So You Want To Start a Business

So You Want To Start a Business

That’s great! You will be one of 3,190 individual’s (2015 figures, via the Kauffman Index) across the United States who is adding to a still-vibrant economy, in spite of war and recession elsewhere. In fact, entrepreneurship is actually up from 2014, by about 10 percent, so clearly some people are still hopeful about the economy, Wall Street aside.

Like many entrepreneurs, you may have to shoulder the burden of the workload by yourself for a while, with part-timers on call when things get really crazy.

Those part-timers can help you get through the sticky stuff, so go ahead and hire them. Young and strong, or older and wiser, they are an important addition to your business. If you are successful, they may even transition along with you to become permanent, full-time employees.

But there are rules, even when hiring part-time or temporary help, and you could lose your precious startup – and everything else you own – if you are not careful to follow them.

What Defines Part-Time

You do. Not the government, and not some anonymous management company, but you. The Fair Labor Standards Act (FLSA) applies whether your new employee works 14 hours, or 30 hours. However, U.S. Bureau of Labor Statistics describes “part-time” as working one to 34 hours per week, so that is a good guideline.

Mandatory Benefits

What are you required to offer, or pay? Mandatory benefits include workers’ compensation and Social Security – or a short-term benefits package for disability, depending on your state. You are required to pay minimum wage in most cases. This is equivalent to $7.25 per hour.

Starting out, you may want to keep it simple and hope that your employees are healthy and capable. On the other hand, a small, simple, very carefully crafted benefits package may be just the incentive your new employees need to work just that much harder to help you succeed.

Health Insurance

Don’t forget the Affordable Care Act (ACA, or Obamacare) for health insurance. Again, depending on your status as an employer, etc., you may not have to offer anything to those working less than 20 hours a week, but your insurer can advise you and help you plan for an acceptable minimum of coverage – perhaps with employee participation.   

The law says you must pay for health insurance if you have 50 full-time employees or more. This is the 2016 threshold. This means you either offer health insurance, or pay a tax penalty. You can get around this by cutting hours, or dividing your company into two parts (e.g., manufacturing and sales), and some larger firms are doing just that, but that’s kind of a shabby way to meet the letter of the law while ignoring the intent.

If your employees are seasonal – if, for example, you build sailboats, but only in the summer – you are required to offer health benefits to employees if there are more than 50 of them, and they work for a consecutive 120 days (4 months) in a row.

Whatever you do, remember that any health insurance you offer must meet the guidelines of “affordability”. That is, it must not exceed 9.56 percent of your employee’s combined household income.

There is a caveat, of course. Since you, the employer, are unlikely to know what your employee’s combined household income is, you can take advantage of any one of three “safe harbor” stances. These are:

  1. The amount of wages on the W-2 form
  2. The rate of pay, typically calculated at 130 hours per month or more times the hourly wage
  3. The Federal poverty line, or FPL, takes the position that the coverage is affordable if your employee’s contribution is not greater than 9.5 percent of the FPL for a single individual during the calendar year.

Best Advice

Good employees are a treasure beyond gold. Learn to spot them, and reward them, outside of mandatory state and federal employment guidelines. For example, that Thanksgiving turkey or Christmas bonus may mean more in the long run than all the niggling little attempts you make to stay precisely within the law.

5 Ways to Avoid Startup Failure

These days it’s not uncommon for someone to change career plans and decide to start up a small business. The great thing is that it’s socially acceptable. Everyone is cheering each other on, saying “go for it!” and “what have you got to lose?” and in reality, some startups succeed and some fail. Maybe you’re ready to ditch corporate America and open up that specialty shop or maybe you finally decided to be an independent consultant rather than rely on being part of a company. If you’ve got the patience and the drive, there’s no doubt you can get started. In order to stay on the right track and be successful, there are some things that you should avoid doing that often lead to the failure of a start up. Make a couple of “right” moves to avoid failure and you’ll be happy you went after your dream job.
Be Confident, Even When You’re Not

Once you begin to establish your startup, it’s important to have familial and friend support, but you need to be confident in your startup and your ability to succeed. If you constantly second guess every decision, how do you expect to sell your ideas and promote your business to others? Sure, a startup is a big, scary, and often times risky decision, but you need to be confident for the sake of your customers, your employees, and yourself. If you fail to be confident, your startup is likely to fail.
Ask For Feedback and Advice

Startup businesses can be intensely personal; a part of you. Unless you have years of experience running your own business, you may need a mentor or consultant. Find someone who you respect and trust to bounce ideas off of, yet someone who is not part of your personal circle (spouse, family, best friend).
Hire the Right People

The beginning stages of a startup are often a whirlwind. You may not expect needing employees right away, but then all of a sudden you do. Eager to keep the business moving forward, you hire the first person who seems qualified. Hiring the wrong people can break your business. Choose people who understand your plan and vision and show potential for having the same passion. It may take a while, but it’s worth the search.
Be Original

Many new startup business owners want to own a business, but rather than choosing something they are passionate about, they base their plan on what’s trending. While this is important to do to some extent, don’t “copy and paste” another existing business. For example, if you are really interested in making specialty cakes, you need to create a style or a product that will set you apart from every other trendy cake shop in your city. The most successful startups are a perfect balance of originality and trend.
Listen to Your Clientele

Your customers will make or break your business. If you don’t care how your customers perceive your business or your products, then you probably don’t care whether or not your business will succeed. Ask for feedback, even if you may not want to hear the truth. Whether customer feedback is positive or negative, listening, learning, and taking action can help your startup grow and have a better chance at returning customers.

Technology That Will Make Running a Small Business and/or Startup Easier

Technology That Will Make Running a Small Business and/or Startup Easier

537489489Running a small business or startup enterprise takes initiative, creativity, and drive. For intrepid individuals courageous enough to undertake it, time and resources are often scarce. That’s why it makes good sense to take full advantage of new available technology to enhance and streamline your business.

The Small Business section of the New York Times offers articles of interest about technology to small business owners, including topics such as:

  • Using Twitter to market small businesses: Micro blogging is the sole method of advertising for many businesses with no marketing budget.
  • Text message marketing: This article claims that text messaging can increase sales and establish customer relationships for a reasonable cost.
  • Managing your online reputation: This includes interacting with customers and monitoring web conversations.

A February 13, 2015 article on Tech Cocktail entitled New Business Technology for the New Year has several technology suggestions for small business owners. The author claims that by working smarter instead of harder with new affordable technology options, small businesses can streamline operations and maximize returns. According to the article, business owners may consider any or all of the following:

  • Social Media: Although social media is a valuable marketing tool, managing it can be time-consuming. For that reason, it is recommended that you choose one or two social platforms that suit your business audience instead of branching out to multiple platforms. The author recommends Twitter for promoting deals or specials, Instagram for visuals, and Facebook for dialogs with customers.
  • Cloud Document Storage: This makes shared documents accessible from home or mobile devices, but controls are still available as to who can edit or access them. The article recommends affordable cloud storage friendly to small business, such as Box, Google Drive, Drop Box, or One Drive.
  • Voice Over Internet Protocol (VoIP) Phone and Fax: This technology has features that can enable small businesses to present a polished image at very low cost. Switching to VoIP phone and fax could help you improve service and image while reducing costs.
  • Mobile Apps: Apps can replace certain traditional business services and can be particularly useful for hands-on business owners and employees who are seldom if ever in an office. Accounting, travel management, point-of-sale, and a number of other useful business apps are available.

In a December 2013 article on Entrepreneur, author Michael Garrity claims that technology is a vital tool that is leveling the playing field for small businesses. In terms of small business technology, the article recommends the following:

  • Move your business to the cloud.
  • Replace expensive POS solutions with an app on your tablet or smart phone.
  • Offer loyalty and rewards programs to your customers using FiveStars, Belly, or Perka at affordable prices.
  • Take advantage of inexpensive tools such as cloud apps for accounting, HR, and other backend productivity.
  • Use marketing and sales plug-in apps to track customers, active leads, sales pipelines, and more.

As covered in this article, with a tablet and a few essential apps, a small business owner can run a customer’s credit card, promote the daily specials on Twitter, manage payroll, and much more.