POV: Britt Raybould: Building a biz outside your home town

At SXSW, Britt Raybould and I met, introduced by Chris Brogan (who else?). We had some excellent conversations about working in a high tech field, without being from a major metro area. We both got lots of surprised comments from the big city folks. Of course, I wanted to introduce her to you, too.

Before I answer your official questions, a little background might help put things in context. In 2006, I was working full-time for an in-house marketing group. Miserable, and convinced I wanted a PhD, I started applying and got rejected. One of my graduate professors recommended I join a mentoring program offered by my college that started in the fall of 2006. The program matched me up with an experienced communications consultant who met with me monthly and provided career advice. Through that program, I figured out I didn't want to do a PhD (yet), which was good because I got rejected yet again, but I also knew I didn't want to stay at my current job. So, knowing that I had a significant chunk of money saved, originally for school, I quit my job (my last day was today a year ago).

I started looking for another job, and even interviewed for several prospects. I wasn't particularly excited about any of them and they never reached the point of an offer. By this time, is was the end of April, and my mentor wanted to know if I had time to do some work for her. After that, she recommended me to a client she didn't have time for that needed some project management, and the rest as they say, is history. Now, I'll go into your official questions.

How did you find your first clients?
I found my first clients through two channels: 1) My mentor recommended me to two clients, both of which have evolved into a long-term clients with monthly retainers; 2) within my community, both of my parents are well known and they've mentioned what I do to acquaintances. These individuals often own small businesses, which in turn makes them curious about what I can do for them. Sometimes I make a connection. Once in awhile, I also get project work from people I used to work with in previous jobs.

You told me you have managed to tap into a network of business people for ongoing word of mouth. Have you done anything to encourage that (other that exceptional performance)?
As far as encouragement goes, the only thing I actively do is consistently deliver, as you say, exceptional service. For some unknown reason, my current clients seem to talk about what I have to offer with little prodding from me.

How do you track and manage your activity? Or how do you motivate yourself?
I track and manage activity in two ways: 1) I keep a time sheet next to me at all times, with space for a client name, project, and times; 2) as the sheet fills up, I enter the time into Quickbooks, which lets me create my invoices at the end of the month.

Motivation is trickier. For example, I'm not a morning person, so I absolutely loathe the times when I have to do conference calls or go to meetings before 10. To make it manageable, I make small deals with myself like I'll get to read for pleasure in the afternoon for a couple of hours if my mornings are packed.

Bigger picture, my main motivation comes from the fact I refuse to fail. I'm my own worse critic, and I have impossibly high standards. It drives me crazy if I know I'm not meeting my expectations, let alone a client's, so I keep pushing, reaching for that next level.

How about overcoming rural isolation? Any good tips?
For me, isolation isn't a big deal because it's what I usually prefer. However, I'm realistic. So, once a month, I plan a trip to Salt Lake (where I used to live) and schedule lunches, dinners, etc. with all my friends that still live there. I have clients in Salt Lake, so I usually schedule clients meetings, too, allowing me to expense many parts of the trip and enjoy myself at the same time.

I also make it a point to reach out and stay in touch with the people I've met at conferences. Realistically, 98% of the people around me have little knowledge of what I actually do, let alone how I do it. I'd go crazy if I couldn't connect with people who are into the same things I am, so I rely on Twitter, email, phone calls, etc.

Thanks for the chance to share.



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Working with independent contractors without getting into trouble with the IRS

In our massively connected professional networks, handing work off to friends and associates is pretty common. But it also triggers some tax issues in the US.

When you pay someone to write an article, to be your virtual assistant, to redesign your site, to work with you on a project for your client, basically anytime you give work to someone else, the IRS views them either as an employee or a contractor (or as a statutory employee or statutory non-employee. Those are pretty uncommon, and we'll talk about them at the very end.)

What difference does it make?
I'm sure you've watched big companies converting positions from employees to independent contractors because it's cheaper. Independent contractors have to pay their own self-employment taxes and don't receive any of the usual costly employment benefits.

As a small business owner or solopreneur, you might assume that anyone you work with is also independent, but a person can be your employee even if they live far away and work only part time with you. Unfortunately, if you think someone is a contractor, but the IRS decides they are your employee, you'll get socked for a huge tax bill. So it matters.

What makes an employee vs. what makes a contractor?
The basic difference is control. For an employee, you have the right to control the details of how the services are performed. On independent contractors you control only the results, not the means and methods. Usually, when we pass work off to another entrepreneur, we give them complete control over methods. Just beware of taking too much control. For more info on this, check with the IRS.

What types of relationships get questioned most often?
The more work you do with an individual, the more likely that the IRS will take a look at the classification. So if you are working on assignments every day with same person, that's a signal.

If you are the other person's only client, or just one of a few, that's another signal.

If the other person used to be your employee, that's a big signal!

OK, so if you've got some signals, what do you do?
First, you want some documentation. Get at least a few of the following:

• Get a copy of their business card, ad, business website, etc. and file them. I've even used LinkedIn and JumpUp profiles to show independent status.
  
• Ask for copies of their invoices to other people. (Let them mark out the amounts, if they want.)
  
• Ask for a copy of their IRS Schedule C. (Once again, no amounts needed.)
  
• Get a copy of their LLC filing or business license, if they have them.

Second, prepare a contract explaining the independent relationship, outlining who owns the rights to the work product, etc., and get it signed. I'm no lawyer, so I'm going to point you to some online samples. Check the one at the Business Owner's Toolkit and the one from Inc.com.

Keep this documentation for 5 years after you last do business with them. Really.

The goal is to show that the contractor really is in business and working for more than just one client (you). That should keep you out of trouble on this topic.

If I didn't answer yes on any of the signals, am I in the clear?
Probably so. But I'm tellin' you it won't hurt to actually document it anyway.

What about employees?
We'll be going into detail on how to deal with employees and payroll in another article. Oh, and tax forms like 1099's. Sounds like another good article for our tax expert Maesz.



Statutory Employees and Statutory Non-employees

As promised, here's a little bit more about statutory employees. This only applies in a few very specific cases. I'll give you a general rundown here. If this sounds like it may include your business, then you can read the full details from the IRS.

• Food and laundry delivery drivers
• Life insurance sales agents
• Home craft assemblers
• Traveling salespeople

Home craft assemblers caught my attention. With the current trend towards hand made items, it's possible some of you are working a craft business with independent assemblers out there. You'll need to examine this issue closely!

Statutory non-employees include direct sellers and real estate agents. Once again, if this might apply to your organization, get the scoop from the IRS.

This article is part of the Small Biz 100, a series of 100 practical hands-on posts for small business people and solo entrepreneurs, whether in a small town, the big city, or in between. If you have questions you'd like us to address in this series, leave a comment or send us an email at becky@smallbizsurvival.com. This is a community project!

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Our Brag Basket Runneth Over!

Each Friday, I open the brag basket as a fun place to brag or promote yourself and your projects.

Last week, Kim shared a compliment from a colleague, our own Maesz was proud to be still learning, Erica shared some recent writings, Jim celebrated a completed project and its payoff, Shashi bragged on interviewing me and on his new site, I bragged on me (and Chris) for the success of the Checklists for your first small biz article, Scott was pleased to be featured twice (twice!) in the WSJ, Connie proudly stirred up a hornets nest, Bob introduced himself, and our own OkieJ rounded things out by razzing me! WOW, what a week! What will you put in the Brag Basket this week?

You can brag on a friend, your own project, yourself, others, anything! You don't need special permission or anything. Just leave a comment right here. There's no deadline, so you can brag anytime during the week, and I'll open a fresh Brag Basket each Friday.

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The Small Biz 100

Based on the enormous success of Checklists for starting your first business, we are starting a series of 100 practical, how-to small business posts. I stole (or borrowed) this idea from Chris Brogan and his Social Media 100. So let's call this the Small Biz 100.

Small biz owner Rick Cockrum also suggested that we write “Sole Proprietorship 101 - How to start your business and keep it going while still being able to sleep at night.” Exactly! That is what we want to build with you.

To make this work for you, I need your suggestions. What questions do you have about small business? Here are the first nine ideas from Rick:

1. Setting up a simple, adequate accounting system.
2. Developing relationships with vendors.
3. Remembering the customer is the reason you’re there.
4. How to perform customer surveys simply, and why you would want to.
5. The difference between advertising and marketing, and why they’re both important.
6. The importance of a good relationship with the bank. How to tell a good one from a bad one.
7. Navigating SBA loans.
8. What the SBA has to offer.
9. How to value your business.

Also at Open Mic Nite, Joe Hauckes, Working at Home on the Internet, mentioned:
10. Offering your service for free as good advertisement and getting a good ROI.

Related to that is:
11. How to know who to charge and who gets some things for free

Back to Basics, we'll have to cover:
12. More steps to startup
13. Declaring your business intent, being enough of a business to take income tax deductions.
14. When to form an LLC or S Corp
15. Converting from a sole proprietorship to get more legal protection

No one likes to talk finance and accounting, but we will do it:
16. Just the basics
17. The level of detail that makes sense for your business
18. Is a spreadsheet enough?
19. Reviewing accounting software
20. Online accounting tools
21. Do you need a comprehensive package or a few tools?


Hiring and employees seem to generate enormous questions, so let's go over:
22. Employee vs. subcontractor
23. Doing payroll yourself
24. Finding a local payroll service
25. Using online payroll tools
26. Maybe you don't need to hire at all!

OK, that's more than 1/4 of the way there. Of course, this is just a list of ideas. There are plenty of important how-to topics left, but I want to leave it open. What topics would help you most? Put your ideas in the comments, and we'll offer our own best answers, as well as rounding up some terrific experts when we can. Ready? Go!



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Do you get the age of conversation?

Drew McLellan and Gavin Heaton decided to take on creating sequel to the incredibly successful group-written book, Age of Conversation. The winning topic is "Why don't they get it?"

I'm already formulating my thoughts on who doesn't get it and why that is. But I'm joined by 274 additional outstanding writers on this project. Expect to see some amazingly thought-provoking pieces!

I'll update you with more details as the project progresses.

If you want to see the original project, help us "bum rush" it (promote it) on Friday, by buying your copy of Age of Conversation at Amazon.

100% of the proceeds go to Variety the Children's Charity which serves children across the entire globe.

Here's the author list for the new book, 275 strong:

Adam Crowe, Adrian Ho, Aki Spicer, Alex Henault, Amy Jussel, Andrew Odom, Andy Nulman, Andy Sernovitz, Andy Whitlock, Angela Maiers, Ann Handley, Anna Farmery, Armando Alves, Arun Rajagopal, Asi Sharabi, Becky Carroll, Becky McCray, Bernie Scheffler, Bill Gammell, Bob Carlton, Bob LeDrew, Brad Shorr, Bradley Spitzer, Brandon Murphy, Branislav Peric, Brent Dixon, Brett Macfarlane, Brian Reich, C.C. Chapman, Cam Beck, Casper Willer, Cathleen Rittereiser, Cathryn Hrudicka, Cedric Giorgi, Charles Sipe, Chris Kieff, Chris Cree, Chris Wilson, Christina Kerley (CK), C.B. Whittemore, Clay Parker Jones, Chris Brown, Colin McKay, Connie Bensen, Connie Reece, Cord Silverstein, Corentin Monot, Craig Wilson, Daniel Honigman, Dan Goldstein, Dan Schawbel, Dana VanDen Heuvel, Dan Sitter, Daria Radota Rasmussen, Darren Herman, Darryl Patterson, Dave Davison, Dave Origano, David Armano, David Bausola, David Berkowitz, David Brazeal, David Koopmans, David Meerman Scott, David Petherick, David Reich, David Weinfeld, David Zinger, Deanna Gernert, Deborah Brown, Dennis Price, Derrick Kwa, Dino Demopoulos, Doug Haslam, Doug Meacham, Doug Mitchell, Douglas Hanna, Douglas Karr, Drew McLellan, Duane Brown, Dustin Jacobsen, Dylan Viner, Ed Brenegar, Ed Cotton, Efrain Mendicuti, Ellen Weber, Emily Reed, Eric Peterson, Eric Nehrlich, Ernie Mosteller, Faris Yakob, Fernanda Romano, Francis Anderson, G. Kofi Annan, Gareth Kay, Gary Cohen, Gaurav Mishra, Gavin Heaton, Geert Desager, George Jenkins, G.L. Hoffman, Gianandrea Facchini, Gordon Whitehead, Graham Hill, Greg Verdino, Gretel Going & Kathryn Fleming, Hillel Cooperman, Hugh Weber, J. Erik Potter, J.C. Hutchins, James Gordon-Macintosh, Jamey Shiels, Jasmin Tragas, Jason Oke, Jay Ehret, Jeanne Dininni, Jeff De Cagna, Jeff Gwynne, Jeff Noble, Jeff Wallace, Jennifer Warwick, Jenny Meade, Jeremy Fuksa, Jeremy Heilpern, Jeremy Middleton, Jeroen Verkroost, Jessica Hagy, Joanna Young, Joe Pulizzi, Joe Talbott, John Herrington, John Jantsch, John Moore, John Rosen, John Todor, Jon Burg, Jon Swanson, Jonathan Trenn, Jordan Behan, Julie Fleischer, Justin Flowers, Justin Foster, Karl Turley, Kate Trgovac, Katie Chatfield, Katie Konrath, Kenny Lauer, Keri Willenborg, Kevin Jessop, Kris Hoet, Krishna De, Kristin Gorski, Laura Fitton, Laurence Helene Borei, Lewis Green, Lois Kelly, Lori Magno, Louise Barnes-Johnston, Louise Mangan, Louise Manning, Luc Debaisieux, Marcus Brown, Mario Vellandi, Mark Blair, Mark Earls, Mark Goren, Mark Hancock, Mark Lewis, Mark McGuinness, Mark McSpadden, Matt Dickman, Matt J. McDonald, Matt Moore, Michael Hawkins, Michael Karnjanaprakorn, Michelle Lamar, Mike Arauz, Mike McAllen, Mike Sansone, Mitch Joel, Monica Wright, Nathan Gilliatt, Nathan Snell, Neil Perkin, Nettie Hartsock, Nick Rice, Oleksandr Skorokhod, Ozgur Alaz, Paul Chaney, Paul Hebert, Paul Isakson, Paul Marobella, Paul McEnany, Paul Tedesco, Paul Williams, Pet Campbell, Pete Deutschman, Peter Corbett, Phil Gerbyshak, Phil Lewis, Phil Soden, Piet Wulleman, Rachel Steiner, Sreeraj Menon, Reginald Adkins, Richard Huntington, Rishi Desai, Beeker Northam, Rob Mortimer, Robert Hruzek, Roberta Rosenberg, Robyn McMaster, Roger von Oech, Rohit Bhargava, Ron Shevlin, Ryan Barrett, Ryan Karpeles, Ryan Rasmussen, Sam Huleatt, Sandy Renshaw, Scott Goodson, Scott Monty, Scott Townsend, Scott White, Sean Howard, Sean Scott, Seni Thomas, Seth Gaffney, Shama Hyder, Sheila Scarborough, Sheryl Steadman, Simon Payn, Sonia Simone, Spike Jones, Stanley Johnson, Stephen Collins, Stephen Cribbett, Stephen Landau, Stephen Smith, Steve Bannister, Steve Hardy, Steve Portigal, Steve Roesler, Steven Verbruggen, Steve Woodruff, Sue Edworthy, Susan Bird, Susan Gunelius, Susan Heywood, Tammy Lenski, Terrell Meek, Thomas Clifford, Thomas Knoll, Tiffany Kenyon, Tim Brunelle, Tim Buesing, Tim Connor, Tim Jackson, Tim Longhurst, Tim Mannveille, Tim Tyler, Timothy Johnson, Tinu Abayomi-Paul, Toby Bloomberg, Todd Andrlik, Troy Rutter, Troy Worman, Uwe Hook, Valeria Maltoni, Vandana Ahuja, Vanessa DiMauro, Veronique Rabuteau, Wayne Buckhanan, William Azaroff, Yves Van Landeghem

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Be a social media mirror

What do you do with interactive tools like blogs, video, all that web 2.0 stuff, to build relationships, to reach customers?

First, it's not about you. Let's start with the message I previously shared from Hugh MacLeod, small town global microbrand, who writes and draws at Gaping Void:

Marketing is moving away from our message (i.e. Come Fly the Friendly Skies) to being about you. (i.e. You're cool. Here's some wine.)
"They are not your community.... I didn't really think of the people drinking the wine as 'the Stormhoek Community.' They were just cool people having fun with the wine."

Long-time Friend Mark Harbeke, of Winning Workplaces, built on that with a very smart comment:

Great insight. I think the theme of transitioning from "us" to "you" is valid across industries and locations. We've seen that among (I hesitate to say "our") constituents, leaders of really innovative small firms: they want communications from us that do more to share their news and growth stories with each other. In essence, we become a mirror for them. And as long as the technology is in place and works the same way for everyone, that's not too tall of an order. It's something we're working on on both the e-mail and web front.

They want communications from us that do more to share their ... stories with each other. In essence, we become a mirror for them.

Use social media tools and interaction to become a mirror. Enable people, a community, to share stories with each other.


When I write for small business, I want to share more stories from small business people!
When I write for my store, I want to start mirroring customers' stories.
I can imagine my university alumni association, being a mirror to alums.
If you offer editing services, share ideas and stories from and to writers.
If you run a cattle sale barn, share successful ideas between ranchers.


How do (or can) you use social media tools to be a mirror to a community?


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Next questions from starting your first business

Checklists for starting your first business has generated some follow up questions and discussion, so let's go over those.

Can I deduct computer equipment and software I purchased before I started my business?

Partially, but you won't get much of a deduction. Here's Maesz' explanation:

The previously personal items of equipment that are converted to business use can be depreciated from the date of conversion. The basis for depreciation is the dreaded Fair Market Value of the item on the date of conversion. Then, the business percentage is applied to the FMV and depreciation (on computers 3 years) commences. However, there is no Section 179 available for converted property.

FMV of used software would probably render too small a value to gain much in the way of depreciation, but the process would be similar. Once, again, no Section 179 for converted property.

Can you tell she's an Enrolled Agent? Yeah, I thought so. The short answer is, probably not worth the effort.

How do you distinguish that you are self employed if you don't have a license or something? Can I just say I'm a blogger and is that enough?

As far as the IRS is concerned, if you decide you are in business, then you are in business. For a sole proprietorship, you report it to the IRS only at the end of the tax year. The IRS has no requirement to have filed or registered the business locally. You do have to operate your business with an intent to make a profit. So as a blogger you would also need to accept advertising or sell written works for pay, for example. (We can get Maesz to talk more about that, if you want.)

In Oklahoma, there is no state-wide requirement for licensing or registration of most consulting and independent self-employed people. That leaves it up to the cities, and most small towns here don't require it.

If anyone is not sure about your own local rules, I would check in with a Small Business Development Center.

Alternatives to using a lawyer to review contracts.

Jeff pointed out that contract negotiators specialize only in contracts, and can provide quick service.

Someone said you should never form a sole proprietorship.

I've operated both sole proprietorships and an LLC. There are advantages to each. For a really small business, such as a one person part time operation, I generally recommend a sole proprietorship for the ease of starting and maintaining it. LLC's are also easy to start, but vary significantly from state to state.

For more on other business structures, check out When NOT to be a sole proprietorship.



What other follow up articles would you like to see?



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10 Questions That Are Illegal to Ask Prospective Employees

I know, most of us are really small biz owners, but when you get to the place you must hire employees, here are the 10 questions you must NEVER ask in an interview. It might also be a good idea to have these with you if you have applied for a job and go to the interview!

Fun promotion in the Brag Basket

Each Friday, I open the brag basket as a fun place to brag or promote yourself and your projects.

Last week, Michelle and I bragged on SXSW!

You can brag on a friend, your own project, yourself, others, anything! You don't need special permission or anything. Just leave a comment right here. There's no deadline, so you can brag anytime during the week, and I'll open a fresh Brag Basket each Friday.

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The old definition of interactive experience

While we talk about interactive web 2.0 type tools, there's an older definition of an interactive experience.

Michael McMillan told this story on the Harvey House listserv group, shared by Sandie Olson to Angie Koehn to me.

My wife and I were crusing the Mother Road [Route 66] up in Oklahoma and the Texas panhandle 2 weekends ago and happened to stumble into the "Sand Hills Curiosity Shop" in Erick, not knowing what we were getting into. That stop was quite a unique adventure -- Harley and Annabelle know how to put the "Kicks" in Route 66 way more than anything else we saw!
...
When thinking over the Harley and Annabelle, "Mediocre Music Makers" experience, the word "interactive" kept coming to mind. People go to museums with so-called "interactive" exhibits, which are nothing but canned computer programs that respond when you push a button. But Harley and Annabelle give an *old/traditional* meaning to the word, glad to entertain a single person who wanders in. I've never run into anything like it. It wasn't exactly the antique store we were expecting when we walked in, just so you'll be prepared, in case you're ever in Erick, Okla.
[emphasis added]

How are you making your business truly interactive?


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Best small business post ever

Jon Swanson, formerly the Entrepreneurial Chicken, is writing about small business again. He helped again this year with a training event for a small retail cooperative.

What I heard today made me more optimistic about the presentations in any time in the past 6 years of doing this.

Today, one of the groups said, “We want to be the information source for ___”. Another group said, “we could take laptops with __ software out to the customers and design right on the spot.” Another person said, “We won’t do television advertising, but we can take pictures of our customers working and put them on our website.” Another group spent the bulk of their time talking about the people side of the solution, the staffing changes that would need to be part of the solution for the company in the case study.

Here were mostly department managers from comparatively small business saying that what can make them successful is moving out of the product business into the information and relationship business. They aren’t selling hammers and nails, they are selling houses and homes and lives.

I did my best to encourage them, within the confines of my role. I wanted to say, “YES!!!” In taking on big, you can try to undercut their margins which will fail. You can try to duplicate their advertising budget, which will fail. You can try to out program them, which will fail. Or you can try to outlove them. (I know, it’s business, but at the core of relationship marketing must be relationship, which, at some level, has to be about love.) And the big boxes, whatever their industry: food, church, hardware, furniture, departments, are not fundamentally about outloving anyone.

For the rest of the story about art and crayons and Small is the New Big, visit Jon at Levite Chronicles.

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Checklists for starting your first business

"I just got my first paying side gig! Now what? Am I a business? What do I have to file? How does all this work?"

If you are active in the world of social and creative media, you may find yourself with an unexpected offer to accept advertising, do some consulting work, or speak for pay. If you don't have a business of your own, or are new to starting businesses, you're probably at a loss for some of the details of what you need to do. So let's work them out, keeping everything as simple as possible.

How do I 'become' a business?
You set up a structure. If the business is just you, or will be just you for a while before expanding, then a sole proprietorship is probably best. There's nothing you need to do in advance, nothing special to file until tax time, and you can now deduct many new expenses. You can always change structures later, in case you grow. In the USA, a sole proprietorship just means you add two new pages to your annual tax return. That would be a Schedule C to show your income and expenses, and a Schedule SE to figure your self-employment tax.

You also need to establish your start date. This can be the point when you actively started trying to get clients, or the point when you agreed to your first paid gig if it was a total surprise. From that point forward, any expense that qualifies is deductible.

Some small business situations call for a different business structure, and that's explained in When NOT to be a sole proprietorship.

What qualifies as deductible? Any reasonable and necessary expenses related to your business. So any money spent to connect with clients or potential clients, to do your work, or to get necessary equipment to run the business. For example, you can deduct:

• web hosting, web design, domain names, etc.
  
• the business percent of your cell phone, including data plan
• part or all of your home internet service, based on how much you use it for business
• business cards or any other business promo items
  
• computer equipment
• software used in the business
  
• paper, ink cartridges, and office supplies
  
• ipod, etc. (if it's related to your line of business, like podcasting)
• camera, etc. (once again, if it's reasonable)
• contract labor or subcontractors
  
• professional fees, like legal or accounting
  
• meals and entertainment with clients if you discuss business before, during or after
• conference registrations
  
• mileage driven for business
  
• tolls and parking fees for business trips
  
• other business travel expenses, including motel and airfare
  

Miles are deducted on a flat rate, currently 50.5 cents per mile. That flat rate includes fuel and vehicle repairs, so you don't need to track those separately. (No need to save gas receipts!) Each January 1, record your current odometer reading, so you can figure your total miles driven. Mileage as a whole is a complex topic. Commuting isn't covered, but driving to a meeting with a collaborator or to a client's site is. You might want to read more info on mileage expenses.

The whole point is that you probably have enough qualifying expenses to offset your income, so you won't owe any self employment tax.

Records
Make a business folder, accordion file, box, what have you, for receipts and records.
Receipts:

• original receipts are best
• note the business purpose right on the receipt
• on meals and entertainment, note who was with you
  
• if you are missing some receipts, go online, and print out replacements from the vendor or your credit card
• track expenses by category on a spreadsheet

For a bit more about expense tracking, read Simplified accounting for side businesses.

Calendar
Your calendar is an important business record. It helps support where you were and when and who with, and that's important to establishing what is deductible. So keep it complete, and be sure to print out a copy at the end of the month and put it with your other records.

• note client meetings and meals
• note all business travel, including miles driven
  

Banking As a sole proprietor, there is no requirement that you have a separate bank account. It's much better from a record-keeping perspective, but not required. The bank account will still use your social security number, but you can put your business name on it.

Licenses Now, don't tell anyone I told you this, but it's pretty unlikely that you need to file any business licenses if you are just consulting, speaking, writing, podcasting, etc. If you aren't selling any taxable services and aren't having walk-in business traffic, you might not even be required to file anything. Some jurisdictions may require a general business license or DBA (doing business as) filing. Ask around with others in your area, because this varies significantly from place to place.

Contracts
When you work on your own, you'll find yourself signing frequent contracts. Most times, you'll have to start with what the client provides, but don't sign blindly. Now is a good time to line up a legal adviser who can quickly read and respond to any contracts you receive. If you'll be providing contracts for your clients to sign, ask some other independent pros in your field for a copy of theirs. That will be the best starting point.

Insurance
Any business includes some liability. I recommend you read Insurance and the Home Based Business for an introduction.

What else?
That should get you started. It's inevitable that you'll have questions! Feel free to post them here, and Maesz (who contributed a bunch to this article) and I will put together some follow up articles on the next most important topics.

[Updated] Comments and follow ups are now online at Next questions from starting your first business.


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Stay connected from your small town

When you are in a small town, how do you build relationships and beat that feeling of isolation? I asked that question at SXSW, and here are some suggestions from other attendees.

Blog the local

If you blog or podcast, talk about local events. It's a way to hopefully connect with other local folks interested in technology or your niche.

Have lunch together, online

Several people mentioned having lunch with a distant friend via Skype. Grab a brown bag, and enjoy some time together.

Hold meetings with video

Use any one of the online meeting tools, like Operator 11, BlogTV or ooVoo to get people together. I'm thinking of trying to start this one within Oklahoma. Let's see, I know a techie guy in Elk City with a web cam, so there's one ...

Make your town the center of the universe

Why not make your town the location for a major gathering in your field? Plenty of exciting events happen in out of the way places. All it takes is work.

It goes without saying

Or at least it does at SXSW, that Twitter, Facebook, blogging, etc., are all terrific tools for keeping in touch.


What do you recommend? How do you beat isolation from your small town or rural area?


[Photo: Creative Economies roundtable - the closest thing to a rural discussion as can be found at SXSW.]

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Self Replicating Awesomeness - The Marketing of No Marketing

Self Replicating Awesomeness - The Marketing of No Marketing was an odd title for a panel, but it was an interesting discussion. Here are the thoughts of six amazing marketers talking about a different way of marketing.

"When we talk about marketing, we mean bad marketing, because good marketing you don't notice."
Parmet

"Either you understand that you don't exist without said customers, or you don't and it's in your DNA. No blog or bling or swag will change that."
Schultz

"The more I give away, the more I get."
Hunt

"They are not your community."
"I didn't really think of the people drinking the wine as 'the Stormhoek Community.' They were just cool people having fun with the wine."
MacLeod

Larger companies are starting to listen to customers who complain. Why aren't you also listening to the ones who love you? Talk and listen, especially as a small company, so that it is ingrained as you grow.
Schultz

What Doc Searls called the "Because Effect." We are giving it away because that's helping us make more somewhere else.
Heuer

Marketing is moving away from our message (i.e. Come Fly the Friendly Skies) to being about you. (i.e. You're cool. Here's some wine.)
MacLeod

Follow up and tell the stories of the people you interact with. The people who received Stormhoek Wine were asked to send back pics of their wine parties. Those pics were shared on Flickr.
Schultz

If your product is too expensive or tough to give away demos or samples, then think of creating social objects that are cool/relevant/free and give them away.
MacLeod

The iProspect CEO Frederick Markini said, "The brands with the best storytellers win."
Heuer

Nothing replaces listening.
Schultz

Read Heuer's own summary at The Golden Rules of Marketing.


Panel Participants:

• Chris Heuer Partner, The Conversation Group
  
• Tara Hunt Co-Founder, Citizen Agency
  
• Jeremiah Owyang Forrester
  
• Deborah Schultz Founder/Chief Catalyst, deborahschultz.com
  
• David Parmet Owner, Marketing Begins At Home LLC
  
• Hugh MacLeod Grand Pooh-Bah, gapingvoid.com

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Quit your Day Job

Some advice and ideas from people who quit their day job to create what they are passionate about.

Quitting a job is a scary decision.
"It takes some sort of crazy gene, I think."
Zadi Diaz

It requires intense commitment.
"How many hours are there in a week? That's what full time is to us."
Zadi Diaz

Finding your passion
"It was like I didn't know I could fly, and then I could fly."
Lindsay Campbell

Editing
"Cut everything that isn't good. Cut it right to the edge."
Bre Pettis

Finding Work
"If there is any way to get a job, it's by doing it first."
If you want to make/edit video, make the video that potential clients will want to see. Bre Pettis

From the Quit Your Day Job and Vlog Panel at SXSW Interactive Festival, 2008

Participants:

• Zadi Diaz Principal, Smashface Productions LLC
  
• Bre Pettis Video Podcaster, Make:
  
• Timothy Shey Founder, Next New Networks
  
• Lisa Donovan Zappin Productions
  
• Lindsay Campbell Producer/Host, Wallstrip CBS Interactive

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Size Does Matter…The New Economy of Networks and How to Use It for Your Business

(Dan Patino, the VSNBlogger and fellow Okie, sent us this guest post on networks. Thanks, Dan!)

Linkedin.com: 20 Million experienced professionals from around the world

MySpace.com: 100 Million Accounts

Ning.com: 100,000 social networks

It is amazing how exponentially sites like Linkedin.com, MySpace.com, Ning.com and many others have grown over the past 2 to 5 years. It is almost as if someone turned the switch on the social networking button, and they all appeared before our eyes.

Well the truth is that they didn’t, but almost every product launch and business grows using the same strategies that these social networking sites have utilized to grow the users and accounts into the millions, or as some would say to go ‘Viral’. There strategies are not new, but it is something that every business should look to learn and utilize to their advantage. You see the new economy is driven by economies of network. In the end your network is what will make or break your business.

What are Network Effects?

A network effect is the value a person applies to a good or service by the number of users. Think of AT&T Wireless in Network service. Anyone you call within the AT&T Wireless network is not counted towards your minutes of use. So, the more people you see that are on an AT&T Wireless service plan, the more you will want to be apart of that network. You see the value of any network, whether it be AT&T Wireless, Linkdin.com or Ning.com, it is all about the population of people connected into the network. Size does matter.

The Key to an Economy of Network…Positive Feedback

So, now that we understand what Network effects are and how they play a big part in our information age economy. Let’s get down to the key that makes this engine run – POSITIVE FEEDBACK. Again, positive feedback is not a new concept in any market. I would imagine that when the first wheel was created one guy made an oval wheel and the guy next door made a perfectly round wheel, the guy with the positive feedback –the perfectly round wheel guy- probably beat out for market share in the wheel department. He won out all due to positive feedback from all the wheel buyers. Fast-forward to today’s environment, never has positive feedback been more important. Without it you might as well not exist. Look at e-Bay for example. The entire site is built upon getting positive feedback from people that have procured from you. If you don’t get positive feedback you soon will find yourself with the inability to sell on their site.

The Positive Feedback = ‘Viral’ Growth

The reason people say a product or site or blog has gone viral is because when one of these goods/services “takes off” and begins to grow it’s network of users takes on the same growth pattern as the spread of viral diseases, like the flu. There are basically three stages of viral growth:

Launch Stage: Market is learning about the product and there is very little growth;

Take-Off: This where the market catches on to the positive feedback and the product/service grows exponentially;

Level-Off: The market is now taken over by product and service and room for growth either through your domination of the market (think Microsoft) or your competition (think mortgage companies) and the room in the market for growth are small.



So Where Do You Focus to Go Viral?

First and last, focus on making people’s life easier, in some way you need to assure that the users of your product or service go away thinking you have added value to their life which in turn will equal ‘positive feedback’.

Robert Taylor, a leader in Information Studies, laid out his thoughts about the (6) areas one should look at to add value for information systems in his book Value-Added Processes in Information Systems, but I believe at their core they are adaptable to almost any industry. His (6) value-add areas are:

1. Ease of use

2. Noise reduction

3. Quality

4. Adaptability

5. Time savings

6. Cost savings

Each one of these will help to generate ‘positive feedback’ from the market and get you on the path towards growth.

Where are you on the S-curve? Are you launching? Wherever you are remember…stay in there, keep trying and always look for ways to grow, learn, and serve your market to the best of your abilities.

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Trevor Holewinski is moving back to a small town

Trevor Holewinski is a small town guy, living in Austin, Texas, but headed back to a small town with his small business.

Moblog post from the floor of SXSW

Mobile post sent by BeckyMcCray using Utterz. Replies. mp3

Danielle Kozich talks about Lewisberry, PA

Some universal small business challenges, with a family run business, succession issues, and Wal Mart moving in nearby.

Moblog post from the floor of SXSW.

Mobile post sent by BeckyMcCray using Utterz. Replies. mp3

Brag Basket from Austin

Each Friday, I open the brag basket as a fun place to brag or promote yourself and your projects.

Last week, Mitten and Linda and I all had brags.

You can brag on a friend, your own project, yourself, others, anything! You don't need special permission or anything. Just leave a comment right here. There's no deadline, so you can brag anytime during the week, and I'll open a fresh Brag Basket each Friday.

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Get out of town

I'm sitting in a kitchen talking with Liz Strauss and Sheila Scarborough and thinking that this is the value of getting out of town.

We just discussed some blogging secrets. (Put your name on your blog!) We're moving on to business models.

So I'm just sayin', get out of town. Go to conferences. Get away with some business-minded friends. Come up with new ideas, take new inspiration, and dream up new opportunities.

And if you don't hear from me for a few days, it's because I'm taking my own advice at SXSW.

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Networking events in reach for small town small biz

Small town entrepreneurs around Charlotte, NC, Miami or Orlando: Our friend Shashi B let us know about some small business networking events organized by Network Solutions in your area.

Network Solutions is organizing a networking events for Small Business in Miami. FL (March 19th), Charlotte, NC (March 25th) & Orlando, FL ( April 9th) We will have Guy Kawasaki several small business experts there to meet, network and get advice.

It will be fun to meet people at these events. I am planning to travel and come there So people-if you live in these towns please register and come. Help me spread the word by blogging this. Registration is free.

Get more details and links to registration at Shashi's blog.

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The best way to get new ideas

Today, I sat down with nonprofit staff members to generate ideas for them to reach more people and sell specific merchandise. With three of us, we filled two pages with ideas, and we each shared more insights and knowledge than any of us alone had started with.

We could have had these ideas any time, but we had to take time out, sit down together, and brainstorm to find them. And this is the best way to generate new ideas for your business.

How long has it been since you took time out from your business to brainstorm ways to improve it?



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