Startup 101: What to Know Before You Begin
Starting a business is risky. It requires a lot of time, energy, and capital. It’s important to take your time, do your research, and map out what you want to achieve. Having a complete understanding of what starting a business requires – before you begin – is crucial to success.
Dallas McCarthy and Rosa Lee Timm sat down to talk about the logistics and experience of getting a business operational. The pair cover several topics including:
- How to know what business structure to choose
- Different types of funding and what to consider when securing it
- The importance of insurance
- And more!
This webinar covers important topics at a high level. It’s important you check with state and federal guidelines to get more information regarding your specific needs.
Please note, there were many great questions asked in the live Q&A. We will update this blog shortly with those.
Hello everyone, and thank you for joining today’s webinar: Starting Your Business 101. We’ll discuss a few things today: What’s next for CSD SVF; what the future looks like; what the vision is. We’ll be discussing that, also what it’s like to start your own business. What the process and experience look like so you can get some ideas on what you need to do. It’s good to share experiences so you can learn from them.
Also, most importantly, what you need in order to start your own business. What types of resources you’ll need to start your business. We’ll talk in-depth about that later. Now I’d like to introduce CSD SVF’s team.
My name is Dallas McCarthy. I am a Venture Fund Associate I’m responsible for contacting all Deaf-owned businesses, talking with them to see if they need any support or resources from us. Plus any feedback in order to improve ourselves because we’re still new and learning as we go. Also, I talk with them to see if they’re interested in partnering with us, and we explain what it is we can provide them and how they can support us at CSD as well,
in terms of the community. We’ll talk more in-depth about that one-on-one.
My job is to provide as many resources as I can, and if they’re not available I’ll look for them to share with you as well. Including those who we already partner with – I provide resources that are needed from CSD to them or even external.
Now I’d like to introduce our new President of SVF, also our CMO – Chief Marketing Officer. Her name is Rosa Lee.
Rosa Lee: Hello!
Dallas: Rosa, if you don’t mind please share what your role will be and what’s next for CSD SVF.
Rosa Lee: Sure, I’d be happy to I’m thrilled to have you here as well. and I’m also thrilled to lead CSD SVF into the future. The reason for my excitement is I’m an entrepreneur as well. I love the process of implementing something new, something that makes a difference, that solves problems within our community, and solves the challenges that we face. Doing all of these things truly excites me.
Going forward, my main goal is to invest in the Deaf entrepreneur industry. This investment will come in various forms. Some examples are expanding the provision of resources.
There’s a wealth of great information available to the public. However, it’s inaccessible. It’s all typically geared toward the same population, and it’s not inclusive of different backgrounds, races, physical needs – and so forth.
So the focus here is on the Deaf entrepreneur industry, and we’re committed to invest by providing an expansion of resources and training programs. Such as our incubator program which will be expanded for both our current partners as well as our new partners.
Really it’s all about dismantling barriers by providing additional support and resources. Whether that be funding, mentorship, and much more. I’m really looking forward to these exciting times.
Dallas: Rosa, thank you for sharing your vision, and I really look forward to working with you too. I’m really excited about what’s going on with CSD SVF partners, really excited about that.
So you mentioned you owned a business, and I’ll let you know, I owned a business too before. Would you mind sharing your experience what was it like starting your business?
Rosa Lee: Yeah, I come from a family of entrepreneurs. My father is an entrepreneur and growing up I always saw my father coming up with new business ideas that ran the gamut. I’ve seen his ideas succeed and fail too – many times. I have that same desire to want to start my own business I’ve always had that mentality
I first founded a performance troupe called “Dangerous Signs.” Really this was my sort of way of dealing with life during college. You know college life is extremely stressful. There are major shifts: discovering your identity, who you are, what you want in your future.
So setting up this performance troupe helped me have some stability, an outlet for creativity and stimulation. We had a long run. This performance troupe lasted my full four years at college.
I was the Art Director, so I was in charge of managing everything from the development of shows, to screenings, booking travel, equipment, contracts – and their negotiations – I handled it all by myself all four years. I didn’t have any sort of mentorship or someone to help me.
I had to learn things myself as I went along and I learned a lot of things the hard way. It’s fairly easy to come up with ideas, but when it comes to their application and working out all of the intricacies, like taxes, paperwork, making sure that your business is registered, making payments, all of that – especially as a college student – it was tough.
It was a learning process, and I hit a lot of speed bumps along the way. As time went on I had some successes and failures. I started a magazine.
I founded a Deaf women’s group in the performing and creative arts, I established a film production studio, and I performed in a one-woman show. And the list goes on and on.
Like I said, some were successes and some were failures. But, yeah, it was a lot of learning as I go. A lot of trial and error. I had friends, peers, and family who supported me through the process.
This experience would have been so much smoother and easier if I had something wonderful like SVF to tap into. Which I did not have back then.
I’m wondering what your business was?
Dallas: I used to own a business, It was a concrete surfacing business. We didn’t pour concrete, but we surfaced concrete to prevent cracks, and help cover the cracks in concrete – that kind of thing.
Rosa Lee: Cool.
Dallas: Yeah, so if people would see cracks we would make it into a design like bricks, or stone. So that was my business experience. And it was a good experience.
Rosa Lee: And what was your role mostly in that? Were you the founder of your business? Did you do everything end-to-end yourself? Did you have a partner or a team? All yourself?
Dallas: I did it all myself. In the beginning, it took me over a year to plan. I did not set this up right away, it took a year to plan. Starting from my vision, I had to explore the costs and set up a lot of things on the back end. As you mentioned taxes and invoices – I had to learn that as I went. I didn’t want to approach a customer looking like I didn’t know what I was doing, like a fool. So, I had to make sure that I was prepared. So I was professional and I looked as if I knew what I was doing along the way. And it was a good experience.
I did that for about a year until I actually set up my business. I took it one step at a time, and I learned from that. One thing I wish I had was a partnership with SVF. Not just because of the funds but also the resources that could have sped up my startup process. Plus make my process smoother when I met my first couple of clients. It would have made things a lot smoother for myself. I didn’t know what resources I needed. I learned it all as I went along, and that was tough.
Rosa Lee: I’m wondering did you learn all of this yourself? Online? Or did you take classes? or trainings What did you do to up your skills?
Dallas: That’s a good question. I had one organization called SCORE. I noticed that every state has a similar organization and they help anyone that wants to start a business. You can talk to them one-on-one, or on a mentorship basis. But understand they’re a hearing organization. So it was through the phone most of the time, so I would use a relay interpreter. I’d prefer to meet with them one-on-one so I could get more of a sense of the conversation, and not just have a black and white type of answer to everything. So yeah a SCORE is where I started. And then I began meeting a few contractors who did similar work, and I started asking them questions about the equipment they use, how long things took, how much they typically charge, and all of that. So that’s where I started learning and I just went from there.
Rosa Lee: I think some obvious characteristics for a Deaf entrepreneur to have are: to be a risk-taker, to not be afraid to ask for help, to be hungry for information, and to be persistent. Do not give up. If you hit a roadblock, find another way. Continue to find another way. Those are the characteristics of entrepreneurs who succeed. They are very persistent. Being that way got me through all of my business successes and failures and the speed bumps along the way. It was having these characteristics. Be welcoming to information, and support. And continually seek out and find solutions.
One interesting note about the two of us -you know when I started I was in college and it was a spur-of-the-moment thing. and I learned as I went along. But for you, you took a year to study and learn as much as you could before starting your business. So really there’s no right or wrong way to start a business. But one thing that must happen is you actually start. That’s it. I remember the first time I decided I wanted to start a non-profit business, prior to that, I was on my own. I had a sole proprietorship, which I later changed to a non-profit.
The very first thing I did was learn about non-profits. I learned about the requirements. What was required to get a 501c3, what all was involved. I learned that you had to have a board and have staff, and establish this whole system. You also had to have financial projections, and know how you would generate revenue. All of that.
I had a dense book that I read through, and then I also called other Deaf friends who were CEOs or leaders of nonprofits, and I asked them how I could start. I told them what my preferences were and asked all kinds of questions. I was basically information gathering.
Then I began with a logo. My first IC contract, I got a logo design from that, and then I started a business plan. I laid out what it was that I envisioned, and what I wanted. Then I built a team – and started from there step-by-step. But, wow, I grew with each step. And when I was ready to start my next business, I was more knowledgeable of the whole process and it went much more smoothly but that…
Go ahead, Dallas
Dallas: Do you mind backing up a little bit regarding your experience of having a sole proprietorship and shifting over to a non-profit? I had that similar experience but I’m wondering how you felt when you switched over to a non-profit and all of those demands.
Rosa Lee: The demands are more, yes.
Dallas: Yeah, it was extreme, I felt almost paralyzed.
Rosa Lee: and I did feel uncertain as to whether I should switch to a non-profit, because of the loss of control. As a sole proprietor, I had full creative ownership. But in transitioning to a non-profit, I would be linking up with the community and have a governing board who would contribute all to the decisions. And that was a challenge for me to let go.
Dallas: You said you contacted friends who were CEOs and you read books. I did the same thing. I read books to make sure I understood how it worked, And to make sure I was complying with federal laws.
Rosa Lee: Yes! That’s it! The legal aspect, and taxes… the list goes on.
Dallas: Right, it’s extensive. Anyway, I’m sorry, please continue.
Rosa Lee: No, but really I think it goes back to where your heart is. What really matters most to you, and what your end goal is. Think about what it’s going to take to achieve your dream. Whether you’re an LCC, a sole proprietor, or a non-profit, think about what your end goal is, and the journey to get there will be worth it. Go ahead and navigate it. it takes passion for sure, big time.
Because some days, as an entrepreneur, when you start the work you don’t realize this but it’s 24/7 – and there’s no boss no time clock where you punch in and out. No one to report to no one telling you what to do or orders to follow. You’re on your own.
Dallas: Yes, it’s like a baby you have to take care of 24/7
Rosa Lee: Yes you must have passion, to continue to fuel your energy and positivity and keep you going.
Dallas: Yes, that’s right. Keep yourself positive as much as you can in your thinking. Always remember why you first started your business.
Rosa Lee: Right – why did you bother to start in the first place? So what were your first steps in establishing your surfacing business? What did you do as your first steps?
Dallas: Well really, like I mentioned before, I always wanted to own a business, but I didn’t know what my passion was. I’ve always loved construction, but I don’t like all of the work that’s involved there. But I thought concrete surfacing really matched up with my skills. It’s simple, but a lot of work. But simple at the same time. So I researched it more and I became more fascinated, and I fell into it. And that’s what got me started.
Then I became serious about it, and I kept researching it more. The first step I took was to find who could guide me in how I could start my business. That’s when I contacted SCORE. They helped me also start my business plan and find the funds as well. So that helped me a lot.
Rosa Lee: So you got an investment for your business?
Dallas: Yes I was invested in by private investors.
Rosa Lee: You’ve experienced investments and lack of investment right? You’ve ran a business before without an investment.
Dallas: I tried in the beginning and it was hard, because I needed money. I needed a lot of equipment, so I had a lot of startup costs. I invested my own time and money to get started, and then I realized I needed a lot more money than what I could invest.
Rosa Lee: to start with an investment, I see.
Dallas: Correct. And I didn’t allow that to stop me. I kept going. I didn’t give up. I encourage you, if your passion is in this, Then keep going, keep pursuing it. Don’t give up. That’s what I did. Then I found investors, which took me a while to find the funds.
I did go to banks but that was an uneasy process because I would have to pay them back. I learned it takes three to five years for a business to start to succeed. So you have to make sure you can run on your own in the first three years before you can start any kind of revenue because your expenses will start to pile up. There are a lot of expenses required in the beginning. That’s why I was thankful for doing that research, it’s when I realized just how much money I needed.
Research is so important, and each individual is different. Some can start a business just fine, it depends on the individual. I like to make sure I research things thoroughly to make sure that I’m on the right path. Rosa Lee, I’m wondering, did you just start your business? Or did you do research beforehand?
Rosa Lee: I went ahead and just started my business. I’m impatient. In general, I am an inpatient person. As I’ve gotten older, I have gotten better, and i know to carefully research things. But back then I wanted to see change happen quickly and right away. So I just jumped in. I also didn’t have a mentor or anyone like me to look to as an example, so I just jumped in and decided to learn as I went along.
During that process, I did a lot of interviews. I remember wanting to establish my performance troupe and so I went to Deaf West Theater summer school. I went to learn acting, but at the same time I was studying their program.
How they implemented Deaf West, what their management style was, and their business operation style, how they brought in revenue. So I would call a meeting with Ed Waterstreet. I interviewed him – and I still have my interview notes – I asked everything under the sun, like how you started, how you navigated things, how you founded Deaf West. And what I was to do, what my options were, my best paths forward. Whether I should go with the sole proprietorship, an LLC, or a non-profit, or corporation. And he gave me so much advice. I took all of those notes and I’ve kept them in mind. I implemented a plan and a training program. So, yeah, really it was all about learning as I went along. It was about solving immediate problems. As things popped up I just had immediate solutions, and carried on that way.
It may not have been the best course of action, because I did make a lot of mistakes, but entrepreneurs have to be willing to take risks. I think that’s part of everything I do. I just try and that’s how I learn. That’s the only way to learn.
Dallas: It’s okay to make mistakes, right? And learn as you go along. You learn from your mistakes. It’s good that you can share those experiences with others. Others who currently own a business, but they sell. Or maybe their family is taking over a business, they can learn from their prior mistakes and pass along and share that experience.
Rosa Lee: Often entrepreneurs do not set up one business. Often they’ll set up a business and add a new product line. But they take from their learnings in their first course and in the second and third businesses they end up having more success as a result. So you have to go through growing pains in order to really grow.
Wow, now you’ve seen my journey as an entrepreneur. I learned on the spot, as I went along. Dallas took a year out to study and learn before establishing his business. I’m wondering what kind of entrepreneur are you? Seeing these different styles, really it doesn’t matter what journey you take, but all of your journeys have to start with these basic things that will help you establish your business.
Dallas: Right. Thank you Rosa Lee. You’re right. You have a vision, but before you pursue it you need to know these key things in order to start your business. So I’d be happy to dive into that. How to actually start your business before you begin.
First, we’ll talk about choosing your business structure. You may wonder ‘what kind of business am I?’ It’s important that you know the three most common structures that people use.
There are several others that you can find on the website But now I’ll cover the three most common: Sole proprietorship, LLC, and non-profit.
A sole proprietorship – What’s the difference between these three? I’m happy to discuss those.
First, a sole proprietorship means you typically start very small. So who do you serve? If it’s mostly friends, family, and neighbors – that’s considered a small business. That’s sole. If you own a sole proprietorship it is connected to your personal assets, meaning your car and your house If something happens to your business, people, or a bank, can take your car. That’s a sole proprietorship. It is tied to your personal assets. If you’ve decided to start with a sole that’s good. It’s okay and you can always grow.
Maybe you want to take it to the next level, so your business isn’t connected to your personal assets.
That’s fine you can change to an LLC. An LLC means it’s not tied to your personal assets. You can protect yourself, but they can still take your business assets. They’re kept separate. A sole is tied to your personal account – including taxes – an LLC is separate.
Which means you have personal taxes with the sole. With an LLC you’ll have business taxes separately. An LLC is most commonly used for businesses. With a startup you don’t have to go with the sole proprietorship. You could go with an LLC. It’s more important that you know the difference between the two wherever you feel most comfortable starting.
And then the non-profit. Most of you know what a non-profit is, of course. They’re not earning any profit, but it’s an organization that gives back to your community. There are completely different laws, and completely different ways to register for a non-profit organization. Non-profits are separate from your personal assets as well.
Now with these three, you know the differences between the most commonly used structures for all business owners and non-profits. It’s important you examine each and see which one you feel most comfortable with. There’s no right or wrong. It’s important you follow the legal requirements. Both state and federal requirements. It’s important you research the differences between the three.
Now we’ll talk about choosing your business name.
It’s important to know your business name because, as I mentioned, the structure, once that’s decided you can come up with a name. You need to come up with something that’s not used elsewhere, to avoid confusion and lawsuits. Every state has its own website that you can follow to find state businesses’ names. There’s a search there. There are unique websites – each state has a different one.
Mine is “Secretary of State.” That’s where I went and searched to find available business names. I’d type in an idea, find out if one wasn’t available,continued to think of names, talked with friends and family.
It’s very important you keep in mind a business name is permanent. It’s better if you don’t change it. So make sure it’s the right name before sharing that with friends, family, and the public. Once you finish choosing your business name, you can register your business.
Now I want to talk about the Federal EIN.
What is it? And why do you need it? It’s important – remember when I talked about taxes, and separating your personal taxes – which is connected to your social security number? Then the EIN is your business’ social security number. Where can you find how to register and how to get your EIN? You need to go to the IRS website to register. They will give it to you. Once you get it, make sure you document it and keep it. You’ll use your EIN to register your business, business name, structure – and all of that.
Next is a bank account.
Why is it important to have a bank account? The same idea that I mentioned with the EIN, keeping things separate from your personal accounts. You’ll have your personal and your business accounts. Now, a sole proprietorship is connected with your personal assets, and that’s fine but as you grow out of control you may decide to switch to an LLC. Even though you can still stick with the sole, you can still stick with the soul if you want.
If you have a bank account for your business only, you’ll know what your expenses are and your earnings, instead of having them mixed in your personal account. It’s important to open a business account under your business name and with your EIN.The bank will require that information.
Insurance is a big key to your business. It can have a huge impact – and it did impact my business.Why? It depends on what you’re selling or the services you’re providing to your customers, and if it can cause injury to your employees, or yourself. Or if it can cause damage to other people’s homes or property.
Like construction, for example, if you’re bringing large equipment and parking it, and say you break someone’s concrete. You’re responsible to pay. That’s why it’s important to have insurance, to help cover your liabilities from your mistakes. Why am I saying insurance is important? Because it can be expensive. It can also be cheap.
It really depends, plus it’s hard to find business insurance out there.There are not many options. It’s not like car insurance, where you can just walk in and get it right away. For a business, you have to reach out to a lot of companies.
For me, it took three or four companies before I finally found one that matched my business needs, and was reasonable, as well, that I could afford monthly. So it’s important to know what your insurance rate will cover before you actually start your business, and before you start serving your customers.
Now your business plan. I know not a lot of people like that, or they wonder why they need a business plan. Well like Rosa Lee and I were talking about, my approach was research. Rosa Lee’s was to do a quick search but do it as you go with her business.
Having a business plan will help you know what you need in your business, and how much it will cost for your business to operate: month-to-month, year-to-year. How fast it can grow, what kind of growth you’re looking for in your area. Is growth just limited to your area? Or county? Or state? Or will it be more than one state that you’ll grow to?
You’ll need to understand your business better in order to operate your business better.
So that’s a business plan. It’s needed and important because it will help you find funding.
Now, talking about funding. There are a few different options.
Seed funding is a small amount of money that you seek out from family or friends that you can get to help kick-start your business. Or there’s a bank loan, an SBA, possibly. The last is an investment.
So how do you find funding and support your business? Like I mentioned earlier, to continue to operate, you need to figure out how to keep your business running for at least three to five years before revenue can start supporting your business
Now seed funding is typically from family, friends, or from your own pocket. You may need to pay that back depending on your agreement with friends and family. Or if they’re just giving that to you to help with your business, or you give them some of the profits – however you arrange it.
The second is the bank, which is a loan of course, with interest. It’s important to research SBAs and compare the rates for an SBA or a direct bank loan. You need to know the interest rate and monthly payment to make sure you can afford to pay that back – and also how long you’ll need to pay it back.
Investments, Where can you find investors who can, and are willing, to invest in your business.
An investment means you have to give up equity in your business. Which means a percentage of your business will be given to the investor, which means instead of getting 100% of your profit – depending on what you agreed with your investor – Let’s say you give them 20%. That means, out of that 100% of the profit you keep 80% percent and 20% of the profits go to the investor.
It depends on what you agreed on. It could be monthly, it could be annually. Some investors may want to wait a few years and let your business grow. Then they’ll go ahead and start taking from the profit.
Now we’re ready to answer your questions. Please go ahead and type your questions in the Q&A. We’ll take a look and answer your questions.