start simple: a guide to starting your own company, part 6

what you need to start (tools and equipment)

After you have completed your business plan and secured financing(if needed), you need to apply for all necessary permits and licenses. This will include your business license, tax identification, and any others. Your city or town in most instances will issue your business license. The minimum fee for your license in most areas is about $50. The fee amount is based on the company’s revenue from the previous year. In the case of a new company, you have no previous revenue. Therefore, you will have to estimate your annual revenue. You really have no guarantee of sales and revenue, so it is suggested that you apply for the minimum fee.

Tip: To avoid paying two(2) Business license fees within the same calendar year, it is best to start doing business after July 1. Most local agencies have a fiscal year that runs from July 1 to June 30. (Example: If you start doing business on May 1, you will pay the full fee of $50. You will then be required to purchase another license on July 1, two(2) months later.)

There should be local offices for your federal and state revenue tax departments. This is where you apply for your Tax Identification numbers. There may be a small fee for the state($15). All information should be confirmed and provided by your local authorities. Each agency should be listed in your local telephone directory.

When I speak of tools, I mean business tools…training…knowledge. A formal education is not necessary to start your company. High School diplomas, College Degrees are all very important and may be among your personal goals. However, if you do not possess them you can still successfully start your company…it will be difficult in today’s business environment, but it can be done. Knowledge and training in the industry of choice will be you greatest asset. The ability to prove yourself to your potential customers and “deliver”…are usually all the credentials you will need. But if you are not proficient in certain areas, you should seek the assistance of someone who can help you.
What kind of business tools or training will I need? Management? Sales? Accounting? Customer Relations? YES…YES…YES and YES!

Management
Managing all aspects of your company is an essential tool needed to be successful. You must be organized and efficient, especially in the early stages of your company’s development. Managing the company and its component can be very challenging, but you don’t need to hold a MBA. A formal education in management will benefit the quality of management and certainly give you a head start. I recommend that everyone receive some training, even if it is self-taught through reading as you are doing now. However, regardless of training, you may choose or be required (because of work load) to assign some management duties to others. These people may be internal or external professionals. Many functions of business are being outsourced in today’s business environment. One important asset of a good manager to remember… “there comes a time when you can’t do it all”, which results in being able to delegate responsibility. This is not to be confused with ignoring the actions of those people given management duties. Even when hiring professionals such as Financial Managers, Business Consultants, Attorneys, Accountants, etc., you must monitor the people managing your company, its assets, and interest. This is the difference between Macro and Micro management.

Sales
This is another important area…not easy, but requires the least amount of formal training. Almost anyone can sell, if you have the desire and motivation. You sell yourself to everyone that likes you and that’s what selling is all about. I will discuss this in more detail in sections to follow (start doing business). It will be helpful to read other books and participate in sales seminars or training classes. Every company has to generate sales or else there is nothing to manage, account or service. Sales do not equal profits. These are two different things.
Even non-profit organizations must generate sales in some shape or form. In for-profit organizations, sales generate profit and this is a direct result of good selling. There are many techniques used to generate sales. And there are even more people willing to show or tell you which techniques are best. But, if you can grasp the basic sales and marketing concepts, the best techniques are what works best for you. Some industries require aggressive sales and marketing. However, an aggressive sales technique does not have to be rude, ruthless, or unethical. So, you determine your own sales capabilities, but remember sales are a must.

Accounting
There are many areas of accounting that must be handled in house. Usually, the main area handled by an outside professional or firm is the tax preparation; which I strongly recommend unless your are a tax professional. Internally, you will need to keep accurate and organized records. It begins with your very first expense. Your purchasing, invoicing, accounts payable, and accounts receivable will be internal functions. They can be outsourced, but usually not necessary for small startup companies. However, if your time and attention are needed in other areas; and business allows, outsourcing may be a good option. Some tax duties will be handled in-house such as monthly or quarterly sales and use tax reports, withholding tax reports, etc. These are not very difficult and usually not worth paying an outside source to execute. Training courses, seminars, software, and help lines are available for all aspects of accounting.

Customer Relations
Customer relations is the new term for customer service. The theory is not to help only when asked or a problem arises, but to build a relationship that constantly keeps you in touch with the customer or client. This area of business requires great interpersonal skills or “people skills”. You or your employees that handle this area of the business must have excellent communication skills. Troubleshooting, identifying current and future needs, quality, and satisfaction are all components of customer relations. It is a function of all areas: management, sales, accounting, etc. Everything you do affects the relationship with your customer (good or bad). It is not always apparent, but even the little things matter. What is most important is the attitude with which you conduct business. Make sure that you exhibit a great attitude! And remember it all starts from the top…so have that same attitude with your employees and it also will be conveyed to the customer.

Q: How much business equipment do I really need?
A: Only what is necessary to start simple.

We have long been moving into the “high-tech” age. Technology is rapidly changing and it often seems impossible to keep up. While you may need more advanced equipment today than you needed five years ago, there is no need to go out to “break the bank”. Spending more money than needed in the early stages can be a huge mistake (at the very least, wasteful). While computers, fax machines, pagers, mobile phones, etc. have all made doing business a lot easier; it doesn’t make them necessary. This is an area where you must make the decision based on company size, your availability to the customer, and industry requirements.

Office Space? Fax Machine? email? Pager?
Computer? Voicemail? Business Cards?
Website? Copier? Furniture?
Mobile Phone? Office Supplies? Telephone System?

There are some obvious needs that will be industry specific (tools and equipment needed to perform a particular service you provide). However, if we were to look at the basic needs for general business, it would consist of: business cards, telephone, answering machine or voice mail, typewriter or computer.

Everyone in business needs a business card. It is your calling card…your ID. I will discuss its importance and the proper look for your business card in the next section.

There are some people who exist without the use if a telephone. I don’t know any, but I’m told this is true. However, you as a business person, must have a telephone…one line or multiple lines. By using a little creativity (and with the help of your phone company), you can create a multi-line system without buying an expensive phone or installing additional lines. One example: If your company will be “Home-Based”, you can add a “master-ring” or “distinctive-ring” system. This will allow you to add a second, separate phone number to your residential phone. It will give you a different ring option to notify you of which line is ringing. Using this, along with “call waiting” gives you virtually three incoming lines (residential, business, and other).

In the event you cannot answer your phone, you must have someone or something that will. Thus, the need for voicemail, an answering machine or service. Today, many people have a “love-hate” relationship with technology. One of the most noted relationships is with voicemail. Many people are not comfortable talking to machines or leaving messages. However, if answering machines or voicemail did not exist, how much information would we lose or never receive? The compromise should be not to abuse the technology. Provide options for your callers, keep the information current, and return your calls as promptly as possible.

Believe it or not there are companies that still use typewriters for business operation. And you can start your company without a computer. You can use a typewriter to invoice and correspond with customers. A simple typewriter used with standard triplicate invoice forms from your local office supply store is still acceptable. However, computers make most of your business tasks easier.

Now, those were the basics. Let’s look at the better basics and what you should start with if feasible: business card, office phone, pager, fax machine, and computer.

We already discussed the need for business card and an office phone. Moving ahead to a pager. Yes, they still exist! They are less expensive than ever. You can access local paging service for as little as $6.00 per month in many markets. Regional and national service are always more, but not as costly as one might think. Obviously, your service requirements depend on the locale and accessibility of you and your business. The pager offers you and your customers more flexibility and another form of communication. It is also less expensive than a mobile phone and almost as effective. Mobile phones are great, but they can be very expensive for business use. It would be a good addition to your “high-tech arsenal”, but not a necessity for all.

Fax machines are fantastic and almost a necessity. You should eventually purchase one, if not immediately upon starting the company. They can send and receive documents quickly that otherwise would be delivered via postal system or courier. For those not familiar, they do not require any special talents and can be simple to use. The fax machine plugs into the same telephone wall outlet and the machine does the rest. You can use the fax machine to make regular phone calls and fax documents. Many of them have answering machines or options. You can make copies of documents, thus eliminating the immediate need for a copier for many people. It is a great piece of equipment to own. However, if that is not an option in the beginning, many coping services and office supply stores have fax service. But, they can be very expensive and you will probably save long term by purchasing one now. You can buy a quality fax machine for about $200.00.

The computer…wow, what an invention! Today’s computer can actually replace all the equipment we have previously discussed. Again, it depends on your needs and available financing. The computers on the market now have phone, fax, copying, emailing, invoicing and all document creation capabilities. So, you can even print your own business cards. However, they do require a fair learning curve to do many of these things…not to scare anyone away from computers. You can do as much or as little as you need with them. They allow you to accomplish tasks so much faster and so much easier. You can create and correct documents with little effort. So, before you purchase, assess your needs and don’t buy more computer than you need.

There are many options for equipment, furniture, office space, etc. You must determine what your business requires and make sensible choices. I only explored the basics here, things that apply to general business. Remember, unless you need it, you do not have to have it. Don’t let your wants overshadow your needs and force you to overspend.