1500k Angels1500k-2500k dead zone2500k-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 definedManagement team knownMarketing plannedFinancial needs understood

Of course, plans changeBut, operating without a plan is

financial suicide

Legal StructureWhat legal structure will you use?

Sole proprietorshipLimited liability partnershipLimited liability corporationC corporationS corporation

Have you considered the issues of liability?Have you considered taxation?

GovernanceBoard of DirectorsCorporate OfficersArticles of IncorporationBylaws

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.

DetailsState registrationCompany name and brandingEmployer identification numberLicenses and permitsLocationBankingLetterhead and cardsOrganizational membershipsAdvertising

AccountingIf you are getting investors, plan on using a

third party accountantIf 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 cashUse outsourcing

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