When starting a small business you have to be practical, too. You have to plan and be realistic about whether you can afford to start it.

QUESTION.
I am planning on starting a law office focusing on immigration law.  I am in the process of writing a business plan that should be finished by the end of the week.  I have 9 years of marketing experience gained before I went to law school, and three years of immigration experience since I entered law school.  I just passed my bar exam and recently was sworn in to the bar.  I guess what I’m looking for is advice in terms of reviewing my business plan in order to obtain a small business loan to get my venture going. Is this the proper place to receive that kind of advice?

ANSWER.
SCORE specializes in helping entrepreneurs formalize their business plans so they will be sound and helpful in starting and running a small business. From what you tell me you are a recent law school grad who has passed a bar exam. If you are getting sworn in now, that tells me that you took the bar exam last winter. That tells me you have probably been out of school a year now. Am I correct?
 
Do you have student loans to pay back? Do you have any capital to put up for security for a small business loan? I doubt it. In any event, putting together a business plan is not going to help you extract money from a bank for a small business loan if you don’t have collateral and you are already heavily in debt.
 
If I am off-base with my assumptions about you, then let me know and I will change my tune.
 
You still need to put together a business plan. But you should devise it so you have minimal capital expenditure in getting your “legal consulting” practice off the ground. Consider taking a look at Listmania List #6 at www.jlippin.com/listmania.html.

I recommend you try to find temp work as a docment review attorney to help make ends meet while you get your practice up and running. You may also want to learn the ropes of how to hand municipal court matters like DUI and other traffic offenses. You can hang out at the court in the evenings and pick up chump change representing people who show up unrepresented but the judge would like to have represented. Charge $100 to lead and bleed them and 4 of those a night and you walk away with $400.
 
Maybe you can put together a great business plan that makes sense? I recommend you give it your best shot and then call your local SCORE chapter and schedule a 1-hour face-to-face session with two SCORE volunteers. See www.score.org/findscore/chapter_maps.html and type your home zip code in the appropriate space in order to find the local chapter. The counseling is free.
 
Immigration law is one of those areas that can be done online pretty well and profitably if done correctly. Your client base will be from all over the world rather than just from the area in which you live. I’ve tried to provide helpful comments. Good luck! Regards, -Jeff
 
Jeff Lippincott
SCORE.org Counselor
Princeton, NJ
scoreprinceton @ aol.com
www.scoreprinceton.org
www.jlippin.com

You have to put a value on your small business before you can properly negotiate the sale of part of it to someone.

QUESTION.
I’ve begun initial discussions with a potential partner/investor for my small but growing company, and need to find a lawyer who has experience in merger/aquisitions.  I’ve been advised by another SCORE volunteer counselor that I should not conduct negotiations myself (good advice!).

ANSWER.
Bringing on a partner or investor is not really a merger & acquisition (M&A). M&A’s are when one business wants to buy another business. Such a situation involves TWO businesses. But you describe a situation where you have a business and someone else wants to buy into it as either a part owner or investor.
 
You do not mention whether your business is incorporated, an LLC, or just a simple sole proprietorship. In any event, you will need to have your business appraised. You can do it, or you can pay someone to do it (like a CPA firm). You need the appraisal so you know what your share of the “new entity” will be. For example, let’s assume your business appraises at a value of $100,000. And the new part owner is going to contribute $100,000. Of course, you may not want to sell 50% ownership. You may want to only sell 25%? In such a situation you could only take a $50,000 contribution from the person who wants to join you in business.

It would appear logical that profits will be divided 50-50 when you both own 50 percent of the business. Now what about working the business? If you continue to work it, and the new part owner just wants to be an investor, then you have to devise a salary to compensate you for your efforts. Then whatever profits are left over after you get paid your salary would be split 50-50.
 
You don’t need an attorney who is expert at M&A. What you need is to educate yourself on buying and selling a business. Then you can contact almost any attorney who will represent you in formalizing what you want to accomplish by bringing in a new part owner of YOUR business. Consider taking a look at the book “Buying and Selling a Business (ISBN: 0471657026). Read it and study it. And read my book review for it.
 
The best attorney for you to consult when you are ready would be one who does a bit of work helping small business owners. The CPA firm that does your appraisal can probably point you in the correct direction. If you don’t have a CPA firm do an appraisal (and I recommend you do it yourself), then you still might want a CPA firm to review your work for a nominal fee and then ask it what lawyer it would recommend.
 
I think I have answered your questions. Good luck! Regards, -Jeff
 
Jeff Lippincott
SCORE.org Counselor
Princeton, NJ
scoreprinceton @ aol.com
www.scoreprinceton.org
www.jlippin.com

Already have two home-based startups going, and now you want to start a nonprofit, too? Not a good idea!

QUESTION.
I want to start up an organization that promotes awareness of childhood sexual abuse. I am interested in finding out whether or not this is best done via a for-profit or not-for-profit. Also, I already have two home-based businesses. One is in network marketing, and the other is a singing telegram company. Both are still start ups in my opinion. I have been doing the singing telegrams for less than one year. I’d like to find out how to improve upon these two businesses, and if there are organizations that would assist me as a single, minority female.

ANSWER.
It is difficult starting small businesses. It is my recommendation that a person start a business one at a time. You have two going, so don’t shut one down. But you really should focus on just one and make it successful. Then when you have it going pretty good (and have employees doing the work), you can can move on to a new business to focus on.
 
Each business should have a sound written business plan. SCORE can help you develop your plan so it will be a road map to success. The SCORE I’m talking about is your local SCORE that has volunteers who will sit with you for an hour each session and get your business plan in good shape. The sessions are free. Email counseling is not so good for that kind of counseling. Email counseling is best for very pointed questions. Contact your local SCORE as follows. See
 
www.score.org/findscore/chapter_maps.html
 
Type your home zip code in the appropriate place and the Web site for the local chapter will appear.
 
With regard to you question about the cause you mention. That would and should be done through a nonprofit organization. See Guide #3 at www.jlippin.com/guidemania.html. But don’t start the nonprofit until you have one of your two businesses up and running and giving you a nice cash flow of revenues. You’re going to need revenues to start a nonprofit. Usually a nonprofit founder has to get the operation running and then if it appears successful it will be able to attract donors. Donors typically do not donate to a half-baked idea concept or whatever. They want to help a success story.
 
I’ve given you a few things to think about. Good luck! Regards, -Jeff
 
Jeff Lippincott
SCORE.org Counselor
Princeton, NJ
scoreprinceton @ aol.com
www.scoreprinceton.org
www.jlippin.com

Do some planning before you start your new business. Also, don’t overspend on things you don’t need at the outset.

QUESTION.
I wanted to ask you about the start up cost of a retail clothing store. Is it necessary to hire an accountant during start up? Is it better to take a loan that can cover 6 months of my living expenses? Or is it better to borrow 12 months? I’ll be a first time business owner. Is it wise to start off in a new building built from the ground up?

ANSWER.
So you want to start a retail business. I’m not a fan of starting retail businesses. They are capital intensive and seasonal in activity and sales. But if that is what you want to do – then so be it. I recommend you try to start some sort of a service business. The start up costs are lower, and the profits are generally higher.
 
In either case, you need to do market research and put together a sound written business plan. See guides 8 and 6 at www.jlippin.com/guidemania.html.
 
Look through the online table of contents for some of the books on the above lists. Consider contacting your local SCORE chapter and discussing your plans with two volunteer SCORE counselors.
 
You don’t need to hire an accountant. You need to learn the basics of accounting yourself. See Guide #1 at www.jlippin.com/guidemania.html.
 
I hope my comments are helpful to you. Good luck! Regards, -Jeff
 
Jeff Lippincott
SCORE.org Counselor
Princeton, NJ
scoreprinceto @ aol.com
www.scoreprinceton.org
www.jlippin.com

Sometimes it is advantageous to recycle an old corporation rather than form a new one.

QUESTION.
I have an S Corp which I own 60%, my spouse owns 20%, my sister(recently deceased) owns 10%, and another sister own 10%. I would like to purchase all the stock shares from all above, but not sure how to do this. The corportion has had no activity for the the past five years or so. I am thinking of incorpating my Scedule C business into the S corp and would like to have 100% ownership in the stock.  I am not certian how to go about doing this.

ANSWER.
If the corporation you talk about has been inactive for five years, then I assume it is not worth anything. Assuming I am correct, then all you need to do is have the owners of the stock sign their stock ownership over to you. Stock can be sold like a car. In a way, stock represents title to a company like a car title represents title to a car.
 
Typically you will want to document the sale of the stock certificates in the corporation’s records. At some place you should have a stock certificate register listing the people that the stock certificates were issued to. Make sure your wife, sister, and sister’s executor sign off on the stocks you are purchasing so you have evidence of actually “purchasing” them.
 
If the business has value, then you will need to put a value on it. As long as everyone is family I don’t see any reason to get too involved with putting a value on the corporation and its assets. You may consider taking a look at the following book if you have to do that though. See “Buying and Selling a Business” by Robert Klueger (ISBN: 0471657026). I’ve written a book review for it at Amazon.
 
I hope my comments are helpful to you. Good luck! Regards, -Jeff
 
Jeff Lippincott
SCORE.org Counselor
Princeton, NJ
scoreprinceton @ aol.com
www.scoreprinceton.org
www.jlippin.com

Young entrepreneur wants to start a business, but is finding that it is more complicated than she initially thought it would be. Research, research, and more research is required!

QUESTION.
I started a Web site for business sellers/brokers to post this business for sale ads. I have a very limited marketing budget and I need some direction on where to allocate my limited funds. 

Below are a few of my ideas:

1. Targeted email campaigns towards business brokers- there is a company in India willing to collect emails for me for 3 cents each. The problem is since these people are not “opt in” I would probably get in trouble with anti-spam laws. Correct? Is there a way around this? I also saw online where you can “borrow” an email list which I don’t understand because technically they are not “opt in” for my site.

2.  Google keywords- I want to target specific states first such as CA, FL, NY, NJ where broker activity is higher than other states.

3. SEO- ask a development company to help with search engine rankings etc.

All of these ideas will cost money and was wondering what you think I should
focus on given my limited funds.

Hope you can help me out!

ANSWER.
I think it is wonderful that you have the entrepreneurial spirit. And a woman, too! So few women want to take the plunge. As a group you are conservative, health insurance hungry, and generally not too energetic.
 
The questions you ask are integral to a marketing plan for your business. Generally speaking, the only way to come up with a great answer for you would be to research your market (your competitors, their customers, and the industry in general). That is a big project. As a SCORE counselor I don’t do that for you. I listen to you when you hand me an attempt at a business plan. If I see holes in the business plan (which includes a financial plan, marketing plan, publicity plan, and networking plan), then I make my recommendations.

What you need to do is become expert at putting together a business plan. Please take a look at guides 8 and 6 at www.jlippin.com/guidemania.html. Also, take a look at list 68 entitled Business Plans Handbook Volumes 1-13 at www.jlippin.com/listmania.html. And to see the list of sample business plans in the different volumes then look at www.jlippin.com/bph/.

The last two links relate to sample plans – lots of them. I highly recommend you read as many as possible so you get a feel for what a plan is about. They don’t have to be just like the business you want to start. In fact, all plans are pretty much the same. It’s just the particulars or the business model, or the unique mix of marketing tools, that changes from one plan to another.
 
Two other books I highly recommend you get copies of are: “Making a Fortune Promoting Other Peoples Stuff Online” by Rosalind Gardner (ISBN: 0071478132), and “Business Models Made Easy” by Don Debelek (ISBN: 1599180413). Read the book reviews I have posted on Amazon for each.

I have provided you with a few comments. I hope they prove helpful. Good luck! Regards, -Jeff
 
Jeff Lippincott
SCORE.org Counselor
Princeton, NJ
scoreprinceton @ aol.com
www.scoreprinceton.org
www.jlippin.com

Web site selling crafts must collect sales tax for sales made to residents of state where Web site has its headquarters.

QUESTION.
When operating an Internet business in Philadelphia, PA. I know there are no occupancy laws and I am aware of the need to register with the state to charge sales tax. If I decide to attend craft shows in Pennsylvania and other states, what other laws would pertain to my business?

ANSWER.
Many Internet businesses don’t bother registering with the state so they can pay sales tax. The only sales they have to collect tax on is sales made to residents of the state in which they are headquartered. If your offices are in Pennsylvania, then you should collect sales tax on sales to Pennsylvania residents. Therefore you really should register with Pennsylvania to charge sales tax. If your company has a physical presence in a state other than Pennsylvania, then you would be expected to collect sales tax in that state for sales made to its residents. And you’d need to register with that state, too.
 
Regarding your Internet business, I recommend you get and read “The eBay Entrepreneur” by Chris Spencer (ISBN: 141958328X). This book covers most of what you need to know in running an Internet business. This is true even if you are not interested in selling on eBay. Also, read my book review for the book I’ve posted at Amazon.
 
With regard to selling at craft shows, it is unlikely that anyone would consider you having a physical presence in the state where the craft show is situated. Unless of course, that craft show is in Pennsylvania. Technically you are present in the state when you make the sale at the craft show there and you really should be collecting sales tax on those sales for the state where you make the sale. However, from a practical standpoint, it is very hard for the state to regulate such sales. And you don’t have a mailing address in the state anyway when outside of Pennsylania. So don’t worry about collecting sales tax at the craft shows outside of Pennsylvania unless you attend a lot of them in one particular state. The states where you do a lot of business through craft shows are ones you probably should register with in order to pay sales tax to them.
 
I hope my comments are helpful to you. Good luck! Regards, -Jeff
 
Jeff Lippincott
SCORE.org Counselor
Princeton, NJ
scoreprinceton @ aol.com
www.scoreprinceton.org
www.jlippin.com

Guy who wants to start a Hedge Fund needs to choose a entity type for his business and a Limited Liability Company (LLC) is probably the route to go.

QUESTION.
I need to learn how to start a company that is owned by my father but I am the sole employee.  I want to start a trading company [I would trade commodities unsing only my own money – as a business]. I need to be advised as to the best business structure for this type of business.

ANSWER.
So you want to be a Commodities Trader like Richard Dennis? See “The Complete TurtleTrader” by Michael Covel (ISBN: 9780061241703). See also, “Hedge Hunters” by Katherine Burton (ISBN: 1576602451). I’m not sure of the ins and outs of the business you want to start. But to answer your question, I recommend you form a single-member Limited Liability Company (LLC) and for tax purposes have the IRS treat it as a C Corporation. Forming the LLC is the cheapest route to go to forming a separate legal entity for liability purposes. And you can get all the tax write-offs of a C Corporation. Just make sure at the end of the tax year all profits in the LLC are paid to you as a bonus so none of your income is subject to double taxation. Consider taking a look at “Structuring Your Business” by Michele Cagan (ISBN: 1593371772) which covers the different choice of entity options available for someone starting a small business. Make sure to read the book review I posted on Amazon for Cagan’s book. Good luck! Regards, -Jeff
 
Jeff Lippincott
SCORE.org Counselor
Princeton, NJ
scoreprinceton @ aol.com
www.scoreprinceton.org
www.jlippin.com

Wanta-be entrepreneur has got it right knowing that putting a business plan together will be the key to her success as a small business founder.

QUESTION.
I am starting a new business and know that I will need a business plan. I want to know how to make a strong plan that will get the attention of my investors. Also, I would like to know if you could lead me to someone that looks over tax ID paperwork for the state. I have my federal tax ID number, but I am looking for help with the state paperwork.

ANSWER.
You make a strong business plan by doing the necessary research and writing a plan that is sound. You should be more interested in writing a plan for you to follow when starting and running your business. You should leave no stones unturned when putting together your plan. If you do that, then the banks will think highly of your plan.
 
I don’t normally suggest to my SCORE clients to think in terms of relying on their business plan to get a loan. It is best to take a second mortage on your home to get start up funds. And if you don’t have a home to mortgage, then consider finding someone who has capital that you can partner with.
 
Your federal tax ID is the one you should use for your state paperwork, too. If there is some state entity that is going to require you to get some sort of ID, then it will tell you how to do it. For example, if you sell products, then you will have to get a state sales tax ID.
 
I don’t know what business you are going to start, but consider going to your public library and reading as many of the volumes of Business Plans Handbook that you can get hold of. The more sample business plans you read the easier it will be for you to do the research and write your own business plan. See what is currently List #68 at www.jlippin.com/listmania.html. The list is entitled Business Plans Handbook by Thomson Gale Volumes 1-13.
 
See also, http://www.jlippin.com/bph/ to get a list of the types of sample plans included in the volumes.
 
By the way, usually you form an LLC or a corporation for your business AFTER you have written the business plan. And you can only get the Tax ID after you apply for the LLC or the corporation. Sounds like you are a little ahead of yourself.
 
I hope my comments are helpful to you. Good luck! Regards, -Jeff
 
Jeff Lippincott
SCORE.org Counselor
Princeton, NJ
scoreprinceton @ aol.com
www.scoreprinceton.org
www.jlippin.com

Are you interested in starting a small town newspapers? Do some research and write a business plan. It’s that simple!

QUESTION.
I would like to start a small town newsletter. We do not currently have a local paper so to obtain financing I plan to solicit local businesses for advertising. My concern is in liability so I thought a single member LLC status would limit
my husband and I from any legal liability if a reader found some fault in something that was printed. My goal is to provide information to the public about local events and services. Do you think I should establish this venture as an LLC or as some other business type? How will our personal assets be affected?

ANSWER.
An LLC would be the best option to use if you are going to make it a for-profit enterprise. It sounds like you may be able to make it a nonprofit enterprise. If so, then you will have to incorporate. See

BECOME A FOUNDER OF A NONPROFIT ORGANIZATION 
 
PICK A BUSINESS, CREATE A BUSINESS PLAN, AND START IT SOON
 
FIGURE OUT HOW TO WRITE A BUSINESS PLAN
 
I hope my comments are helpful to you. Feel free to send me follow-on questions via email. Good luck! Regards, -Jeff
 
Jeff Lippincott
SCORE.org Counselor
Princeton, NJ
scoreprinceton @ aol.com
www.scoreprinceton.org
www.jlippin.com