Essentials for Starting a New Business - by Jon Miller MBA [Business Management] 'Plan for the future, because that is where you are going to spend the rest of your life' Mark Twain Recommended Products In the interest of full disclosure, I am in no way affiliated with, employed by, have any vested interest, or in any way receive compensation from the sale or distribution of the product lines reviewed or the company that manufactures or markets it. Liability The information contained herein is believed to be true and accurate; however we make no guarantees concerning the veracity of any statement. The writer assumes no responsibility, expressed or implied, due to misuse or misinterpretation of the information or methods used, or for any vehicle damage or injury that may occur due to the suggestions and information offered. Accuracy of Content I strive to present complete and accurate information. To be of real practical use, a subject like automotive detailing requires a great deal of research, and updating as new products or technologies becomes available, so the articles are updated on a regular basis as necessary from current research. From time to time there may be information that contains typographical errors, inaccuracies, or omissions (because I’m human). These are unintended and TOGWT™ reserves the right to correct any errors, inaccuracies or omissions and to change or update information at any time without prior notice. Disclaimer The information contained herein is believed to be true and accurate; however we make no guarantees concerning the veracity of any statement. Use of any information on this page is at the reader's own risk. The detailing methods set out here have been adapted for special use and may not be the same as those recommended by the product manufacturer, and you may experience different results from those stated. When in doubt always use common sense Article Revisions / Updates The advent of new materials like detailing clay, micro fibre, polymer coating, nano-particle technologies and new micro abrasives are examples of why it’s so important to monitor the industries new products, chemical technologies and ideas that are constantly being introduced, as are the techniques for applying them, hence all the in-depth articles will be up-dated and revised on a regular basis Starting a New Business Most people start their own business because they want to be their own boss, and then discover how hard a taskmaster they can be on themselves! According to a study for insurance company, the average small business owner already works more than 50 hours a week. As times get tougher, the temptation is to cut costs by doing even more yourself, resulting in a fossilised social life and children who mutter “who’s that?” on the rare occasions they glimpse you around the house. There is a so much to learn about setting up and running a business as well as having the knowledge of your profession. Do adequate research on owning and operating your own business first - Adequate insurance, stable finances, available credit, a good working relationship with your banker or business backer, accounting, tax law, properly setting up your business (sole proprietorship, Limited Company etc.) as well as having the necessary discipline and organizational ability to pay bills on time, are just some of the things required and to start maintain business momentum. This is all in addition to Market research, Marketing (being good at what you do is 25% the balance is Marketing yourself / your product) Customer and Vendor relationships Starting a new business demands much more than a good idea, a new business needs seed capital, which means that you must also convince a wide range of people that your idea is a good one and that you can successfully generate profits in the future. A limited liability company Usually abbreviated by LLC, is a legal form of business company offering limited liability to its owners. It is similar to a corporation, and is often a more flexible form of ownership, especially suitable for smaller companies with a limited number of owners. Unlike a regular corporation, a limited liability company with one member may be treated as a disregarded entity by the IRS. A limited liability company with multiple members may choose, generally at the time that the new entity applies for a US federal taxpayer ID number, to be treated for U.S. federal taxation purposes as a partnership, as a C corporation, or (if it is otherwise eligible) as an S corporation. An LLC can elect to be member-managed or manager-managed. Some general rules of engagement before you start should include: • Be as brief as possible, short, sweet and to the point. •Place financial data in an appendix at the end of the document •Demonstrate respect for your competition •Mix in a spell and grammar check before you send your plan •Justify any projections you make for your business •Focus on your profit potential •Include a risk analysis for the business and a realistic diagnostic for its survival •Go easy on industry and technical jargon •Be honest about any major claim •Talk about relevant experience of your executive team Here are four key steps you need to take 1. Raise finance: There are a number of options if you need backing to start a new business: •A bank loan •Venture capital •Investment from family and/or friends •'Business angels' - independent, wealthy individuals looking for investment opportunities Each option has advantages and disadvantages - a bank loan can be expensive, for instance, but allows you to keep a greater control of the business. Before you go about raising capital, it is also worthwhile exploring whether your business may qualify for a grant from a local or national source. Businesses that are likely to employ workers from deprived areas could qualify, as could those that will have a beneficial effect on a deprived area or section of society. Similarly, grants and tax breaks are also available in specific locations, such as enterprise parks section of society. Similarly, grants and tax breaks are also available in specific locations, such as enterprise parks. 2. Business Loan Application: A Financial Plan is usually a requirement of a lending institution or investor; specify the amount of capital which you expect to put into the business. Provide specific information as to how the loan will be used; purchase of new equipment, a building, inventory; supplies or working capital. Identify what items will be purchased or leased, name potential suppliers and estimated costs. Show return on investment (ROI) for this capital and estimated profit. In the event the loan or investment cannot be made, describe what changes, if any, must be made in order that the business would still be operational. •Financial Data: Sources of funding; Mortgage Loans, Term Loans, Personal Equity Investments, Applications of funding, Purchase Building, Purchase Equipment, Renovations, Inventory, Supplies, Working Capital. •Balance Sheet; Assets- Cash, Accounts Receivable, Inventory, Supplies. Fixed Assets; Fixtures, Vehicles, Equipment, Building, Land. Liabilities- Accounts Payable, Bank Loans, Net Worth; Owners Equity •Operating Expenses: Salaries, Wages, Commissions, Payroll Taxes, Marketing, Advertising and Promotion, Office Administration, Legal and Accounting Operating Supplies, Bad Debts, Rent, Repairs and Maintenance Utilities, Insurance, Taxes and Licenses, Depreciation, Interest •Break even Analysis: Sales Cost of goods / services sold Gross profit Fixed expenses Net profit (loss) Gross profit as % of sales Divide Gross Profit by Sales (To show percentage relationship) (Break even) divide fixed expenses by Gross Profit (As % of Sales expressed as a decimal) •Supporting Documents: Personal Resume Job Descriptions Financial Statements Credit Reports Letters of Reference Letters of Intent Copy of Lease Copy of Agreements Copy of Contracts Copy of Proposals Quotations and Estimates Census and Demographic Data Industry Surveys 3. Write a business plan: The first and most important step in raising finance is a solid and convincing business plan. Competition for the attention of banks, venture capitalists and other investors is fierce and potential investors receive many hundreds of business plans every year. If you are to win backing for your new company, your business plan must stand out from the pack. Make sure your business plan follows these guidelines: The front cover should be clearly dated and should identify ownership of the plan with a clear index An executive summary, providing the reader with a brief (no more than a single page) but thorough idea of the proposal: organisational information, which should include: contact numbers; the company's legal form, registration number and incorporation date; directors and shareholdings, if appropriate; employment numbers and the projected increase in staff over a specified time scale; the names and addresses of the company's advisers. The main section, which should provide a history of the organisation with a mission statement, clear details of the project being proposed for funding, a thorough analysis of the market, customers and competition, management details and finance details. Management details should include the CVs of main management and an analysis of the team's ability to manage marketing and sales, finance and administration and technical issues. The finance section should include projections for monthly cash flow, and profit and loss accounts and balance sheets covering a minimum of two years. An assessment of the project's long-term financial viability should also be included, along with a realistic statement of the total funding requirement (split between capital expenditure and working capital). A good source of information is ‘Business Panning Made Easy’ (bplans.com) As the business expands and changes are made, the business plan will need to be amended and revised to fit the new business environment. The business plan should be treated as an ever evolving document, don’t get caught up in following the plan rigidly or you may end up missing new business opportunities 4. Find an office / detailing space: Once your funding is in place, the next step is to find a base for your company. Again, there are a number of options: •Be conservative. Take your time and set priorities. •Choose a location with easy access: This can be a personal residence, mobile rig, commercial building, or rental space in an existing automotive-related business (car wash, lube shop, stereo shop, window tint, etc.) •Shop-around for financing: Interest rates vary. You might also consider alternative financing. •Leasing a property - Points to look out for include: break clauses, which give you the option of leaving the premises before the end of the lease; that the responsibility for maintenance and repair of the building is clearly defined; and that the terms for rent increases are laid out in the contract. •Buying a property - should be seen as an option for the future. •Purchase adequate insurance: This includes full coverage on customer vehicles in the shop, and off the premises during pick-up and delivery. •Invest in a good phone system: If you cannot be reached directly, you should be able to return a customer's call within 15 minutes. •Set-up a credit card accounts for business purchases: Some suppliers do not offer credit terms or C.O.D. •Set-up credit card accounts for retail sales: Electronic credit card machines offer financial safeguards and convenience for your customers. •Investigate state and city tax laws: Some require sales tax on services. 5. Get equipped: The final step is to find the right equipment and software for your needs and to stock up with stationery and other office goods. You'll also need to find yourself legal, tax and accounting advisers. 6. Insurance Obtain business liability coverage; specifically Garage Keeper's Insurance (fixed location) or a Commercial General Liability policy (Mobile detailer’s). 7. Cash Flow: Cash (Liquid Assets) - cash available or income from the business •Credit- extended by supply vendors; to maintain a good trade credit ensures bills are met on time. •Inventory- cash disbursements (supplies in stock) this will be your biggest monetary outlay •Debt- bank overdraft or business loans must be repaid in a timely manner to ensure a good standing with your bank when it comes time to expand your business •Expenses- business rent, utilities (telephone, electricity, water, and etc) Insurance, Taxes, salaries, monies must be available to meet these expenses, plus state and local taxes, accountant and attorney fees. •Bookkeeping- always maintain accurate records of all your business transactions, these are very necessary for the day-to-day running of the business, plus you’ll always be aware of you liabilities for sales tax and etc. Summary Professional detailing can be a great business opportunity, but like any other business, it requires very careful planning and execution. Work smart, take the time to study and understand your market and build a business strategy around it. Once you’ve established your business plan, all it takes to execute it is hard work. Recommended reading- •Start Your Own Automobile Detailing Business by Eileen Figure Sandlin •Selling The Invisible" by Harry Beckwith •The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It by Michael E. Gerber •What Clients Love: A Field Guide to Growing Your Business – Harry Beckwith •Mentored By A Millionaire by Steven K. Scott Amazon Books •Guerrilla Marketing in 30 Days, by Al Lautenslager ys, Recommended Software- •Service CEO Auto Detailing Software - Service Business Software - •Quicken Quick Books - Accounting Software - QuickBooks •Executive Coaching and Business Coaching Martin Brossman is a personal coach operating in the Raleigh, Durham and the Washington DC Area's. Client referrals have extended his practice nationally and internationally. Coaching areas include, personal coaching, executive coaching and business coaching.- Personal Coach Martin Brossman serving Raleigh, Durham and the Washington DC area Information resource- 1.America's Small Business Development Center Network - America's Small Business Development Center Network 2.“Automotive Detailing Inside & Out, A Knowledge Base for the Perfectionist"– by Jon Miller 3.TOGWT™ Series of Detailing Articles, by Jon Miller © TOGWT ™ Ltd Copyright 2002-2008, all rights reserved Detailing Articles This is one of is one of a series of unbiased and informative, knowledge based, subject specific articles, which are dedicated to the automotive detailing enthusiast or professional detailer in search of development and further education All original material is copyright, unless otherwise stated (1) it may be copied and distributed for non-commercial purposes only provided that you retain all copyright and other proprietary notices contained in the original material, (2) the information is copied in full with no changes unless prior written agreement is obtained from TOGWT™, and a reference to © TOGWT ™ is included, any unauthorized use of these materials may violate copyright laws and/or trademarks. 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We prosecute for breach of any of these conditions: If anyone is found to be using our copyrighted designs or articles from our website TOGWT AUTOMOTIVE DETAILING INSIDE & OUT FOR THE PERFECTIONIST or associated websites, we will prosecute to the full extent of the law and have done so successfully in the past
One thing to remember... The money is everywhere. Brains aren't. If you have a great idea and a proper plan, the money will find you.
Being good at what you do is 25% the balance is Marketing yourself / your product (i.e. Paul Dalton - Miricle Detail)
TOGWT, I just want to say that, ALL of your posts are little gems and I want to give you props for them. I really enjoy your posts and I have learn alot from them (especially the technical ones) Keep on doing your excellent work buddy PS: when you release your book, I will by it for sure
A solid business plan is essential if you plan to go to a bank. I spent many years in banking and most bankers have three basic questions, although they may phrase them differently: 1. How much do you really need to borrow? 2. How are you going to pay it back? 3. What do I get if you don't? For the new start-up entrepreneur, be prepared to personally guarantee any bank loan - they will accept liens on your equipment as collateral, but they usually want much more in the way of security for the loan. Just don't mortgage the house!! :deal:
Word. I`m hoping to start my own business these days (in detailing), together with my neighbour. The guidelines are a bit different over here, when it comes to starting up, but your relationship with the bank is just as important. We`ve decided to start relatively small in the beginning (a year or so, depending on the market), so we don`t need to borrow the world, but we still have to personally guarantee for the whole amount, regardless of business type. Luckily, we`ve both been granted the loan we need, so I`m hoping for the best! AND: your many posts have helped me a LOT, togwt, thank you! :applause:
You might want to consider persona asset protection in the form of- A limited liability company (abbreviated by LLC) in the law of many of the United States is a legal form of business company offering limited liability to its owners. It is similar to a corporation, and is often a more flexible form of ownership, especially suitable for smaller companies with a limited number of owners. Unlike a regular corporation, a limited liability company with one member may be treated as a disregarded entity by the IRS. A limited liability company with multiple members may choose, generally at the time that the new entity applies for a US federal taxpayer ID number, to be treated for U.S. federal taxation purposes as a partnership, as a C corporation, or (if it is otherwise eligible) as an S corporation. An LLC can elect to be member-managed or manager-managed. I wish you every success in your venture- Thank you all for your positive comments, I hope my experience can help others, to quote my alter ego-{Knowledge unshared is experience wasted}
