Step 7: Organize Logistics
By The Sloan Brothers - StartupNation

Logistics are not the most exciting aspect of starting up, but having the logistics in order can mean the difference between success and failure. Having your books in order, your contracts buttoned up, your money safely managed and your downside covered are each critical to your personal and business future. Accountants, lawyers, bankers, insurance agents—the big four—are the people that can help you get these logistics organized and put you on a path to starting up smart. These service providers will be instrumental as you grow, too.

In addition to the "big four," there are other service providers that may be vital to your business success. For example, tech support, web designers and programmers, merchant banks, and realtors are among those people with whom you might want to develop relationships. There are plenty of others that can help you along the way — it just depends on your business model and plan.

Before you start your search for these service providers, it's important to know what you want to accomplish with each of them, and to set a well-defined budget to meet your goals. Once you've hired these professionals, you should work with them to establish clear milestones to reach, a strict timeline for reaching them and a plan for communicating with each other along the way.

Regardless of who you retain, they should be well-versed in assisting entrepreneurs, and they should understand the nature of your industry. Most importantly, you should be able to trust them. Therefore, the best way to find these service providers is through referrals from your friends and business associates. You should also ask each service provider for additional references to ensure that you are making a good choice.

In this step, we will focus on eight areas of logistics:

  1. Accountants
  2. Attorneys
  3. Insurance providers
  4. Bankers
  5. IT support
  6. Web designers and programmers
  7. Merchant banking accounts
  8. Realtors

Important Logistics

Accountants

Accountants bring structure and order to your business and help you plan for current and future needs. They can help you form your company, file the paperwork to do so, and advise you on tax-related issues and account management. In forming your business, accountants can help you set up financial timelines with potential revenue and expenses so that you can more accurately project your company's needs and need for additional capital until you can generate a profit.

Once your business is formed, accountants can then assist you with ongoing booking, payroll and general financial analysis and management. In fact, many businesses bring in an outside accountant once a week to assist with payroll and bookkeeping.

Questions to ask:

  • Does this accountant specialize in businesses like mine?
  • Can the accountant advise me on issues regarding starting a business, as well as growing a business?
  • Is this accountant qualified to prepare income tax returns as well as keep the books?
  • Can the accountant provide me with enough referrals of clients in similar situations as myself and are they positive referrals?
  • Did this accountant explain the fee structure so that I completely understand how much the total services I need will cost?

Also, make sure that the accountant is a CPA (certified public accountant).

Like attorneys, accountants generally charge by the hour or on a project basis, depending on the work. The amount charged also varies from project to project, place to place and the experience of the accountant.

You'll also need a software package like Microsoft Office Small Business Accounting 2006 to track all of the financial transactions in your business. We like the Microsoft product because it has the familiar, user-friendly look and feel of other Microsoft Office programs we already use like Word and Excel, and it interfaces with them seamlessly.

Also, if you have Outlook 2003 with Business Contact Manager Update, you can even do things like create quotes, orders and invoices without leaving Outlook. But, most importantly, instead of wrestling with basic business tasks due to poor integration of customer and financial information, using a comprehensive accounting program like this one frees up your valuable time to get out there and drum up more business.

Attorneys

Attorneys help you strategize and formalize key relationships with vendors, product sources, financiers and employees. They can also help you form your company, draft contracts with vendors or other parties, draft real estate agreements and provide legal advice as you negotiate contracts. They will help you comply with a sea of regulations ranging from zoning and securities to environmental and Sarbanes Oxley. If you are an inventor, a patent attorney is particularly important for you, as they can help you do patent searches and file your patent paperwork.

You need to select an attorney who is an expert in the area of law that you need help in. To find an attorney the best way is to ask your friends, accountant, banker, business associate or vendor.

You can also check with the state or local bar association or you can locate an attorney at www.martindale.com, www.lawyers.com, www.uspto.gov/go/attorney/index.html or www.findlegalhelp.org, but these sources often do not have direct experience with the attorneys you may be retaining. Therefore, it is important to do your own research.

Questions to ask:

  1. Have you handled matters like mine and can you give me examples of the issues you helped them with?
  2. What is your track record of working with companies my size, my stage and in my industry?
  3. What will the timeline be from beginning the work to completed action?
  4. How will you keep me informed of progress?
  5. What assurances can they give me that I will be a priority client?
  6. What is a ballpark figure for the total bill, including fees and expenses?
  7. How do you charge legal fees and for what expenses will I be charged?
  8. Will you be working on my file, or will an associate work on the file to cut costs? (i.e Can junior attorneys or paralegals in the office handle some of the administrative work at a lower rate?)
  9. Do you have sample legal forms, agreements and politics that I can use for my business?
  10. Would you be willing to work out a more creative fee structure based upon the success of my business or perhaps accept fee for service?

In regards to fees, attorneys generally charge an hourly rate for research, writing and negotiating. Costs, in addition to an hourly rate will include filing fees, telephone calls, copies, and work done by other professionals within the firm. Fees depend on the experience of the attorney, the size and geographic location of a law firm, the matter being worked on and the client's financial situation. Some cases may be worked out on a project fee basis, i.e. to set up a S Corp or file a patent.

In working with lawyers, as other professionals, it is important for you to do your homework in order to keep fees to a minimum. You can conduct preliminary research online or even file documents yourself to help avoid costs.

So be prepared, know what you want your lawyer to do and do not hide anything from your attorney as to minimize future risks. In knowing what you want, provide your attorney with clear written goals and issues you want addressed. And finally, know your budget and make sure your attorney knows your budget.

Insurance Providers

It does not matter where your business is located, you will still need insurance. Insurance agents can counsel you as to what kinds of insurance you will need and the type of coverage available to you. Insurance, such as health insurance, property insurance, general liability insurance, workers compensation, malpractice insurance, is intended to minimize the impact of unexpected events and disasters.

Questions to ask:

  1. Is the insurance professional a licensed agent?
  2. Ask how many and what companies the agent represents.
  3. How long has the agency been in business and how long has the agent been with the business?
  4. Clarify the relationship.
    • Is the agent independent or do they work directly for an insurance company?
    • If independent, how many insurance companies do they work with?
    • What kind of insurance do they broker, i.e. are they a full service firm?
  5. Does the broker know your business?
  6. What types of value-added services does the broker provide, i.e. employee benefits, retirement planning, wealth management and human resources outsourcing?
  7. Does the company offer 24/7 service?
  8. Ask how the agent perceives his or her role in handling claims.
  9. How often will your policies will be reviewed and better coverages sought?

Insurance agents make their money through commissions on the products they sell you, so there should not be any upfront cost to you. The bottom line is seek out several agents, obtain quotes and go with your gut.

Health insurance is a hot topic these days, and it probably comes as no surprise to hear that costs are increasing exponentially each year. Health insurance costs are, in fact, one of the number one concerns of most small business owners. An economical source to consider for health insurance is your local chamber of commerce. Oftentimes, chambers group their members' companies together to obtain deep discounts on health insurance, discounts you might not otherwise have access to on your own.

Bankers

Even if you don't need a loan yet, or if you don't qualify for one because you are in the very early stages with your business, banks do provide a suite of other products fundamental to your business that are mostly (but not completely) financial in nature. These can include business checking accounts, business credit cards and perhaps even a reference from your banker. Banks also have great contacts in the community and can be an excellent source of business referrals.

The most important thing you can do is establish a relationship with your banker early on, and spend some time learning from him how best to position yourself for a loan down the road (if you need one). Your banker can also keep you apprised of what other financial products might be appropriate for your particular business such as merchant payment services, payroll services, treasury management services and much more.

IT (Information Technology) Support

IT consultants can help you set-up and support your office computer system (including networks, security measures, email systems, software, etc.) and/or phone systems.

Questions to ask:

  1. Do they specialize in your industry and in assisting small business?
  2. What will be their availability, i.e. 24/7?
  3. Do they charge a retainer or by the hour and do they charge for any other expenses?
  4. Will they host or manage your server, set up your system and otherwise consult, program and service your companies technology?

In locating a consultant, check with businesses similar to yours; ask the store for references from which you purchased your technology or check with your own professional organization.

Web Designers and Programmers

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These folks are the ones who help you build your website, which may be the backbone of your entire company if you are an e-commerce site. Designers create the look and feel of the site, and design any artwork, while programmers are the ones who build the "back-end" of your site and make it actually function. It's also possible to find a professional who is both a designer and a programmer, if you prefer to go that route.

Questions to ask:

  1. Do they have experience in designing and programming a site similar to the one that you seek?
  2. Do they design and program themselves or do they contract one of these out to another company?
    Many web design companies will design and build the basic site, but will contract out any programming work (such as e-commerce) to a development company or contractor.
  3. What is the timeline for designing and programming the site?
  4. How many designs will you "mock-up"?
    You should be provided with a few "mock-up" designs with an explanation behind each design. These "mock-ups" usually include the home page and one sub page.
  5. Do you charge by the hour or by the project?
  6. How many corrections am I allowed to make before you charge me for additional work?
  7. Will you also host the site and secure a domain name as well?
  8. Will it be programmed for search engine optimization?
    It is very important that your designer understands the importance of design a search engine friendly site. Using text where possible instead of graphics and designing the site using Cascading Style Sheets helps with search engine optimization.
  9. Ask to see a sample portfolio of companies they have worked on.
  10. Don't forget to audit their site as well.
    You can tell a lot by looking at a web design company's site. Would you hire a plumber whose own kitchen sinks is leaking? The same holds true to web designers and developers.

However, before you hire a designer and/or programmer, you must first decide what you want.

A few things you need to consider:

  1. What is the function of the site?
    Do you want to sell products (e-commerce)? Do you need to provide information? Will your site contain multimedia elements like music and video? All of the above?
  2. Will you host the site, or do you need someone to host it?
    You will most likely need a hosting service.
  3. How often will the site need to updated?
  4. Do you want to be able to update the site yourself or pay someone else to update it?
    There are content management systems available that let non-technical staff update images, text, and pages on a website.
  5. Who will develop the content for the site?
    The content of your site is the most important element. Graphics, music, and other additive elements are useless without great and frequently updated content.

If you're operating on a tight budget that really doesn't allow for hiring a firm, you can ask if the individual is willing to do it on a freelance basis, outside the parameters of his or her firm, or just find a freelancer to work on your site and programming.

Merchant Banking Accounts

If you are planning to accept credit cards as a form of payment, you must have a merchant banking account. Merchant banking accounts can be tough to come by as a pure startup.

Factors that merchant banks review:

  1. If you already have an established business, preferably a brick and mortar business.
  2. The type of product(s) you are offering and the amount of sales volume you expect.
  3. Your credit risk, including personal credit history.
  4. If you have ever applied for bankruptcy.
  5. If you do not appear on the Terminated Merchant File List or MATCH file
  6. If you have a web site and clearly state your return policy.
  7. If you have ever been convicted of credit card fraud or a related felony.

To locate a merchant banker, you should first check with your bank. However, in securing a merchant account, it is important to do your homework and decide how you intend to process the credit card transactions. It is also important to understand what fees the bank will charge for processing payments.

Real Estate Agents

If you are opening a brick-and-mortar store or an office, you will, of course, need some real estate. You can choose to lease a property or buy one, but in either case, it's best to begin with the Downtown Development Authority or the City's Planning Commission in the community in which you want to locate. These entities can help you identify the perfect location for your business. Otherwise, you may try working with a commercial real estate agent or developer in identifying the right location. However, in working with a real estate agent or broker, they will take a commission on the total sale price.

To find a commercial real estate agent near you, ask a friend or contact your city hall for a list of available properties.

Questions to ask:

  1. Do they have many properties listed in the region you wish to locate in?
  2. How often will you contact me about available listings?
  3. Do you have a website that I can view properties on line?
  4. Do you represent both the buyer and the seller?
  5. How do you get paid?

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