A few years ago, before the Internet was pervasive, before everyone carried a smartphone and before do-it-yourself software tools were available for free, it was difficult to reach a critical mass of new customers without spending a million dollars on a website, custom software and television advertising. Now you can match a big company with worldwide reach for a few thousand dollars.
It’s a new age for aspiring entrepreneurs, where anyone with a dream or a hobby should be turning it into a business. The bad news is that many are already doing it, with competition growing, so the longer you wait, the less chance you have of getting there first. The good news is that most haven’t learned the new rules, so there is still room to surge ahead of the crowd.
Here are some of the key new rules I have learned by starting my own company, investing as an angel in other startups and mentoring many more new entrepreneurs over the last few years:
1. Do incorporate a company, but keep it simple.
A limited liability corporation (LLC) can be formed in most states for less than $100 directly through the Internet without legal assistance. This will keep financial and legal liabilities away from your personal assets, but won’t cost you the big initial cost and ongoing time and fees of a C-corporation.
2. Create a business plan online, but don’t wait for funding.
Too many entrepreneurs still think plans are for investors, and investors are required to build a startup. Both are wrong. You need a simple plan to set real milestones, and you don’t need investors. Finding them takes too much time and effort, and takes away control and ownership.
3. Work out of your spare room, and keep your own records.
Don’t assume that you need to rent an office to start a business or hire an accountant to track expenses and assets. There are several easy-to-use accounting packages available, such as QuickBooks, which run nicely on your existing small desktop or laptop.