Secrets to Success for Starting a Services Company

1. Secrets to Success for Starting a Services Company By Katherine Hills Owner & Managing Director Krush Creative Group LLC 19 April 2011

2. Backstory • Grew up in Lakewood, CA • Bio Sci major at UC Irvine – B.S. ‘83 • Planned to become a doctor • Ended up traveling the world instead • Kept one eye on the next move • Always accepted new opportunities

3. Corporate Life • Great corporate fit • Moved up quickly • Trusted by upper level management • Offered numerous special projects and assignments • Often ended up as CEO confidant and advisor • Paid attention

4. Key Decisions • No medical school • Managed profit/loss center • International Applications Engineer • European Business Manager • International Marketing Director • Jumped to agency side of marketing • Managing Director • Why not do this for myself?

5. Krush Creative Group LLC • Full-service marketing, branding, advertising, design, PR and event production • Launched February 1, 2005 • 100% service based business • Bill time to nearest quarter hour • Invoice monthly

6. The Decision • Why do it for someone else? • Knowledge • Skills • Money • Market • Clients • Opportunity

7. Is Entrepreneurship Right for You? • Willingness to risk – low or high? • Ability to fund your venture • What do you have to offer? • Is there a demand (short term or ongoing)? • How do you feel about paperwork and management? • Taxes required

8. Important Things to Ponder • Going it solo • Taking on a partner • Percent ownership • Decision making responsibility • Management responsibility • Financial responsibility • Checks and balances • What if it doesn’t work out?

9. Then Ponder Some More • “You’ll never work harder than when you work for yourself.” • “Cash is king.” • “Hope is not a strategy.” • “Having a business partner is like being married . . . without the [fun stuff].” • “In this world there are prospectors and there are score keepers. Which one are you?” • Your have to be okay with: • Sacrifice • The word “no” • Employees acting like employees, not owners • Feeling like you’re in it alone • Asking for help

10. Ready? • When you can • live with the risk • part with your money • be the boss • visualize your success • absolutely, positively say that you’d rather work for yourself than someone else • not imagine another way

11. To Partner or Not to Partner • Going it solo • Taking on a partner • Percent ownership • Decision making responsibility • Management responsibility • Financial responsibility • Checks and balances • What if it doesn’t work out?

12. It’s a Go • Market analysis • Competitive analysis • Budget analysis • Business Plan • Articles of Organization • Name Registration (check URL!) • State Registration • EIN Number • Employment or Work-for-Hire Agreement • Include Non-Compete • Confidentiality Agreement • Register URL

13. Surround Yourself • Team of trusted advisors • Lawyer • CPA • Banker • Insurance Agent – General, E&O, Worker’s Comp, etc. • Insurance Agent – Health • Friends and family • Therapist

14. Basics • Summary of services • Budget • Pricing • Sales plan • Execution • Support • Banking (checking, credit card, LOC) • Bookkeeping (balance, invoicing, A/R, A/P) • Insurance (general liability, worker’s comp)

15. Making It Real • Office space (brick and mortar or virtual) • Notes on Leasing • Mailing Address • Infrastructure • Desks, phones, computers, Internet, servers, tools of the trade, software, copier, FAX • Hiring • Marketing

16. Marketing – The Minimum • Branding • Perception • Tone • Culture • Logo • Palette • Fonts • Business Card(s) • Website • Phone/Reception • Printed Collateral (brochure, one sheet, portfolio) (maybe) • Social Media (maybe) • PPT Template (maybe)

17. Selling • Online Presence - SEO • Networking • Business Development/Sales Team • How will you reach your target audience? • Certifications • WBE • SBA • Minority • Generate a professional proposal/quote

18. Fulfilling Orders • Internal communications • Who does what? • Meet your commitment/deliver on time • Quality standards • Follow-up

19. Invoicing & Cash Flow • Cash flow is key – and it’s tricky • Set-up a system, e.g., Quickbooks • Invoicing cycle – there are options • Commencement payments • Milestone payments • Net 30 versus due on delivery • Methods of payments • Late fees/penalties • Collections • Court

20. W2 Employees vs 1099’s • BE CAREFUL! Specific rules apply • With W2 employees • State and Federal employment taxes • Worker’s Compensation • Paid holidays and sick days • Health insurance • Infrastructure (equipment, software, etc.) • You get 100% of their time (theoretically) • Protected by employment laws – hiring, firing, etc.

21. W2 Employees vs 1099’s • With 1099 contractors • W9 required • Must provide own equipment and tools • Set own working hours (you can set deadlines) • Responsible for own work environment • Able to work for other people (in fact, they should) • Self insured • Responsible for own taxes • You must report 1099’s

22. Why Do People Fail? • Lack of planning • Failure to commit • Poor management • Under financed • Underestimate importance of marketing • Not perceived as a player • Inability to network • Ineffective sales channel/technique • Inability to fulfill orders • Inability to manage cash flow

23. How Krush Survived the Economy • At first, power of positive thinking • Cut costs • Did not renew lease agreement • Sold unused assets • Restructured • Converted employees to contractors • Virtual model • Stopped spending • Adjusted invoicing to maximize cash flow • Re-evaluated services and market (who’s spending?) • Network, network, network • Identify, bid on, fight for and win every opportunity

24. Parting – and Hard-Earned – Words of Wisdom on Entrepreneurship • It’s hard • You really, really have to be okay with risk • Set your financial investment limit up front – and stick to it • Spend as little as possible • Conserve cash • Pay as late as possible • Be willing to do whatever it takes • Always look and act like a professional • Be your own best PR agent – talk yourself up, be confident • Continuously evaluate EVERYTHING • When you wake up and loathe/hate/resent/regret what you do, it’s probably time to move on to your next great adventure (after all, you’re a prospector, not a score keeper)