Scale Your Company without Shedding Core Values

Most start-ups are looking to grow. But once success hits, how can you scale your company without shedding the shared values and culture that helped make you successful in the first place?

As you move beyond you initial start-up stages, here are four ways that to strive to keep your small business values as you continue to grow:

Keep a small-business owner's perspective. 
When you are a really small business, it is easy to empathize with the pains felt by your small business customers -- be it paperwork keeping them from the work they love, to struggling to grow their own businesses. As you grow, it's critical that you continue to see things from the small business owner's perspective.

Empathy is important in more than just customer support. From marketers to product design and quality assurance, you want your employees to all be able to step inside the small business owner's shoes and then focus on how to make their lives easier.

Build a foundation of shared beliefs. 
Every business has its own culture, whether you define one or not. It doesn't mean that all of your employees must think exactly the same way as management does. But by creating a set of shared beliefs, everyone has a framework for how to set priorities, make decisions, treat customers, and treat each other.

To keep your company's core beliefs fresh in everyone's mind, consider writing them down somewhere highly visable. For example, online retailer, Zappos, has the 10 core values of the company written on every staff member's nametag. Whether you do this or not, the actions of your company's leaders will always speak louder than any words in the corporate manual.

Create open channels of communication. 

When your company is small everyone wears multiple hats and experiences the business from multiple dimensions. As a company grows, communication can become a labyrinth and employees get pigeonholed into one or two roles.

Develop company culture outside business hours. 

If a company expects employees to love its customers, the company must love its employees. Include a lot of activities outside of the office -- in fact, fun should be one of your values. For example, one weekend every year, the entire company and their families could take a group vacation. 

Courtesy of CNNMoney

Smart Tips for New Small Businesses

Save up as much money as possible before starting.
All too often, people go into business without any savings, exclusively using loan money from friends, banks, or the SBA. They except to be able to start paying the loans back right away with their profits. What these business owners don't realize is that it can take months or years to make a profit. And once a lender discovers a business isn't as profitable as expected, the lender is likely to call in the loan or refuse to renew it for another year. Often new business owners then have to take out home equity loans or use credit cards to pay off their loans (which puts their home and credit rating at risk).

A better plan is to save up as much of the needed investment money as possible, including your living expenses for the first year, or even two. Odds are that your business won't be profitable for one to two years. Even if you get plenty of business coming your way -- and your customers pay you on time, which isn't always a sure thing -- you'll want to be able to invest most of that money back in the business for space, equipment, advertising, and insurance needs.

Start on a shoestring.
Think small. Don't rent premises if you can work somewhere else, and don't hire employees until you can keep them busy. (You can hire independent contractors or temps in the meantime.)

People who start their small business on the cheap, often in a garage, den, or some other scavenged space, and create their first goods or services with more sweat than cash, have the luxury of making their inevitable rookie mistakes on a small scale. And precisely because their early screw-ups don't bury them in debt, they are usually able to learn and recover from them.

Protect your personal assets.
When you go into business for yourself, you are usually personally liable for all judgments and debts that the business incurs. This includes business loans, taxes, money owed to suppliers and landlords, and any judgments against the business as a result of a lawsuit. If you don't protect yourself, a creditor can go after your personal assets, such as your car and your house, to pay for these debts.

While you can protect yourself against lawsuits by buying business liability insurance, this won't help you with business debts. If you will be running up big debts, consider forming a corporation or limited liability company (LLC). Just one person can form either of these types of businesses.

Understand how -- and if -- you will make a profit.
You should be able to state in just a few sentences how your business plans to make a substantial profit. For starters, you need to know your costs: how much you'll spend purchasing inventory, paying the rent, compensating any employees, and covering what is likely to be a surprisingly long list of other costs. Then you can figure out exactly how much you need to sell each month, for how many dollars, to cover those expenses and have an adequate profit besides. These numbers are all you need to create a "break-even analysis."

Make a business plan, no matter how short.
Understanding your profit numbers and creating a break-even analysis is the first step in making a business plan. For most small companies, the key portions of a business plan are the break-even analysis, a profit-and-loss forecast and a cash flow projection. (Projecting your cash flow is key and will make or break your company: Even if your business is getting plenty of work or selling its products, if you're not getting paid for 90-180 days, you're not going to survive unless you've planned for it.) With a cash flow spreadsheet in place, as well as a profit-and-loss forecast, you can tinker with your business idea and improve it before you start -- and continue to use them after you start.

Creating a business plan also allows you to determine what your projected start-up costs are (how much money you'll need to save) and what you marketing strategies are (how you'll reach customers to make sales). If you can't make the numbers work on paper, you won't be able to make them work in real life.

Get and keep a competitive edge.
Building a competitive edge into the fabric of your business is crucially important to long-term success. Some ways to get this edge are by knowing more than your competitors, making a product that is hard or impossible to imitate, being able to produce or distribute your product more efficiently, having a better location, or offering superior customer service.

One way to hold on to your competitive edge is to protect your trade secrets -- confidential information that gives you a competitive advantage in the marketplace. Examples of trade secrets include customer lists, survey methods, marketing strategies, and manufacturing techniques. To protect your trade secrets under the law, you need to take steps to keep the information confidential. This includes marking documents "Confidential," using passwords to protect computer information, using nondisclosure and/or noncompete agreements, and limiting access to employees with a reasonable need to know the trade secrets.

Another way to keep your competitive edge is to react quickly to bad news. Once you see that your business faces some kind of adversity, you need to come up with a plan to deal with it immediately. This may involve moving your offices, introducing a new product or service, or developing a better way to reach customers.

Put all agreements in writing.
The laws of your state require you to put some contracts and agreements in writing:

• Contracts that will last longer than a year.
• Contracts that involve the sale of goods worth $500 or more.
• Contracts that transfer the ownership of copyrights or real estate.

Even if not legally required, it's wise to put almost everything in writing, because oral agreements can be difficult or impossible to prove. This includes leases or rental agreements, storage agreements, contracts for services (such as consulting or electrical work), purchase orders or contracts for goods worth more than a couple hundred dollars, offer letters of employment, and employment policies. Get in the habit of getting and giving receipts for all goods, services, and deposits, regardless of how much.

Hire and keep good people.

Your goal should be to hire and retain truly excellent employees -- not just reasonably competent ones. A highly competent and truly enthusiastic employee is at least two and sometimes even three times as valuable as a person of average skills.

To create a stable and happy workforce, it's essential not only that your employees (and independent contractors) believe they are being fairly treated, but that your business is worthy of respect. Employees and contractors who like their work will represent you well on and off the job. And customers will more likely be loyal to an upbeat business -- and are more likely to recommend it to their friends.

Pay attention to the legal status of your workers.
When you hire workers as independent contractors, make sure they shouldn't really be taxed as employees. The IRS can impose substantial penalties against you for not withholding taxes and paying taxes for a worker who is really an employee. The IRS and other agencies are likely to think that a worker is an employee rather than an independent contractor under any of these conditions:

• The worker works full-time or nearly full-time for you.
• The worker doesn't work for anyone else.
• The worker provides services that are an integral part of your operations.
• You control how the worker does the job and provide detailed instructions and training for the worker.

One way to help avoid trouble is to have the worker sign a written service contract, or independent contractor agreement.

Most employees you hire will be "at-will" employees -- subject to being fired at any time and for any reason (except for illegal motives such as discrimination). It's important to preserve your at-will rights because they protect you from having to prove that you have a valid business-related reason to terminate an employee. Don't make any promises to prospective or current employees that you are offering a permanent job or that they will lose their job only if they perform poorly, because this will limit your ability to terminate the employee for other reasons, such as personality conflicts or finances.

When hiring an at-will employee, have the employee sign an offer letter that makes it clear that the employment relationship is at will. Except for high-level executives, you shouldn't have employees sign an employment contract -- this can limit your ability to alter the terms of employment as your business needs change and subjects you to higher legal standards.

Pay your bills early and your taxes on time.
In the real world, where a reputation for keeping one's word is a hugely important asset, a good strategy is either to pay your bills up front or pay them early. You gain trust, build a positive credit profile, and have a built-in safety net if things go badly. These benefits outweigh any interest you might earn by holding onto your money until the last possible minute.

Most importantly, pay your payroll taxes on time, especially the portion that you withhold from your employees' paychecks. The IRS and state tax authorities can hold you personally liable for these taxes, plus stiff penalties, if they're not paid. This is true even if you operate your business as a corporation or LLC or if your business goes bankrupt -- you will still be personally and legally on the hook to pay back payroll taxes.

Have you started a business and made a mistake that could have been prevented? Help others by sharing your story below...

Do Your Homework When Starting Your Business

Avoiding Legal Problems
Arm yourself with basic knowledge of business law so you're alert to your company's obligations and rights.

Practice prevention. Have your attorney review contracts and agreements before they're signed.

Get your attorney's opinions on documents you have drafted - such as employee policies - before you put them in place. You want to make sure they meet the requirements of the law.

Familiarize yourself with trademark and patent laws so you don't violate them. Learn how to apply for a trademark or copyright should you need to do so.

Understand the law as it pertains to your organizational structure. Your legal obligations as a C corporation, for example, will differ from those as a sole proprietor.

Policies for Employers to Implement
A policy, which states the company is an equal opportunity employer and strongly enforces a nondiscrimination policy.

A strong sexual harassment policy detailing what isn't accepted at your place of business.

A policy about phone and/or e-mail communications.

Expectations of employees.

Include how your company plans to monitor or take action on all of the stated policies.

Obtaining a Lease
Be prepared to negotiate. The landlord's printed lease will most likely favor the landlord.

Match the lease to your business's needs. If location is important, you'll want a longer lease - or a shorter one with options to renew.

Understand who pays what - such as utilities, repairs, insurance and even taxes. You may want to pay slightly higher rent for eliminating these items.

Be aware that your negotiating power is stronger in a market where lots of commercial space is available.

Remember that a lease is a legal document. Have your attorney review it before you sign.

Advertising Legally
Don't engage in false, misleading or deceptive advertising. Make sure your claims are accurate.

Obtain written permission to use photographs, endorsements, or quoted matter. Remember that some material is protected by copyright.

Don't use words and phrases like "free" and "easy credit" unless they're true. Easy credit, for example, means you offer credit to poor risks without charging them more for it.

Remember that consumers can sue you for deceptive advertising, and federal, state, and local governments can take action against you.

Consumer Credit Basics
Know the laws. If you must grant credit directly to consumers, familiarize yourself with both federal and state consumer credit statutes.

Tell the truth. The Truth in Lending Act requires you to disclose exact credit terms, such as the monthly finance charge and annual interest rate.

Follow correct procedures for handling billing mistakes. If you don't, you may have to give the customer a $50 credit even if your billing was right.

Don't discriminate on the basis of race, color, religion, national origin, age, sex or marital status when granting credit.

Developing an Employee Handbook
Some company policies have to be in writing - such as policies on sexual harassment and discipline - so employees know what's expected of them. These can form the basis of an employee manual.

Draft your employee handbook yourself or assign someone else in the company to do it. Then have it reviewed and fine-tuned by your lawyer.

Include a disclaimer stating clearly that the manual is in no way a legal contract.

Make sure every employee receives a copy of the handbook and signs a statement saying they've read it. Review it every six months or so and update it as needed.

Protecting Yourself from Employee Lawsuits
Obey the laws regarding employees. Don't discriminate in hiring, for example, or permit sexual harassment.

Hire carefully. Look for people with a strong work ethic and avoid hiring those who feel life owes them something.

Adopt strong employment policies. Communicate them clearly to employees and enforce them.

Keep good records on employee mistakes, even when they're not firing offenses. Document your own actions and the reasons behind your employment decisions.

Consider buying employment-practices liability insurance (EPLI).

When Military Duty Calls
Employees have the right to use their vacation time or personal days during their service; they may also opt for unpaid leave.

You aren't obligated to pay employees who are absent on account of military duties, unless your company policy says you will.

If your company does have a paying policy for military service time, you can't require employees to use their vacation or paid leave time.

You must extend the same benefits to employees who are absent for military service as you do to employees who are on nonmilitary leaves of absence.

You may temporarily fill vacancies left by military employees absent for service. However, upon their return, military employees are entitled to the same positions they left.

Brought to you by SCORE, "Counselors to America's Small Business."

Take These Questions into Consideration BEFORE Starting a Business

You are super excited about starting your business. That's fantastic. However, there are some things you should consider, kind of like "preventive medicine".

Have you set goals and a plan for reaching them?

Without a clear idea of where you want to go and how you plan to get there, you may find yourself stumbling through the stages of starting a business and facing unwanted stress and frustration.

One of the most important steps is setting goals that outline what you want to accomplish in the short term (1 month, 3 months, 6 months, etc.), as well as over the long term (2 years, 5 years, etc.).

Once you have created your goals, it's time to make sure you have a plan for your business that will guide you along the way. It's also helpful to understand your motivation for starting a business in the first place.

Will I be able to follow my plan without breaking any laws or regulations?

There are a number of legalities that you should consider and explore when starting a business.

• Deciding on the structure of your business (sole proprietorship, partnership, corporation, limited liability company)
• Registering a business name
• Obtaining necessary licenses and permits
• Planning for business taxes

Have you fully considered the financial implications of starting a business?

Money is a major concern when you start a business, especially if you will be leaving behind a steady paycheck and if your business has significant start-up expenses.

Some business financing options to consider to ease the financial transition include starting your business on the side while continuing to work full time, working a part-time job until your business becomes established, waiting to start your business until you have saved up a financial reserve, and borrowing the necessary funds to bridge the gap.

Is your support network in place?

We accomplish very little in life completely autonomously, and the same is true in business. Even if you plan to be a sole proprietor, you can benefit tremendously from creating an external support system to keep you on track.

Your support network may include family, friends, colleagues, a mentor, a coach, and anyone else who can help you navigate roadblocks. When you have an effective support system in place, you will find that you have a cheerleader, consultant, moral support and even a devil's advocate when necessary.

Do you have what it takes to make it as a business owner?

Being a successful business owner requires a unique mix of personality and small business character traits. While there isn't a standard formula that makes one type of person more successful than another, some entrepreneur-friendly personality traits that can ease the process of getting started as a business owner include passion, drive, dedication and self-discipline. And it doesn't hurt to be an effective communicator and someone who is willing to take measured risks.

These questions are likely to spur a few more specific to your situation. Now is the time to consider all of the possibilities ... then you can let your enthusiasm take your dream to the heights you expect.


What mistakes did you make because you simply "Didn't Know What You Didn't Know"? Help others to learn by sharing below.