EBD
Economic Business Development, Inc.
The host of Innovative Entrepreneurs
7755 Center Avenue, 11th Floor
Huntington Beach, CA 92647
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Business Survival Tips
To view our events and training seminars or to join Innovative Entrepreneurs free of charge, click here: EBD Activities and Membership
Start a Business:
- Conduct a feasibility study or a business plan before opening a business. This process will help you eliminate fatal mistakes and costs.
- Do not incorporate until you are ready. In California, you are required to pay the minimum $800 franchise tax within 3 months of formalizing the company, whether you generate money or not.
- Consider other States that have no franchise tax if you plan to operate an internet (virtual) company that serves nationwide and you do not make any money for a while. Consult your tax attorney wisely.
- You may obtain incorporating information through the California Secretary of State. If you are the only owner, it is fairly easy to do it yourself. "S" corporation and LLC are popular because they do not have double taxations.
- In some counties, such as Orange County, you will have to pay an additional of over 1% tax on equipment and furniture usage annually.
Office Leasing:
- Do not commit to a long term lease and always have an escape clause in case your business cannot survive
- Landlords will require liability insurance with a typical limit of $1,000,000/$2,000,000
- Be careful of Modified Gross Lease. This means that the landlord can add additional expenses to your current rent.
- Unless your business needs a physical location such as a restaurant, consider virtual or part-time office arrangements. There are many executive suite centers that offer shared secretary, conference room, flexibility for expansion or downsizing, and amenities at a fraction of the cost compared to what you have to pay all by yourself.
Cost Reduction:
- Telephone land lines are very expensive. By the time the phone company added set up cost and taxes, it can drain your monthly cash flow. Consider internet phones that cost 70% less and allow you to make unlimited calls to overseas.
- Internet fax costs as little as $10 per month; some comes free of charge with a virtual answering service
- Use a virtual secretary to answer your phone instead of a real person. It costs as little as $20 per month.
- Shop online for printing of business cards and brochures. Some online stores offer as low as 70% less than the physical stores because they have minimum overheads
- Use online webhosting services that cost as little as $10 per month. They offer professional templates for you to fill out information. Do not spend money on website development until you start making money and know exactly what you need. Website development can be expensive if you start from scratch without a clear direction.
- Do not commit to hiring employees unless they can perform to contribute to the profit of your company. Hiring employees will cause additional costs including worker's compensation insurance, quarterly payroll reporting expense, and employer's payroll tax. In addition, unless it is for economic reasons, you will need to document their behaviors and give them warnings and counseling before you can fire them. Otherwise, you will expose yourself to potential lawsuits. You must obtain an Employer Identification Number (EIN) for payroll purpose through the California Employment Development Department (EDD).
- For start-up or small businesses, it is best to acquire partners who are willing to work for stock options or a percentage of gross income. Pay them based on performance.
- Before becoming a giant company, Microsoft started with hiring seasonal contractors instead of permanent full-time employees. This method has allowed the company to grow and to adjust to seasonal fluctuation of labor demand.
Do not spend money unless you have to. Profit is equal to revenues minus costs. Keep your costs down!
Why do we need to be more creative?
In this internet age and global competition, those who know how to adapt to changes quickly will survive and others who insist on doing business the old fashion way will soon vanish. For small or start-up businesses, every penny counts as business loan is difficult to obtain and competition is getting tough. For nonprofit corporations, winning a grant has become a great challenge. For these reasons, businesses need to learn to cut down expenses and use alternative and creative ways to conduct businesses to survive in the long run.
Copyright 2009 Economic Business Development, Inc
7755 Center Avenue, 11th Floor
Huntington Beach, CA 92647
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