Bootstrapping the Startup

Nevin Buconjic, B.Sc., MBA, BA

Starting and Growing your Business on a Budget

My Background• Degrees in Marketing, Computer Science and MBA

• Internet marketing and economic development certifications

• Entrepreneur - Co-founded web design firm, created Adventures in Computing Camps, President of Digital Adventures & InteractiveMinds Inc.

• Over 10 years of marketing and small business experience

• Taught business and computers at college/university level

• Former Enterprise Centre SSM Manager

• Currently a Strategic Business Advisor, MNDMF

• Interests include photography, technology, writing & blogging, and

• Visit my blog at www.digitaladventures.ca and my personal site at www.nevinbuconjic.com

Agenda

Researching your ideas and accessing free resources to help

Starting your own business for under $100

Marketing your business cheaply but effectively

Maximizing your small business tax write-offs

Growing your business part-time, without quitting your day job!

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E-business and selling online

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1 What is Bootstrapping your business?

What is Bootstrapping your Business?

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Comes from the phrase “pulling yourself up by the bootstraps”

“In business, bootstrappers typically rely on savings, early cash flow, and penny-pinching to fund startup companies, rather than seeking external funding in the form of loans or investments.” [Karen E. Klein, Bloomberg Businessweek]

Jack Garson, author of(St. Martin's Press, 2010) agrees. "You don't need to

open your dream business on the first day. It's better to start with a successful hot dog stand than to get halfway through the construction of a full-service restaurant and run out of money," he says.

How to Build a Business and Sell It for Millions

Do Your Research

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Often times we think of our own ideas as great, but before you start any business it is important to do some research to see if the business will really work.What is your business idea?Who are you customers?Can you sell the service or product for a profit?How much money do you need to start?Will you run the business yourself or will you have a partner?Do you need to open a business office/store or can you operate from home?Can you run the business yourself?Have you written a business plan?

Free Business Resources

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Enterprise Centre Sault Ste. Marie – business counseling, business planning assistance, books and resourcesCommunity Futures Development Corp. – books and resources, business loans, self-employed benefits programMinistry of Northern Development, Mines & Forestry – business funding programs, summer student wage subsidy program, guidance and more – www.mndmf.on.caOther Government websites:www.canadabusiness.cawww.ontario.ca/en/business/index.htmwww.cbo-eco.ca/en/guides.cfm -- business start-up guides

It is very important to do your research and make a plan - these resources can help:

Choosing Your Business Structure

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Sole proprietorships are businesses owned by one person – they are easiest to start, operate and also the least expensive.

The owner and the business are one in the same. You call the shots and keep all the profits.

Business income is considered personal income for income tax purposes, but business

write-offs and losses can be applied against your income – effectively lowering your taxes.

Partnerships are businesses owned by two or more people – they are easy to start, a little more complicated to operate, but still inexpensive.

The business and owners are not legally separate. The owners are jointly AND separately

responsible for the debts of the business.

Decisions must be shared, as well as profits, and any losses.

Business partnerships can sour a friendship – be careful when going into business with

family or friends.

Sole Proprietorship, partnership or corporation?

Choosing Your Business Structure

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Corporations are distinct legal entities that are separate from their owner(s) – they are expensive to start and operate, and also more complicated and formal.

Ownership is achieved through the purchase of shares.Corporations regularly pay accounting and legal fees to which make them expensive to operate.Any profits or losses belong to the corporation – not the shareholdersCorporations do offer some personal liability protection, however.You can either be on the payroll or pay yourself through a dividend –which are taxed at a lower rate.

Setting up your Business

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Business registrations can be done online or at ServiceOntario locations. Cost is $60 and is good for five years (sole proprietorship and partnership).A name search is recommended – $8 – 26.Corporations typically cost $800 – 1,200 to register.

Can also be done online, or using a lawyer.

Once registered, make sure to open a separate business bank account. Most banks and credit unions start at just $5-10/month, and allow you to do online banking.Depending on the type of business – you may also require business or liability insurance.

E-business Strategies

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Today most consumers expect a business to be onlineA website is essential. You could spend $5,000-10,000, but it doesn't need to cost that much.

I typically purchase professional website templates (www.templatemaster.ca) for $50-100. I then customize the templates myself. Examples: www.computercamps.ca , www.nevinbuconjic.com

Website hosting is as little as $50/year www.godaddy.com or you can build a blog website and host for free – www.blogger.com , www.wordpress.comDomain name registrations are only $9.95-12.95/year

I recommend www.godaddy.com or www.domainsatcost.ca

Promote your website on all print materials for your business including business cards, flyers, bags, or receipts/invoices

Building your website

Selling Online Affordably

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There are existing online sites and services that will allow you to sell online without investing in infrastructure:

eBay – With over 90 million active users globally, and over $60 billion in goods sold in

2009, eBay is the largest online auction site in the world.

Amazon.com Webstore – create an affordable eCommerce site using Amazon technology;

Sell Amazon products or your own.

Examples include MTV, Timex, MarthaStewart.com

Yahoo Merchant Solutions – similar to Amazon.com Webstores – make sure to compare

pricing, fees, and features to other solutions.

Amazon.ca Seller Account – sign up and list your books, DVD’s and other items for sale

Amazon.ca Affiliate Store – build your own professional online store and embed in your

own website. You get a % of revenue from products sold.

Does your idea involved selling merchandise online?

eBay - “The World’s Marketplace”

Amazon.com Webstore

Yahoo Merchant Services

Amazon.ca Affiliate Store

Effective Marketing on a Budget

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There are many ways to market your business. Some cheap but effective methods include:

Business cards and networkingWord-of-mouthFlyers and postersBuild a websiteSearch engine marketing, Internet marketingEmail marketing Social Media marketing

Traditional advertising like TV, newspaper and radio are expensive – but sometimes necessary. Make sure to try out some of the suggestions above first!

Social Media Marketing• “Social Media is, at its most basic sense, a shift in how people discover, read,

and share news, information and content. It's a fusion of sociology and technology, transforming monologue (one to many) into dialog (many to many.)” [Brian Solis, WebProNews ]

“Social media give entrepreneurs and businesses an unprecedented chance to engage with their customers and communicate their message.” [Gary Vaynerchuk – Crush it!]

Most Commonly Used Social Media Tools

1. Twitter – social networking combined with bite-sized blogging (micro-blogging) – 88%

2. Facebook – social networking site – 87%3. LinkedIn – social networking for professionals – 78%4. Blogs – online journals – 70%5. YouTube or other video sites – 46%

Why Use Social Media?

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With Social Media you can promote your business or yourself – reaching large audiences for free!According to recently published statistics by Nielson, 22 percent of all the time spent online each month is on a social network or blog. This adds up to over 110 billion minutes a month!This is the first time that social networks or blogs are being visited by ¾ of all global online consumers. Web users are watching 13 billion videos on YouTube per month

Facebook, the most popular social media site, has 500 million users and they spend about 6 hours a month on the site.

Social networking and social media are growing rapidly, and it is where consumers are spending their time – wouldn’t it make sense to promote your business where your customers are?

Examples - Social Media Tools I Use•

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Facebook – Adventures in Computing PageBlogging – where I can showcase my writing, skills and knowledge of business and technology (www.digitaladventures.ca) LinkedIn – Professional social networking site which can be used to promote yourself, make contacts and get workTwitter – I use it to promote the articles on my blog, as well as share information and news from the web. If you can get enough followers, or get “re-tweeted” this can be a very powerful tool.I have links on my website, www.nevinbuconjic.com to all of my social media sites.

Company Facebook Page

My Blog

LinkedIn Profile

My Personal Website

Bookkeeping, Accounting and Income Taxes

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As a business, it is essential that you keep proper records – but this does not need to be time-consuming or expensive. Many small business owners do their own bookkeeping using affordable software programs like Quickbooks, or Simply Accounting.And for many, utilizing tax return software such as QuickTax or uFile can be fast and affordable and convenient.Personally I use a bookkeeper to record my sales, expenses and payroll, as well as doing my business and personal taxes. I find it reasonably affordable and most of all – time saving.Corporations are more formal and thus costly - requiring the services of an accountant, and lawyer each year.

Maximizing Tax Write-offs

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When operating a small business – even a home-based business, you are eligible to write-off business related expenses against your personal income.Some examples of eligible expenses include:

A portion of home expenses including utility costs, Internet, insurance and cell

phone costs

Equipment, software or computer peripherals used by the business

(a portion of the value is written off through depreciation each year)

Car mileage, maintenance costs, and even lease payments

Wages to employees (even hire your family)

Eligible business trips, travel expenses, trade show fees etc.

NOTE: Did you know that until January 31, 2011 the purchase of computer equipment for your business is eligible for a 100% write-off?

Small businesses are an excellent source of tax write-offs

Maximizing Tax Write-offs

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If certain assets are shared by the business and for personal use, make sure to track use – ie. Keep a mileage log for your vehicleAny business expenses incurred while operating the business are claimed against revenues of the business. Losses are written off against your personal income – which effectively lowers the income taxes you will pay!There are numerous books on the subject of small business tax deductions, such as “Make Sure it’s Deductible” by Evelyn Jacks.For more information, contact your bookkeeper, accountant or tax preparer.

Start Slow and Still Grow!

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Although risk-taking is one of the qualities of successful entrepreneurs, you can minimize your financial risks by starting on a part-time basis and keeping your day job!In most cases you can operate a home-based businessThis will allow you grow your business slowly, keeping things manageable, and utilizing minimal resources. I know many people who operate successful part-time businesses, including photographers, web designers, consultants and more.Being in business for yourself is a serious decision – starting out slowly can allow you to better juggle family time and your business.

In Conclusion…•

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Starting your own business can be both rewarding and exciting – and it doesn’t have to cost

a lot of money.

First take the time to research your idea, and writing a business plan is always a good idea.

Make sure to take advantage of all the free resources at your disposal.

A website is a must. But it doesn’t have to cost a fortune.

Does your business idea involve selling online? Don’t spend big bucks on an e-commerce

website, when there are much more affordable options initially.

Market your business cheaply but effectively and capitalize on new tools such as social

media!

Maximize your business write-offs and you can use your tax refund to grow the business

Remember, you can start slow and grow your business over time.

Have fun!

Any Questions?

www.nevinbuconjic.com