Start a Business
Advising Small Business Startups

(Last updated: April 25, 2010)

This page shows how to start a business advising small business startups. You will provide the experience and knowledge in those areas that most small business developers need.

Use this information together with the Business Plan for Simple Services page.

The methods and procedures described on this page can be used to help satisfy your needs, and the needs of likely clients.

Here are the topics:

Introduction to idea
Estimated startup costs
Putting idea to work

Other useful information

Business Guidelines -- This page helps beginners who want to start a business. These guidelines provide focused advice and useful insights.

Outside Information and Publications -- This page helps people learn business basics by providing sources of outside information and publications.


IMPORTANT

Before using this information to start a business be sure to read the following notice: Disclaimer

Introduction to idea

This topic provides an overview of the business idea so you can decide if it suits you.

Basic idea

Small business developers pay you to advise them about their business startup.

The sharp rise in unemployment has forced many people to start their own small business ventures. Normally, these people know how to create and deliver their products (goods, services, or information) to customers. However, they tend to be weak in business management and marketing skills. This is where your services will be valuable.

This is an indoors activity that can be performed year round.

Suitability of idea

This idea is best suited for people who favor technical activities.

It is also best suited for people who reside in a large city.

Skills and equipment required

Primary skills -- You must be able to gain the confidence of business developers, explain business management and marketing concepts, and help them integrate these concepts into their business operations.

You also need some experience with small business startups.

Other skills -- You must have driving skills and a valid driver's license.

Equipment owned -- This business idea assumes that you own the following equipment:

Computer setup -- You are assumed to have a home computer with large capacity memory and large capacity hard disk. This computer setup should include a laser printer, or multi-function fax, printer, and copier. It also should include any desk, stand, or table needed to support the computer and printer.

In addition, you are presumed to own the popular Microsoft® Excel® and Word® programs.

Vehicle -- You will use this vehicle to visit with clients.

Other items -- You need to own or purchase other items, such as a business planning computer program, office equipment, and reference book. These items are listed under the startup costs on the next topic.

Free computer program -- If you don't already have an accounting program, you might want to download a free one. ZipBooks is great for small businesses because it is easy-to-use and completely free. Look it over at this website. You can use this program to keep track of your own accounting transactions.

Profitability of idea

In order to show a profit, you would have to sell enough of your services to cover the startup costs and operating expenses. The more fees you collect over a certain time period the larger your profits. Therefore, you want to have substantial sales, along with low startup costs and operating expenses.

The fees you charge pay for your time and your ability to help business developers with a successful startup.

The amount you can charge depends on how well off the client is and how anxious both you and the client are to make a deal. The economic conditions of the local area might also influence these negotiations.

See the Setting the Sales Price page in another section for more detailed information.

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Estimated startup costs

This topic discusses the estimated startup costs for this business idea. Startup costs are what you need to pay in order to be ready to begin business operations. The amount of these costs also helps you decide if the idea suits you.

List of items in startup costs

Note: I am only showing one month for certain expenses. You should be able to get your first job or two in a month. Then these items become operating expenses, not startup costs.

The assumed startup costs for this business idea, using a frugal style of business operations, consist of the following items:

Advertising and promotion (1 month) -- Small classified advertisements in a local newspaper and/or the newsletters of local business organizations.

Business insurance (1 month) -- Business liability insurance. (Talk to a local insurance agent to see if you need this coverage.)

Computer program -- Business Plan Pro or equivalent program for preparing business plans.

Computer supplies -- Several reams of good quality 8 1/2 x 11 laser copy paper.

Governmental requirements -- Local fees and business license. (Note: You might also be subject to state and federal deposits and registration fees, but these will vary. So I have not included them in these startup costs.)

Office equipment -- Business telephone, desk accessories (stapler, paper clips, pen and pencils, etc.), and listing adding machine.

Office supplies -- Check blanks for business checking account, file folders or large manila envelopes (for filing papers), letterhead stationery, and lined writing tablets.

Other operating expenses (1 month) -- Business telephone expense.

Reference book -- Bookkeeping for Dummies (Paperback). (Note: The "for Dummies" series of books are easy to read manuals for normal people, not dummies.)

Dollar amount of startup costs

Here are the dollar amounts for a frugal business operation:

 

Estimated Startup Costs

  Advertising and promotion (1 month) $ 75
  Business insurance (1 month)   50
  Computer program   125
  Computer supplies   30
  Governmental requirements (local fees and business license)   50
  Office equipment   120
  Office supplies   105
  Other operating expenses (1 month)   50
  Reference book   15
     
       Total estimated startup costs $ 620

Note: See the Planning costs and expenses subtopic in the Business Plan on another page for ways to reduce these startup costs.

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Putting idea to work

This topic satisfies the Starting business operations subtopic in the Business Plan page.

Preparing for business operations

Completing the startup requirements -- This is the last step needed just before you start business operations. See the Listing the startup requirements subtopic in the Business Plan for the items remaining to be completed.

As a minimum, you should have discussed the business idea with your family, set up your business entity, and satisfied all governmental and insurance requirements.

Operating the business

Soliciting clients -- You could place small classified advertisements in the local newspaper. Also, you might want to visit local business organizations to inquire about new startups, or place a classified advertisement in their newsletters. (Once you become established as a startup advisor, you should benefit from word of mouth advertising from satisfied clients.)

For additional ideas on soliciting clients, see the Sales Methods page in another section.

Getting clients -- Hopefully, some of the people who read your advertisements will inquire about your services. They may want to know your qualifications and your hourly fee. If you believe you can assist them, the next step is to arrange a meeting. There should be no charge for this initial meeting.

See the preceding Profitability of idea subtopic for my thoughts about setting your fee.

I recommend that you meet with clients in their homes or offices. Your neighbors may object to having a stream of strangers arriving at your home. Also, meeting with clients in your home may violate the zoning rules in your town or city.

The first purpose of this meeting is to determine whether each party is willing to accept and work with the other party.

If you determine that one or more of the client's principal players (founding members) are difficult to work with, then you may choose to forego the engagement.

The second purpose is for you to determine if the startup appears viable.

Don't let your desire for a client get you involved in a hopeless situation. That can only lead to recriminations and a tarnish on your reputation.

The third purpose is to agree on the scope of the services you will provide, and the frequency and amounts of payments for those services.

The final purpose is for you to gather needed background information on the client. Here are some questions you might ask:

  • What are the goals of the business venture?
  • How do they expect their product (goods, services, or information) to meet the needs of the marketplace?
  • What market research have they conducted?
  • What are their competitive advantages, if any?
  • What financial resources do they have available?
  • Who are the principal players in the business venture and what are their skills?
  • What functions are assigned to these principal players?
  • What is their marketing plan?
  • What is their pricing policy, and is it flexible?
  • When do they expect to achieve the break-even point in sales?
  • What major problems are they having with the startup?
  • How do they want to use your services?

You will need the client's name, address, telephone number, and names of people to contact about routine matters and about confidential matters.

You also need to agree on how often you will bill the client for the services provided to date.

Job procedures

Preliminary service activities -- Here are some preliminary activities you should perform:

  • Prepare an appropriate engagement letter describing the scope of your services and your responsibilities, and have it signed by the client.
  • Prepare a tentative business plan using your computer business planning program.
  • Review your tentative plan and make a list of questions, possible problems, and suggestions.
  • Arrange for the next meeting with the client.

Depending on the services you agree to perform, the tentative business plan you prepare may be used only to help you advise the client.

Alternatively, it may become the official business plan for the startup. In this case, you will need to gather additional information. See the Start a Business Preparing Business Plans page for the type of additional information needed.

Main service activities -- Here are typical activities you might perform during your engagement with clients:

  • Help the client integrate any needed business management and marketing concepts into their business startup.
  • Discover the main problems facing the business startup, and determine possible solutions.
  • Assist the principal players in applying one or more possible solutions to their problems.
  • Help the startup achieve the break-even point in sales as rapidly as possible.
  • Prepare periodic status reports showing current progress in the business startup and actions remaining to complete.
  • Prepare projections of operating results under one or more likely circumstances.
  • Hold periodic meetings with the principal players to review your status reports and projections.
  • Collect periodic payments from the clients for your services

Final service activities -- At some point, you or the client will terminate the engagement. You may want to hold a final conference with the client to try resolving any final problems. Then you will want to collect your final payment from the client.

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