Secrets to Success for Starting a Services Company

By Katherine Hills

Owner & Managing Director

Krush Creative Group LLC

19 April 2011

Backstory

• Grew up in Lakewood, CA

• Bio Sci major at UC Irvine – B.S. ‘83

• Planned to become a doctor

• Ended up traveling the world instead

• Kept one eye on the next move

• Always accepted new opportunities

Corporate Life

• Great corporate fit• Moved up quickly• Trusted by upper level management• Offered numerous special projects and

assignments• Often ended up as CEO confidant and

advisor• Paid attention

Key Decisions

• No medical school• Managed profit/loss center• International Applications Engineer• European Business Manager• International Marketing Director• Jumped to agency side of marketing• Managing Director• Why not do this for myself?

Krush Creative Group LLC

• Full-service marketing, branding, advertising, design, PR and event production

• Launched February 1, 2005

• 100% service based business

• Bill time to nearest quarter hour

• Invoice monthly

The Decision

• Why do it for someone else?

• Knowledge

• Skills

• Money

• Market

• Clients

• Opportunity

Is Entrepreneurship Right for You?

• Willingness to risk – low or high?• Ability to fund your venture• What do you have to offer?• Is there a demand (short term or

ongoing)?• How do you feel about paperwork and

management?• Taxes required

Important Things to Ponder

• Going it solo• Taking on a partner• Percent ownership• Decision making responsibility• Management responsibility• Financial responsibility• Checks and balances• What if it doesn’t work out?

Then Ponder Some More• “You’ll never work harder than when you work for yourself.”• “Cash is king.”• “Hope is not a strategy.”• “Having a business partner is like being married . . . without the

[fun stuff].”• “In this world there are prospectors and there are score

keepers. Which one are you?”• Your have to be okay with:

– Sacrifice– The word “no”– Employees acting like employees, not owners– Feeling like you’re in it alone– Asking for help

Ready?

• When you can – live with the risk– part with your money– be the boss– visualize your success– absolutely, positively say that you’d rather

work for yourself than someone else– not imagine another way

To Partner or Not to Partner

• Going it solo• Taking on a partner• Percent ownership• Decision making responsibility• Management responsibility• Financial responsibility• Checks and balances• What if it doesn’t work out?

It’s a Go• Market analysis• Competitive analysis• Budget analysis• Business Plan• Articles of Organization• Name Registration (check URL!)• State Registration• EIN Number• Employment or Work-for-Hire Agreement

– Include Non-Compete• Confidentiality Agreement• Register URL

Surround Yourself

• Team of trusted advisors• Lawyer• CPA• Banker• Insurance Agent – General, E&O, Worker’s

Comp, etc.• Insurance Agent – Health• Friends and family• Therapist

Basics

• Summary of services• Budget • Pricing• Sales plan• Execution• Support• Banking (checking, credit card, LOC)• Bookkeeping (balance, invoicing, A/R, A/P)• Insurance (general liability, worker’s comp)

Making It Real

• Office space (brick and mortar or virtual)– Notes on Leasing– Mailing Address

• Infrastructure– Desks, phones, computers, Internet, servers, tools

of the trade, software, copier, FAX

• Hiring• Marketing

Marketing – The Minimum• Branding

– Perception– Tone– Culture– Logo– Palette– Fonts

• Business Card(s)• Website• Phone/Reception• Printed Collateral (brochure, one sheet, portfolio) (maybe)• Social Media (maybe)• PPT Template (maybe)

Selling

• Online Presence - SEO• Networking• Business Development/Sales Team

– How will you reach your target audience?

• Certifications– WBE– SBA– Minority

• Generate a professional proposal/quote

Fulfilling Orders

• Internal communications

• Who does what?

• Meet your commitment/deliver on time

• Quality standards

• Follow-up

Invoicing & Cash Flow

• Cash flow is key – and it’s tricky• Set-up a system, e.g., Quickbooks• Invoicing cycle – there are options

– Commencement payments– Milestone payments– Net 30 versus due on delivery

• Methods of payments• Late fees/penalties• Collections• Court

W2 Employees vs 1099’s

• BE CAREFUL! Specific rules apply• With W2 employees

– State and Federal employment taxes– Worker’s Compensation– Paid holidays and sick days– Health insurance– Infrastructure (equipment, software, etc.)– You get 100% of their time (theoretically)– Protected by employment laws – hiring, firing, etc.

W2 Employees vs 1099’s

• With 1099 contractors– W9 required– Must provide own equipment and tools– Set own working hours (you can set deadlines)– Responsible for own work environment– Able to work for other people (in fact, they should)– Self insured– Responsible for own taxes– You must report 1099’s

Why Do People Fail?

• Lack of planning• Failure to commit• Poor management• Under financed• Underestimate importance of marketing• Not perceived as a player• Inability to network• Ineffective sales channel/technique• Inability to fulfill orders• Inability to manage cash flow

How Krush Survived the Economy

• At first, power of positive thinking• Cut costs

– Did not renew lease agreement– Sold unused assets– Restructured

• Converted employees to contractors• Virtual model

• Stopped spending• Adjusted invoicing to maximize cash flow• Re-evaluated services and market (who’s spending?)• Network, network, network• Identify, bid on, fight for and win every opportunity

Parting – and Hard-Earned – Words of Wisdom on Entrepreneurship• It’s hard• You really, really have to be okay with risk• Set your financial investment limit up front – and stick to it• Spend as little as possible• Conserve cash• Pay as late as possible• Be willing to do whatever it takes• Always look and act like a professional• Be your own best PR agent – talk yourself up, be confident• Continuously evaluate EVERYTHING• When you wake up and loathe/hate/resent/regret what you do,

it’s probably time to move on to your next great adventure (after all, you’re a prospector, not a score keeper)