I am considering starting a small engineering related business but I have no experience with starting up a business. I noticed many people on NYspeed are small business minded/experienced and I was hoping to get some tips before really diving in.
Basic concept is that I would purchase some equipment and software that combined with my education and experience would give me some capabilities that no company currently has (in my area). I think I would be able to contact companies in my area that either:
-currently hire out of area companies and mail work back and forth
-are currently considering buying the hardware/software and hiring an engineer
-could do more/better business by using my services but are currently unaware of the capabilities, OR assume the expense to be to great, OR they cannot find someone local to do it.
So with that being the basic idea I am trying to consider where to start.
Do I start with a business plan and try to get a loan?
Do I start with getting a name and getting an accurate gauge of local interest?
Should I be contacting a lawyer?
Is there a preferred or pain free way to get a loan for upfront business expenses such as the hardware/software required to do the work?
As far as a business plan, I know nothing about them. How can I learn? Do you hire someone to do this?
And finally, I used to work for a very small company that did engineering and production in a completely different field. If I was able to get the owner on board and just work as sort of a “branch” of his company, would this be a good idea? Could it work?
I know there is a bit more reading and thinking than in a normal forum post here. thanks in advance for any advice.
You first need to consider what type of entity you would want it to be. Would you want it to be a sole proprietorship where you assume all of the business’ liability and the income flows right through to your tax return? Would you want it to be a partnership with someone else with essentially the same taxation and liability treatment as a sole proprietorship but it would be split with someone else?
Would you want to set up a C corporation where you have limited liability where if the business goes under or gets sued, they can’t touch your personal assets but the income from the business is taxed twice (once on the business’ tax return and once on yours whenever income is distributed to you)? A lot of people like the idea of an LLC (Limited Liability Company) because the income from the business flows right through to your tax return (it doesn’t get taxed twice like it would if it were a C corporation) and you also have limited liability.
These are some really important decisions to be made that you should talk to a lawyer and/or an accountant about. Don’t use legalzoom or some other service, talk to a real lawyer.
In some aspects it would be consulting. I have an MET + Packaging background. I think most of this work would be in the ME field.
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interesting considerations. Thanks.
When I discussed this with some other people they told me I didn’t need a lawyer, but to me it seems like some solid legal advice would be the best way to work forward. The next issue is, what lawyer and how much?
can’t really spend the time to type everything out but I’m on a dual partnership LLC for liability purposes. Get a lawyer and an accountant before you get your articles of organization, and log expenses via quickbooks or whatever from day 1. Having employees will be pricey. prepare to hate life for years.
I would talk to the SBA. I know a lot of people who used a lawyer and payed $2,000+ to file the LLC papers which other people I know did perfectly fine through legalzoom and cost 1/5 the price. if you start issuing shares of stock and have investors, you will need to form a different type of corp, you then have certain legal papers in place which a lawyer can come in handy for to make sure and any partners don’t get screwed.
Also, the biggest thing I can say is if it is just you, you are easier off. Once you pay out employees, then you can be screwed with finances to have an accounting friend (not someone just out of school) to assist with you.
Start small, do the work “on the side” and let it grow. (Keep your day job till you actually get things off the ground) This way you may not need a loan, plus it’s a lot less stressful (financially).
I’ll definitely be doing this. With me just working “after hours” I should be able to get some substantial business started.
Unfortunately I will still need a loan due to the sheer cost of the programs I intend on using. SolidWorks alone is $5k and its just one of a few programs I would need. I also don’t like the fact that the software doesn’t offer me any sort of collateral.
Definitley start with a business plan… Marketing, Operations, then Finance. Three most important parts. Once you get through all that you should have a good idea of what size loan you need. I wrote a 300 page business plan for a boxing gym a few semesters ago and they gave us guidelines on how to start up your own business, so definitley make the plan first so you dont forget anything.
Depending on how much $$$ you need, I would contact a local bank first about getting a loan, if its 50k+. Under 50k you can just get a revolving credit line with your current bank.
IMO, screw the lawyer, talk to a good, highly recommended accountant first, they should steer you in all the right directions, lawyers just want $$$, unless you have a hook up or a friend of a friend.
Just a FYI, if i remember correctly, biz loans require at least 20%, sba will back up the bank, and bring the deposit to half. So figure you need at LEAST 10-15% to get started with just the loan.
I looked them up and they have an office in my area. It looks like a step in the right direction.
The problem with being an engineer, I have no experience what so ever with a business plan. I think I need to learn a lot more about them or work with someone who has done a couple.
All that stuff looks great, I’m in the albany area now so I’m trying to search for some equivalent programs out here.
Ive written 3 complete business plans so far and just finished up a entrepreneurship class…pm me if you have any direct questions but the overall advice so far has been great
The best thing to do is research business plans and get your own started…you stand zero chance of getting any financial support with out a great business plan…you could have a great business idea but without a great business plan its worthless
I also may have all my powerpoint slides from class if you want them its a couple hundred slides…also have my textbook which has great info in it you could have
let me no if i can be of any help I have always wanted to start my own business and I always encourage others to do the same
I also have some money saved up if your business plan is something im interested in we could possibly work something out
I would talk first to a CPA not an attorney. My business is an S Corp for what its worth. I can write myself a check for $XXXXX and not pay taxes. (well, its not quite that simple but…)
Can you send me the powerpoint stuff? I think that would be a good overview for me so I can better research it. Also a “sample” business plan would be interesting to look through if you happen to have one from your classes.
(well, its not quite that simple but…)