Starting a new company?

[Dragonfly]

Hello all.

I'm in a position in my life where for the first time I can go freelance and should be in the financial position to do so.

I am currently a Web Designer / Developer who also deals in print and branding. I would like to work for myself, rather than working for one single company on a fixed salary, I feel that it would make working become more rewarding and would allow me to try new and exciting things.

Before I take the leap into freelancing / sole trading, I'm looking for advice from people who've done it themselves. I'm asking for any and all advice you can give!

If you think I should go ahead an try it out, list the reasons why. Equally if you feel it's not a smart idea, again, explain why.

My current thoughts:

• This could be a huge success
  
• This could be a total flop
  
• There will be ups and downs
  
• I have friends who work for hosting companies, I should be able to arrange reduced cost hosting services,
  
• I can easily obtain trade prices for print through current connections which will allow me to compete on price
  
• I will spend some savings on marketing - business cards, flyers, Facebook adverts, multiple domains (SEO reasons)
  
• I am willing to get a part time job to earn enough to live during the early days of the company
  
• I have every intent to meet with my bank and a financial advisor, as well as asking people I know (older and younger alike) of whom I know who have started companies for advice.
  

To clarify my current plans, I will start by developing a website of my own during weekends and make it as professional and technically sound as I am capable of doing. I will optimize it to the moon and back for search engines.

I will set up a Facebook page, LinkedIn page as well as other social media pages and post regularly to them. I'd also get ever friend and family member I can to like my pages initially to help boost numbers, but I will not pay for fake likes. I will promote posts on Facebook locally using targeted adverts.

I will print myself higher-quality business cards and flyers and locally promote myself to any and all companies I have the time to visit, and when working I will keep a tight track on everything I do such as time spent, new leads etc etc by using a CRM, allowing me to be on-time with as many jobs as possible and let no work 'fall through the net'.




Again, I welcome any advice. Thanks for reading. :)

[Phml]

Perhaps some of it will be obvious to you, just covering some of the aspects that sometimes blindside people.

Get ready to work more than you ever did. Making your own company requires a ridiculous amount of effort in the beginning, for a long-term payoff. If your financials allow it, I would suggest holding off on any part-time job. It's difficult to manage an early day solo venture and any other activity at the same time, unless you have an exceptional ability for self-motivation and airtight work ethic.

If there is anyone you trust on a professional and personal level, bringing them in could be a significant boon. Two and three men teams succeed a lot more often than people on their own. We're social animals, without anyone to share thoughts and purpose with, the sheer amount of work involved can make someone crack. Of course, this is only relevant if you have the right people complementing your own skillset. Better to go at it alone than shackle yourself with incompetent partners.

This is likely to be covered in your meeting with financial advisors, but make sure you take care of yourself legally, with a Dragonfly Company that is an entirely different entity as the Dragonfly Person. I have seen so many people think "oh, my activity is entirely digital, there won't be any unforeseen costs" only to be hit with chargebacks, legal complaints, bank issues, small things resulting in small delays throwing everything off key and making the whole entreprise fall like a house of cards.

Good luck with your company. I would always recommend taking the leap to anyone confident in their abilities. Even if it fails, the life experience you will get is invaluable. It's much easier to appreciate the advantages taken for granted in salary jobs when you've had a look at the other side of the fence.

[Dragonfly]

Thanks for your reply. The concept of working alongside a friend / 'colleague' is quite interesting actually. Perhaps bringing in one of my friends who work in the hosting industry could be valuable.

I've done some lunchtime reading and one thing I see pop up quite a lot is the idea of renting office space. This way your home doesn't become your workplace, allowing you to have a distinction between work hours and play hours. It also ticks that social box since you'll be in an office with other people.

Another problem I'm sitting on right now is what to call the company. Do I affiliate it with my real name some way? Do I use my online pseudonym "Dragonfly"? Or something totally new?

[Soundblock]

Phml said:

I would always recommend taking the leap to anyone confident in their abilities

I'd say the same. Also, be prepared to do more complex tax-returns than before? Track every cost you can tie to the company, if your country gives you tax benefits for that. Start keeping every relevant receipt if you didn't already. There's even apps for that these days...

Dragonfly said:

Another problem I'm sitting on right now is what to call the company.

Something reflective of the webpage content or the company's spirit/main function is probably a good idea, if you can come up with a good name that isn't taken within your chosen industry. "Dragonfly" in itself is pretty cool, like an artistic stamp, but a fresh slate name-wise might get you thinking new, if that's a goal...

[Dragonfly]

Thanks for the response Soundblock.

I'd look to hire an accountant or make use of an accounting application/CRM (or both!) and would of course keep all relevant receipts and the like. Thanks for the tip! I'm in the UK so you can get tax returns on that kind of stuff I believe, so long as it applies.

EDIT: That reminds me, if anyone can recommend a good CRM / business management tool I am very open to ideas. Obviously there's a preference for free/cheap CRM's over the pricier choices, at least in the beginning. If the CRM can handle the following:

• Log & manage all clients
  
• Log & manage all new leads
  
• Log & manage all performed tasks
  
• Track time spent on tasks & clients
  
• Log financial information on a per client basis (income / outgoings)
  
• Calendar
  

The CRM wouldn't need to be browser based, I don't mind if it's a desktop application, as long as I can keep the data backed up (on Dropbox or similar)

[Vorpal]

Dragonfly said:

This way your home doesn't become your workplace

This is super important I think, even if you are a workaholic, there's too many distractions that can happen at home.

That said, be prepared to lose money by the end of year 1, and maybe break even on year 2. I'm not saying this WILL happen, just... do what you can to insulate yourself against a 2 year slump.

[Chezza]

I don't have business management experience but been studying and selling Marketing. I'm sure you understand much more about SEO, gooogle algorithms, quality backlinks and even google adword management etc much better than I do. However don't dismiss the fundamental Marketing principles before you commit.

At least put true effort behind the 4 Ps, SWOT analysis, know your competitors and what they do to succeed. What makes your service / product better for your target market that any current or potential incoming competitor can't do as equal or better than you? Is there really a demand for your particular services that has yet to be met appropriately and is it profitable to pursue it in an efficient and effective manner? If you can't answer all these questions with confidence with some sort or reliable primary or secondary research to back your answers then you risk setting your business for poor foundations. Don't ever build on weak foundations.

Again I'm still quite inexperienced but I'm positive my advise has value to some degree.

[geo]

I own 4 companies (seriously). 3 are co-owned and the other co-owner handles thing. All 3 have degrees in business management. Perhaps owner is a strong word so much as I own 50% or 60% in one case.

What's fun is one of the co-owners went through a divorce and he didn't want her to get 50% of his stake, so he sold me his entire half and staved off divorce for a full year until that nullified any claim she may have. He said he only had to go 6 - 9 months, but went the extra 3 months to be safe. Then once he was divorced I sold it back to him. He paid more to get it back, but that was the plan he came up with.

The latest company is all mine and quite the tremendous flop. The process to start a company was pretty simple and streamlined thanks to going with a lawyer. I just didn't want to do it.

People kept telling me to get the company in Rhode Island or some other state where it was much cheaper. I went with my own state, plus the lawyer is only legal to do things in this state anyway.

Once the LLC came through, the lawyer told me I had to get 2 licenses + 1 permit (or 1 permit and 2 licenses) then fill out a staggering 38 tax forms for things that I never thought I'd even need. Things like coin operated tax forms for vending machines in a staff lounge when I don't even have vending machines or a staff lounge, but one day I could have vending machines therefore I need to fill them out.

I had to get a business bank account and so during interviews with banks I'd ask is it embezzlement if I just take all the funds from my company's bank account and put them into my personal account? One of them said you make it sound so illegal when you say it like that.

Someone wants to start yet another company with me for a side project that's making money. I'm tapped out. I have enough companies that I don't even manage. Plus this friend seems pretty clueless where I'd be the person running the business side of things and I just don't want to. I told him that and he pointed out then we can hire a manager! Yeah what money would be left? We can just go full on and take on an extra 3 people to work hard enough to pay for the 1 extra employee.

Rant over I guess.

[Clonehunter]

Dragonfly said:

Another problem I'm sitting on right now is what to call the company. Do I affiliate it with my real name some way? Do I use my online pseudonym "Dragonfly"? Or something totally new?

This heavily depends on how you've used your online name in the past, due to whatever connotations that could have in terms of your online history. On the flipside, DragonFly is also the name of a common insect, in which case it probably wouldn't be difficult to deny any past connections with your internet name if need be. You'd have to be careful simply because of any possible legal things.

Alternatively, it may workout better to come up with a new, unique brand for yourself, as a fresh coat of paint could simply give you a better, positive vibe about the company.

Although you said you deal with branding in some regard, you could try to find local branding agencies and simply discuss things (Without committing to their services, of course), to see how you should step forward. Is your name unique? Is it John Smith? Does "DragonFly X" already exist as a name? Logo? Colors? Fonts? Connotations with any other name?

[MFG38]

Being their own boss is a dream many people have, including myself. In all honesty, I have nothing substantial to contribute here, but I wish you the best of luck on your endeavor. c:

[Dragonfly]

Thank you for your replies.

Geo, I understand the trials and tribulations of running a company, but I can say now that running multiple companies is not an interest of mine, at least not yet. Thanks for the heads up on the struggles though :)

Vorpal, I agree and am prepared. I'm fortunate enough to have a Fiancée who earns just about enough for us to survive if I break even. I do have some savings as well, so we should be okay if I take on the challenge.

Chezza, Thanks for reminding me of my Business Studies lessons back at school. I will look to be doing these when I write up a business plan. The "Price, Product, Promotion, and Place" aspect I've covered I believe, just not put pen to paper yet.

Clonehunter, you raise some good points. After spending over an hour discussing this all with my father who runs his own company he said I should not call it anything to do with the name Dragonfly, and I feel he is right. As I will be sole trading, it's probably for the best that I use my own name, even for things as simple as when people go to pay me they know what to write on a cheque, etc.

MFG38, I appreciate the luck! :)

[ConnorORT]

Dragonfly said:

I've done some lunchtime reading and one thing I see pop up quite a lot is the idea of renting office space. This way your home doesn't become your workplace, allowing you to have a distinction between work hours and play hours. It also ticks that social box since you'll be in an office with other people.

If you have the budget to have an office I think it's generally a smart idea, but for myself I work in my bedroom and have yet to lose my mind. It's one of those "life is what you make of it", or I may be a freak because I like working 14 hours a day and having no life. So I guess in general having an office space is a good idea, but if it's not within your budget, you can still make it work.

[Grazza]

I started a company 20 years ago, and it has been successful. Well, quite successful; it's not like I own fleets of yachts, helicopters and Ferraris. But all companies are different, so I am not sure whether any advice I can give is going to be useful.

But one thing I would say is don't spend any more money than you absolutely have to. Cut expenditure to the bone, especially to start with. ("He who buys what he doesn't need, ends up selling what he does.") So I'd suggest reconsidering the idea of renting or buying office space, unless this is truly essential to the functioning of your business. Moreover, "use of home as office" tends to have significant tax advantages. If you find it difficult to divide your time at home between work and non-work, then you could try something one of my colleagues used to do. After getting up, he would go to a local cafe, and get a coffee/snack/whatever. Then when he returned home, that would be the start of his working day (i.e. like arriving at work). I'm not sure what he used as marking the end of his working day - possibly his evening meal, but you could think of something, I'm sure.

And yes, talk to an accountant early on: before you set up the company and decide how to fund it. This might avoid some pain later on. You could also check if any local colleges have any classes in basic business management (book-keeping, etc.). No need for anything fancy or time-consuming, but chances are you might pick up some useful nuggets from even the simplest class.

But in answer to your overall question: if you feel you have something valuable (or even unique) to offer, and you believe the market exists, then yes, go for it. Being in charge of your own destiny (and schedule) is worth some pain/effort. Expect to have to work like a demon for some years, but there will be a pay-off.

One final point I've heard several times: your work email address should have your full name and the name of the company. So if your name is Zebedee Dirichlet and your company is Purple Dog, your email should be zebedee.dirichlet@purpledog.com - even if you are the only Zebedee who works there. This looks more professional and avoids making it obvious that it is a small company.