Business Types

• Sole proprietorship: A sole proprietorship is a business owned by one person. The owner may operate on his or her own or may employ others. The owner of the business has total and unlimited personal liability of the debts incurred by the business.

• Partnership: A partnership is a form of business in which two or more people operate for the common goal of making profit. Each partner has total and unlimited personal liability of the debts incurred by the partnership. There are three typical classifications of partnerships: general partnerships, limited partnerships, and limited liability partnerships.

• Corporation: A business corporation is a for-profit, limited liability entity that has a separate legal personality from its members. A corporation is owned by multiple shareholders and is overseen by board of directors, which hires the business's managerial staff.

• Cooperative: Often referred to as a "co-op business" or "co-op", a cooperative is a for-profit, limited liability entity that differs from a corporation in that it has members, as opposed to shareholders, who share decision-making authority. Cooperatives are typically classified as either consumer cooperatives or worker cooperatives. Cooperatives are fundamental to the ideology of economic democracy.

Legal

INCORPORATING

The major steps in making a business legal are:

1) Picking a corporate structure

The most important aspect of picking a structure is to have a separate legal and tax identity from yourself so that if the company is sued, the company's assets are taken instead of your personal assets. When picking a corporate structure, there are various forms of business structures to choose from. The difference between these structures is that each has different legal and tax consequences.

• Sole Proprietorship

One individual who owns & operates the company

• Partnership

Business owned & operated by two or more individuals

Each partner can act on behalf of the entire partnership

Written partnership agreement

• C Corporation

Independent legal entity separate from its owners

More regulations and tax requirements

• S Corporation

Available to companies with less than 75 shareholder

One level of federal tax

• Limited Liability Corporation (LLC)

No limitation of number of shareholders

Some states required the LLC dissolves after 30 to 40 years

Taxes vary by state

Attorney's are vital in running a business in order to fill out, comply with, and understand the different contracts, licenses, and permits.

A lawyer is important to a business because they can provide information in almost every area of your business. They can help with zoning compliance, copyright and trademark, and lawsuits and liability.

The different skill areas that your attorney should have include:

Contracts - Prepare the standard form contracts for customers, clients, ad suppliers as well as help you respond to contracts that others want you to sign.

Business Organizations - Help you decide the type of business structure as well as prepare the necessary paperwork in order to follow that path.

Real Estate - Help to add helpful benefits to you that can be added to the lease documents.

Taxes and License - Register your business for federal and state tax identification numbers and understand tax consequences of basic business transactions.

Intellectual Property - Register your products and services for federal trademark and copyright protection.

Choosing a Big firm or Small Firm

Although larger firms have greater overhead and therefore usually have a higher hourly rate, they have a number of advantages. First, you won't find all the previous skills in a single person and they will eventually have to refer you to a specialist and then you'll have more than 1 attorney. Advantages of larger firms are that they have all the legal skills at one place and they also have a lot of power in the local region and possibly the nation.

Financial

ACCOUNTING

Hiring Bookkeepers or Accountants

Accountants are useful not only in keeping track of your finances but also an excellent reference.

Some accountants have knowledge as to where you benefit the most in situations or what your limitations are

Can clarify questions about business expenses

Accountants very important because an audit is required in order to qualify for government funding

For Example, the Section 179 expensing election allows a $24,000 deduction in cost of vehicles weighing over 6,000 pounds for business use.

Balance accounts and put books in order on a regular basis or hire a bookkeeper instead of hiring a CPA

For taxes, hire enrolled agents who are income-tax specialist licensed to prepare returns and filings

Enrolled Agents have to pass examinations given by the IRS

Charge from $50-$150 an hour

Accountants are more useful for looking over the accounting as well as for supplying information where computer programs can take care of the regular daily accounting such as accounts payable, accounts receivable, and payroll. Programs like QuickBooks and Quicken are fairly easy to use and easy to keep records with.

INSURANCE

Another important business aspect is insurance protection. Risks over which you have no control should be insured against, however, losses which would be trivial if they did occur should not be insured nor should you pay for protection when the premium is a significant proportion of the value of the property being insured. Major types of insurance include: fire, general liability, automobile liability, automobile physical damage, workers' comp, crime, business interruption, glass, group life (health and disability)

Business Insurance:

· Business Owner's Policy

Provides coverage for property (fire, wind, theft, etc.), liability (injury of someone in your business or by your product), business interruption, and, in some cases, workers' compensation

• General Liability Insurance

Coverage of injury to another person or damage to a person's property for which you are legally responsible

• Property Insurance

Provides coverage to business for loss or damage to your property (fire/vandalism/etc)

Building - Covers damage to the building (fire/lightining/wind/vandalism/snow on roof)

Personal - Covers damage to property inside the building

• Professional Liability Insurance

Protects you financially in the case of a claim against you for negligence, errors, omissions, or wrongful acts in the performance of duties

TAXES & COST ESTIMATES

The exact taxes and cost estimates are extremely difficult to determine at this time since no precise information is known about how this product would actually be made and therefore, the cost of manufacturing is difficult to determine. Taxes would be most likely dealt with through an accountant which can be seen in the Accounting section.

Real Estate

SPACE NEEDS

Cytogenics will be a home based business to begin with and since the manufacturing will be outsourced, the space requirements will be insignificant. There is no great disadvantage to outsourcing the manufacturing and this also requires much less startup cost.

• Property zoned-residential, commercial, industrial or agricultural. Specific limitations for those
• Restrictions on vehicular traffic or parking
• Restrictions on the use of outdoor signs
• Restrictions on having employees and customers on the premises
• Sell items on the premises
• Restrictions on indoor or outdoor storage of materials

Many home based businesses ignore zoning laws

Find out about licenses and permits

Call local municipal building and see ordinances that apply to home occupations

Minicipalities have websites with their ordinances and sometimes entire code book

Call from phone lines outside your house

Special Exception Hearing

• If homeowners' association doesn't allow your type of business
• businesses that don't produce traffic, outside visitors, or outside evidence usually have a chance
• Cost is about $5,000
• If a variance is obtained, house becomes a commercial site
• Subject to fire inspections without a search warrant
• fire marshal can fine for extension cords, lack of fireproof doors & curtains
• Require instillation of fire doors between work area and rest of the house
• Required to comply with OSHA and ADA regulations
• Variance can be rescinded at any time without notice if a neighbor complains
• Check American Association of Home-Based Businesses

• lead to resources and assist in establishing businesses
• information on local zoning laws & other restrictions

Complete Business Plan

This is an outline of a complete business plan:

Summary

Business Concept
Current situation
Key success factors
Financial situation/needs

Vision

Vision statement
Milestones

Market Analysis

The overall market
Changes in the market
Market segments
Target market and customers
Customer characteristics
Customer needs
Customer buying decisions

Competitive Analysis

Industry overview
Nature of competition
Changes in the industry
Primary competitors
Competitive products/services
Opportunities
Threats and risks

Strategy

Key competitive capabilities
Key competitive weaknesses
Strategy
Implementing strategy

Products/Services

Product/service description
Positioning of products/services
Competitive evaluation of products/services
Future products/services

Marketing and sales

Marketing strategy
Sales tactics
Advertising
Promotions/incentives
Publicity
Trade shows

Operations

Key personnel
Organizational structure
Human resources plan
Product/service delivery
Customer service/support
Facilities

Creating the financials of the business plan

Assumptions and Comments
Starting Balance Sheet
Profit and Loss Projection
Cash Flow Projection
Balance Sheet Projection
Ratio's and Analysis

ADVERTISING

There are numerous way to convey your message to your target audience

• Trade shows
• Good visibility of items, allows sampling of the product (very important), direct advertising to people interested in your product
• Bodybuilding competitions
• Wear T-shirts, have visible markings of your company/product. Cheap and excellent publicity
• Sponsor a Bodybuilder
• Cheap method and very persuasive
• Magazines & TV
• Most expensive but possibly the most effective in magazines

• Choose a topic which best describes the advantages of your product
• Make your advertisement informative and easy to understand
• Expect to be compared to your competitors and focus on why your product is better
• Make sure it is professional

PUBLIC RELATIONS

Public Relations can be an extremely cost effective method to get excellent publicity. With increasing visibility to the public, your company brings news of your company to the world and you company profile increases as well as client and prospect levels. Important aspects of public relations include:

• Press kit
• Press Releases
• Publicity Campaigns

distribution

• Arrangement between you and the manufacturer or distributor of the product which you are selling in which the manufacturer ships the product to the customers.
• Customer orders the product and pays
• You send an e-mail with the customer's order and shipping information to the distributor
• The distributor packs' the order, puts your shipping label on the package and mails it
• Advantages:
• No worry of shipping the product yourself
• Saves the cost of building your own inventory
• No leftovers - if item becomes obsolete you aren't stuck with extra inventory
• Add new products instantly

sales projections

Sales projections are difficult to determine. It is expected that, obviously, there will not be many sales at first. However, as more contacts are made and more word of mouth and advertising is seen, the sales should increase exponentially at first and then possibly level off or increase at a much slower rate.

MARKET RESEARCH

Market research is the analysis of factors outside the company that affect the business like your customers, competitors, and industry. It gives you the information you need to make smart decisions about your business, so your revenue increases. Market research helps to

• target your marketing campaigns
• identify opportunities in the marketplace
• identify your customers' specific needs
• evaluate your success with measurable data

Job Analysis and Description

For the job analysis one has to determine requirements for the job mostly involving the persons personality, experience, and education. The job analysis should cover

• The mental and physical tasks involved (does the position require mental and time planning skills or physical strength)
• How the job is accomplished (special methods or equipment)
• The reason the job exists (explanation of job goals)
• Qualifications needed (skills, previous experience, knowledge)

The job description is mostly used for making ads for the position. It should describe the job's goals, responsibilities, and duties. Included should be the job title and whom they will report to as well as their major and minor duties. Describes the personal requirements like education, experience, or skills/knowledge. Finally it should include any hazards associated with their job. More information on writing job ads can be found here.

Places to Find Employees

The following is a list of places where you can find employees

• Classified Ads in newspapers
• Network
• Tell both your professional and personal connections about the job opening
• Distribute fliers
• More useful for finding less skilled work
• Contact school placement offices
• List the jobs with colleges/universities and trade schools or even high schools if the position does not require much experience or skill.
• Employment Agency
• Fees justified by the time and $ saved
• Referral by current employees
• List opening in professional associations' job banks
• Industry publications
• Post in newsletters or industry publications that have sections for job openings
• Online
• Monster.com
• WorkLife.com

Checking Credentials Online

Before hiring an employee, their credentials should be checked online.

• Look up websites of former employers, search using the applicants name, look in news archives, and finally university sites.
• At least 20 states have criminal and property databases on the web.
• Ask applicants to sign a waiver if you search their history
• Fair Credit and Reporting Act requires anyone handling consumer data to be impartial and protective of individuals' privacy.
• Can't always trust what you find on the internet

Human Resources

employees

Reasons for hiring new employees

• Extending deadlines while risking losing clients
• Wasting valuable time on trivial tasks
• Special tasks that could be handled better by a specialist (ie Web design)
• Spending a lot of extra hours to catch up regular tasks that could be partitioned out.

Possible Solutions to Situations above

1. Get help from friends or family
• Useful for temporary basis when jobs become too difficult or certain tasks could be extensive when done alone. Pay a fair price or compensation for their time. Treat them with the same respect you would your colleagues and other professionals
2. Hire an employee
• Most decisive factor is if you can afford an employee. Option also limited by amount of space available as well as whether or not your company needs to be zoned for an employee. Can be paid by the hour. Responsible for health benefits & paid vacation.
3. Use a temp service
• Skilled persons hired for temporary or long term assignments from temporary employment agencies. More useful for tasks like data entry, phone answering, and non-specialized tasks.
4. Outsource to a freelancer
• Used on a project basis. Consists of sharing work with other business owners. Useful because no need to pay employee benefits, also gives specialized services from experiences professionals. Lists of freelancers can be found here.
5. Hiring business support services
• Similar to freelancers but companies are dedicated for support services. Also have specialized services. List of business support services found at the Association for Business Support Services International Inc.

BUSINESS PLANS

A business plan will not be a vitally important part of Cytogenics due to the nature that business plans are primarily used as tools to obtain funding from venture capitalists or other sources. However, the primary outline of a business plan will be displayed due to it's ability to see whether or not the business will be at least able to start.