Wyospace.com

Just write the business plan for Pete's sake! (Part 1 of 2)

By Brandon Marshall

Thank goodness for the Wyoming SBDC!  They’ve been bailing me out of making actual contributions to wyospace.com for months now.  So, here they are again, making me look functional and helping entrepreneurs at the same time.  Heck of a deal really. 

At both the Wyoming Business Council and the SBDC, we review literally hundreds of business plans every year.  It sometimes seems like an extraordinary task just to get businesses to realize that they need a very solid plan for the future of their company.   One of the biggest obstacles that people have to overcome in business plan writing is the idea that it needs to be a certain length, like it’s some kind of term paper for your 11th grade English Teacher/local Nazi Party leader.  (My 11th grade English teacher was actually very nice, it just seemed like it would be comedic to put the Nazi line in.)  Nonetheless, today I’m posting part one of “Just write the business plan for Pete's sake!,” with the much anticipated part two to come Monday.  Enjoy!

By Cindy Unger, Business Counselor, Wyoming Small Business Development Center, Region III

The business plan is a written summary of what you hope to accomplish with your business and how you intend to utilize your resources to meet those goals.  The plan is the “roadmap” for operating your business, measuring your progress, and determining when and how to expand.  Ultimately, your business plan must demonstrate that your business concept will generate enough sales to make a satisfactory profit, thus making the business worthwhile for you to start and of interest to potential financial backers. 

First and foremost, the business plan must sell YOU on the business. Researching and writing the plan will help you gain an in-depth knowledge of all aspects of the business.  You will be forced to take an objective, critical, and unemotional look at your planned business in its entirety.  The result may be that this business is not going to earn the profits that you originally anticipated, or that the daily operation of the business is going to be more complex than you planned, or that the initial financial needs are beyond your means.  Making the decision not to go into a business at the planning stage is far better than being forced to make that decision after you have invested large amounts of time and money. 

For any business to achieve success, the management should have a clear understanding of its operating procedures, customers, strengths and weaknesses, and competitive environment.  The business should also have a plan for future expansion and evolution. The business plan should explain how all aspects of operation of the business will be integrated and operate together. Fortunes have been made and lost because one area of a business organization failed and dragged the successful pieces with it. 

Continued tomorrow......

Bad Employee! What to do?

  By Jill Kline, WSBDC Regional Director

Are your employees taking advantage of you? Have you let them get away with things you shouldn’t have and now wonder what to do?  If your business is beginning to suffer because of your employees’ behavior, but you don’t want to fire them, you may want to consider the following.

This is an interesting scenario; I’ll make some assumptions and generalize a bit.

First, take responsibility for your situation and minimize any damage or effects to your business and employees. This is a great step because you, as business owner, are ultimately responsible for what happens in your business, positive or negative. 

Perhaps you did not have any employee policies in place at the time of hiring. This is not uncommon in new businesses; as a business grows you may suddenly find a need for employees and not be fully prepared when you begin to hire. A thoughtful job description will assist with hiring of the right employee. Clearly defined policies and procedures that outline expectations and consequences can help reduce misunderstandings between employer and employee. Job descriptions and policies and procedures are not meant to be an exhaustive list of duties and responsibilities but they lay the foundation for what the employee can expect.

If this happens to be the case, I would encourage you to plot a timeline (this corrective change will not happen overnight) and let your employees know that you would like to begin formalizing your business by developing job descriptions and policies and procedures. Let your employees know the purpose for this decision – that you want your business to be prepared for anything and be successful. Involve the employees so they realize you value their input or opinions. Plan specific times for the process and keep it upbeat and non-threatening. You might ask your employees to write their own job descriptions based on their perceptions while you write your expectations and then together compare and discuss the two descriptions. You will also want to develop a performance evaluation based on the duties assigned; develop accountability measures that include consequences for both fulfillment and non-fulfillment of duties; let your employee know that you want them to succeed and set up regular times to evaluate progress. This does not have to be a time-consuming, burdensome task. Continued communication will allow the employee to seek help or express concerns and will also allow you, the employer, to guide and mentor the employee. 

There are many management programs or strategies that you could adopt. If this approach seems overwhelming, seek the help of a coach, mentor, the Wyoming Small Business Development Center or other professionals.

Do you know a sole proprietorship cannot be formed with anyone else – not even a mouse, not even a spouse!

By Jill Kline, WSBDC Regional Director

A sole proprietorship, as the name implies, can have only one owner; if you involve your spouse or anyone else, the entity would then become a general partnership. 

When a sole proprietorship is formed, no business “entity” is actually created.  The assets and liabilities of the business are the same as those of the owner.  If you want to involve your husband or wife because you are worried about what would become of the business if something happens to you, then rest assured that the business would transfer to your heirs.  Your heirs could continue the business, restructure it, or dissolve it depending on what was appropriate for them.

Forming a sole proprietorship opens you up to unlimited personal liability since the business is the same as the owner both legally and financially (as does a general partnership).  A sole proprietorship has no separate taxation; the owner pays all taxes personally.  You might consider forming an S corporation or limited liability company in order to obtain the appropriate tax advantages you might be seeking, while limiting your liability.  I highly recommend you consult an attorney or accountant to help you determine which legal form of business would best suit your situation.

A general partnership in Wyoming does not require a written contract or agreement and has many of the same characteristics of a sole proprietorship.  Again, there is unlimited liability for each person involved; the partnership would dissolve upon the death or declared incompetence of a partner (unless there is a written contract or agreement stating otherwise); and each partner pays taxes on their share of income.  If you decide to form a general partnership with someone other than your spouse I would recommend involving an attorney.  This, at the very least, could help you avoid any deadlock decisions if the ownership of the partnership is split equally. 

The Wyoming Secretary of State has a document called “The Choice Is Yours” that can help educate you on which legal entity would be best for your business.  It is available at http://soswy.state.wy.us/corporat/pub.htm.

Business Startup Costs - Deductible or Not?

By Leonard Holler, WSBDC Region 3 Director

Generally, business start-up costs are the expenses you incur before you actually begin business operations.  Business start-up costs can vary depending on the type of business you are starting.  They may include costs for advertising, travel, surveys, and training.  These costs are generally capital expenses that would otherwise have been deductible for an existing business.  Organizational costs are generally those costs incurred to set up a business entity (i.e. corporation, partnership or LLC).   

Start-up costs are amounts paid or incurred for creating a business or investigating the creation or acquisition of a business.  Start-up costs could include amounts paid for surveys of potential markets, advertisements for opening the business, salaries and wages for employees while being trained, travel and other costs for securing distributors, suppliers, or customers and fees for consultants or similar professional services.  Amortizable start-up costs for purchasing an existing business include investigative costs incurred in the general search for or investigation of the business. These are the costs that help you decide whether to purchase the existing business.  Organizational costs could include the cost of temporary directors, organizational meetings, incorporation fees and legal services.

When starting a business, you will treat all eligible costs you incur before you begin operating the business as capital expenditures.  Generally, you recover capital costs through depreciation deductions and you usually cannot recover any other costs until you sell the business or otherwise go out of business.  However, you can elect, in the year the business starts, to amortize certain costs for setting up and organizing your business.   For costs paid or incurred after October 22, 2004, you can elect to deduct a limited amount of both start-up and organizational costs.  The costs that are not deducted then, with the election, can only be amortized ratably over a 180-month period (15 years).  The amortization period starts with the month you begin actively operating your business.
As stated above, for costs incurred after October 22, 2004, you can elect to deduct up to $5,000 of business start-up costs and $5,000 of organizational costs in the year the business starts operations, for costs regardless of which year they were incurred.  The $5,000 deduction is reduced by the amount your total start-up or organizational costs that exceed $50,000.  Any remaining cost must be amortized.  For more information about amortizing start-up and organizational costs, see IRS Publication 535.

The WSBDC is a partnership of the U.S. Small Business Administration, the Wyoming Business Council and the University of Wyoming. To ask a question call 1-800-348-5194, e-mail wsbdc@uwyo.edu, or write 1000 E University, Dept. 3922, Laramie, WY 82071-3922. Additional help is available at the WSBDC Web page www.wyomingentrepreneur.biz

Employee or Contractor? Get It Right to Avoid Penalties

By Margie Rowell, CPA
Director Wyoming Small Business Development Center, Region 6

A common and costly mistake employers make is to incorrectly classify an employee as a contractor. Take care not to make this mistake because if you do, you can be held liable for employment taxes for the worker in question as well as a penalty. To make the correct determination, consider that, in general, whether a worker is an employee or an independent contractor depends upon how much control you have as a business owner. If you have the right to control or direct not only what is to be done, but also how it is to be done then your workers are most likely employees. If you can direct or control only the result of the work done, and not the means and methods of accomplishing the result, then your workers are probably independent contractors.  Sometimes, it is difficult to determine the status of a worker. In these instances you can have the IRS make a determination by filing Form SS-8 (Click Here for form), “Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding,” If you have established that your worker is an employee, the IRS provides a helpful guide, Circular E (Click Here for info).

"A creative economy is the fuel of magnificence."

By Diane Wolverton, Director, Wyoming Small Business Development Center

A creative economy is the fuel of magnificence.” —Ralph Waldo Emerson.

The emerging creative economy, in all its magnificence requires us to gain new skills. Daniel Pink, http://www.danpink.com/ author of A Whole New Mind: Why Right-Brainers Will Rule the Future, outlines six of these in his book. He names them design, story, symphony, empathy, play and meaning.

By “design,” Pink means that it is no longer sufficient to focus solely on function when offering a product or service. Instead, what you’re offering must be designed to be beautiful, whimsical or emotionally appealing.

“Story” refers to the need for businesses to provide narrative about products and services. Facts and figures are no longer enough because we are simply deluged with information. Make your company stand apart by communicating your message in a way that activates and excites the imagination.

“Symphony” refers to recognition of the whole and not focusing merely on one part. Develop the ability to look at the big picture, the whole system. Be willing to cross boundaries and break down barriers to see how the pieces can fit together in an exciting new whole.

The skill of “empathy” is understanding that while logical thought is important, it cannot stand alone without a concern for the human element of what makes each of us tick and how relationships work.

“Play!” teases out our inner creative sprites! Business has been wearing a pinstriped serious suit for far too long. Now is the time to experiment with new ways to get serious business done while laughing, dancing, playing and having a great time.

“Meaning” suggests that a career is not just about money anymore. People want meaningful work and they are willing to job hop to find it. It is a universal yearning to want to be part of something that makes a difference in the world. The more you can make meaning a part of your business plan and practice, the better.

Daniel Pink suggests that these attributes reside in the right side of the human brain. The good news is that all have one of those! All it takes is the decision to start activating it.

Green Business: NOT"oh come on!" How about, OH YEAH!

By Diane Wolverton
State Director
Wyoming Small Business Development Center

A movement is afoot. Some call it sustainability; others call it green business. Patricia Aburdene, author of Megatrends 2010 has dubbed it “Conscious Capitalism” and she says it will change the way we conduct business in the USA and around the world.

“Change the way we conduct business” Wow. That warrants attention. Smart entrepreneurs are taking note and looking for ways to be part of the change so it works for them and not against them. Here are a few things you can do to get started.

Learn the basics. Today’s working definition of sustainability is “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” In the context of business, this means operating profitably today without negatively impacting our environmental and societal infrastructures to compromise the future. Sustainable businesses work toward a “triple bottom line”: one that supports people, planet and profits.

One way to orient yourself to the movement is to learn its language. Check out the online sustainability dictionary by the Presidio School of Management. You’ll discover cool concepts like biomimicry, eco-labels, cradle-to-cradle, SRI (social responsible investing), global reporting initiative and more.

Connect with others: Lots of organizations are cropping up to support the sustainability movement. Co-op America has been around the longest. They offer a ton of information, plus an opportunity for sustainable businesses to sell products through Green Festivals and their catalogue of sustainable products, The Green Pages.

Another great resource is LOHAS, an organization dedicated to the $209 billion U.S. marketplace for goods and services focused on health, the environment, social justice, personal development and sustainable living. Just a few minutes on this website will show you that the sustainability movement offers a lot of opportunity for businesses who can tailor their products and services to meet the needs of this huge market. LOHAS also puts on a great annual conference loaded with information and networking opportunities.

Revisit your plan: Getting on the wave of sustainable business requires revisiting your whole business – your mission, your product, your processes, your people, your location. It may seem overwhelming. But there are lots of resources to help. The Wyoming Business Council offers an energy audit to determine what your carbon footprint looks like and how you can reduce its size. Contact Tom Fuller, tom.fuller@wybusiness.org. Manufacturing-Works offers an environmental assessment. Contact Carol Stark, cjstark@bresnan.net. The Small Business Development Center can help you look at your compete business plan through the lens of sustainable practices. Contact Diane Wolverton, ddw@uwyo.edu.

Entrepreneurs – I have a little secret!!

By Brandon Marshall

I guess if you publish something on the internet it ceases to be secret, but hey, we’re about helping entrepreneurs here at wyospace.com, so here’s a little morsel of information that you might not know………..

The Wyoming Rural Development Council (Part of the Wyoming Business Council) conducts what are called community assessments in communities of all sizes in Wyoming.  The last I knew nearly every community in the state had participated in at very least an initial assessment with some currently working on 5 year follow up assessments.  All this sounds somewhat irrelevant to entrepreneurship, but it’s not.  Just hear me out. 

Part of the assessments are asking three questions which basically revolve around what’s good about your community, what’s bad, and where would you like to see your community be in the future.  So, now, the portion of this that’s relevant to entrepreneurs.  Often times, in fact every time, the people of the community discuss the need for additional businesses in their communities.  Many times, people are quite specific in stating exactly what they need to have in their communities.  This is valuable information for aspiring entrepreneurs.  Essentially the beginnings of some pretty good market research can be found in the report that results from the assessment.  Even if there’s not a specific “We want a hardware store” type statement, the report serves as a marker of the sentiment of a community, and generally has the blessings of the local government leaders.   If you are looking to start a business the report will offer insight as to what each community is looking for and what they will support. 

You can find the reports from every community assessment done to date online at http://www.wyomingrural.org/community.asp.  Read through them.  You might just find a market for your entrepreneurial ideas.

Have You Heard of Venture West my Friend?

By Brandon Marshall

Recently I was given the opportunity to represent the Wyoming Business Council on the Board of Directors of The Venture West Network (so now I’m really important and credible, making everything I write on wyospace also really important and credible!)  Venture West is essentially and educational and networking organization dedicated to encouraging entrepreneurship as well as investment in entrepreneurship in Wyoming.  Really the goals of Wyospace.com and Venture West overlap in many ways.  Needless to say, I couldn’t be happier to give a little pitch for the organization today. I encourage you to check them out and consider joining up.

One of the major activities of Venture West is organizing periodic afternoon panel discussions with some of the most successful rock star entrepreneurs in Wyoming.  Each entrepreneur will each speak to whatever subject has been picked for the afternoon and offer their tips and insight based on real-world experiences from their companies. Topics typically range from bootstrapping to start your business to seeking venture capital to finding and keep good people for your management team.  After the afternoon session an evening session is held with a dinner and an opportunity for selected entrepreneurs to make a five minute pitch to several potential investors who are invited to the session.  Potential investors typically come from various places and companies in Wyoming and Colorado.

Now, the pitch that I promised....   Networking in Wyoming is somewhat of a difficult task, simply because of a lack of critical mass and the great distances between all of us.  Venture West is a great, extremely inexpensive, way to conveniently network with the best Wyoming’s entrepreneurial community has to offer. 

Venture West says:

Our collective membership represents the knowledge and experience of many businesses over many years and that information can replace the trial and error approach of an inexperienced entrepreneur.  The opportunity to network with peers as well as government leaders provides value far in excess of the cost of membership.  Attendees also have the chance to network with potential customers and gain exposure for their business.  Our focus on educational programs will provide all members with insight into effective business practices and strategies.

Memberships are $50 per year, meaning the value of the membership is gained back simply by attending two of the afternoon workshops. 

Afternoon workshops are offered to members of Venture West for free, and $25.00 for non-members.  Evening dinner programs are $25.00 for members and $40.00 for non-members. 

Give Venture West a look.  I’m sure you’ll see the value.

By the way, Venture West is a Partner in the upcoming Wyospace.com Idea Expo.  Several sessions will be Venture West panels, offering real world ideas, from real world business people.  If you haven't already signed up, visit www.wyomingideaexpo.com for more information and to register. 

Wyoming Business Tips: Hiring your first employee

By Arlene Soto, WSBDC Region 4 Director

A weekly look at Wyoming business questions from the Wyoming Small Business Development Center (WSBDC) at the University of Wyoming. This article came courtesy of the University of Wyoming Media Relations.

"My company is ready to hire the first employee. How do I proceed?" Dan, Sheridan

Hiring the first employee is a big step for any company. It's important to get everything set up correctly, including registering as an employer, developing a personnel management system, and hiring the right employee.
    
To register as an employer, first contact the Internal Revenue Service to receive an Employer Identification Number (EIN). Information is available by calling 1-800-829-1040 or e-mail www.irs.gov . Also contact the Wyoming Department of Employment at (307) 235-3217 or http://wydoe.state.wy.us for the state employer application form. Registration takes at least two weeks to complete.
    
Having employees requires a business owner to be aware of a pay period, quarterly and annual reporting of wages, and withholdings and employer taxes. A record keeping system is needed and most computerized accounting systems that process payroll will handle the information needed for reporting. Employers must keep a personnel file for each employee including a signed W-4 form and I-9 form with documentation. The file also may contain the application for employment, resume and employee reviews.
    
A personnel policy manual is useful for explaining the business owner's expectations to a new employee. Before hiring, an employer should carefully consider the rate of pay and the benefits offered. An attorney can provide valuable input on what needs to be included in the personnel policy manual.
    
Hiring the right employee takes careful consideration of the type of work expected and the organization culture. Consulting with an accountant can be beneficial in the process. For additional help, contact a local Small Business Development Center office.
    
The WSBDC is a partnership of the U.S. Small Business Administration, the Wyoming Business Council and the University of Wyoming. To ask a question call 1-800-348-5194, (307) 766-3505, e-mail wsbdc@uwyo.edu or write Dept. 3922, 1000 East University Ave., Laramie, WY 82071-3922. Additional help is available at the WSBDC Web page at http://www.uwyo.edu/sbdc .