Invest In My Idea

The actual process of setting up your business will involve dealing with plenty of details—details that must be understood and organized before you open the doors; details that must be handled and forgotten so that you can go onto other, more important matters; details that can sink or swim your business.

Aside from creating a winning image (as discussed in Chapter 6), you also need to set up efficient office operations, computer systems, and phone and mail systems. Nailing these details down now will enable you to concentrate on growing your business—a far better use of your time than getting lost in myriad minutiae down the road.

Automating Your Office

Whatever your business, you must computerize it. Whether it involves tracking sales, writing letters, or inventory control, starting out with a good computer system is vital. Although it may seem less expensive to do certain office tasks by hand rather than investing in a good computer system or related software, that is fuzzy logic for two reasons. First, you eventually will automate whatever tasks you begin by hand. Changing over later will take longer and cost more. Second, computer hardware and software will allow you to be more effective and, thus, more productive from the get go.

You have likely learned a thing or two about purchasing computers since you bought your first one. You are more knowledgeable about your computer needs, and you probably know what areas you would like to improve. It may be that your monitor is too small and you want a larger one, or that you want a newer operating system. Probably what you want is speed and more speed.

Checklist of Important Business Computer Features

Features that you should look for include:

•   The processor speed. These days, processor speeds are measured in gigahertz (GHz). The higher the processor number, the faster your computer will run. Many computers today run in excess of 1.5 GHz, but the time of computers running at 2 GHz is not far off.
•   RAM capacity. At a minimum, you need 128 megabytes (MB) of RAM.
•   Disk drives. Again, the more, the better. A CDROM drive is essential, and a DVD drive will probably be included in most new models.
•   Internet speed. This may be the most important part of your purchase. If you plan on using the Web a lot, you should consider getting a cable or DSL line, and thus an Ethernet port is a necessary component of your computer.
•   Software. The software package is important because it creates what you see on the screen. You will want the latest version of Windows.
•   Monitor size. Your monitor is one of the most important parts of your computer. A 17inch screen seems about right for most people.

■ Leasing Equipment

You can lease not just computers but much of your business equipment. Leasing offers a number of distinct business advantages:

• • Leases are easier to finance than purchases. Banks will usually want to see two or three years of financial records—records unavailable to a new company—before they will make a loan for equipment. However, leasing companies are not so picky.
• • Leasing improves your cash flow. It frees up cash. Equipment leases cost less monthly and rarely require down payments (though you may have to pay a security deposit). Conversely, equipment purchase loans usually require down payments of up to 25 percent.
• • Leasing allows you to get more. Although you might not be able to afford to buy those pricey new tool and dye machines, you might be able to lease them. Even better: Topnotch equipment can help your people be more productive, create better products, and boost morale.
• • Leasing makes it easier to keep up to date. If your business relies on new technology, leasing makes a lot of sense. Instead of buying new equipment every two or three years, a series of short term leases will cost you less and let you upgrade more often.
• • Leasing helps the bottom line. Some leased assets can be eliminated from your balance sheet, which can improve financial indicators such as your business’s debt to equity ratio or earnings to fixed assets ratio. Check with your accountant.

• Don’t fall in love with the technology. If you do, you are liable to make a choice for the wrong reasons. Instead, first decide what your business needs are and then look for the computers and other information technology solutions that can fill those needs.
•   Once the system is up and running, your people will need to be trained to use it. According to Inc., businesses in the United States spend more than $6 billion on information technology training every year. Seventy six percent of that training comes from using a traditional instructor, while 17 percent of businesses use videos, satellite TV, or computers. In fact, high tech training is growing at the rate of 31 percent a year. Interactive training software can also be rented at a cost of between $5,000 and $10,000 for two years. A Web search of “information technology training” will reveal many options.
•  You will also need to create a local area network (LAN). By networking all of your computers, you increase productivity and communication within your business. For example, one printer can be shared by five workstations. Everyone can share the same Internet connection. LANs are important.
•   You will also need a backup system in case of a calamity, such as a fire or theft. Losing your files could cost you your business.

Software

Many of the routine tasks that entrepreneurs often hate—budgeting, bookkeeping, and billing—can be handled quickly and painlessly with the right software. Software packages exist that can make even the most mundane office tasks tolerable for such jobs as:

•   Creating spreadsheets
• Doing payroll
•   Invoicing
•   Tracking customers
•   Tracking sales
•   Creating mailers
•   Creating form letters
•   Calculating taxes

These need not be demanding, time consuming chores. By automating all of these tasks and scheduling them for a certain time each week or month, you free yourself up to think bigger. Go to your local office supply store and speak with a salesperson about the various suites of software packages available for business owners.

If your business is bigger and requires more than an off the shelf solution, the secret is in defining your needs and then educating yourself about your options. Sophisticated (and expensive) IT software is available to solve almost any business problem—inventory control, increasing response rates, securing computer systems, data management, etc. This is what IBM and Microsoft specialize in, as do a host of others. If your needs are along this avenue, contact the company, call your local sales rep, and tell him or her what you need. By being clear up front about what you are looking for, you can avoid buying expensive “solutions” to problems you don’t have.

Another option is to hire a software programmer yourself. They can create custom software to suit your exact needs. The downside is that it is usually an expensive proposition and the software often has a few bugs in it that you won’t find in commercial software.

Phones and Faxes

It is impossible to generalize about what sort of phone system you may need. A sole proprietor and a corporation will have vastly different needs. As you consider a phone system, ask yourself these questions:

•   How much time do I anticipate spending on the phone every day?
• How many people will be using the phone system?
•   Will the system need to take messages and forward phone calls?
•   Will I need call waiting? Keep in mind many people find it rude.
•   Do I want to be able to screen my calls?

If you choose to handle phone duties yourself, you can have a voice mail system or an answering machine pick up you messages when you are not available. The advantage an answering machine has over voice mail is that you can screen your calls when necessary. The advantage of voice mail is that it allows you to have different “mailboxes” if needed, and people are used to using it. Voice mail is offered through your local phone company as well as through private voice mail service bureaus. It is also possible today to set up voice mail on your computer, using specialized software.

If yours is going to be a larger, phone intensive business, you should definitely consider buying a voice mail system, rather than renting one though your telephone carrier. Personalized voice mail systems can set appointments, take orders, check on deliveries, forward phone calls, and record and retrieve private messages in many mailboxes. Not surprisingly, prices for voice mail systems can run upward of $25,000, although some start as little as $1,000. It is important to make sure that the system you get will neither be obsolete nor inadequate in a year or two.

One way to get more business is to get a toll free phone number for your business. Toll free numbers—800, 888, and 877—are not just for the big boys today; almost every sort of business can afford and find uses for a toll free number. And the easier you make it for people to get a hold of your business, the more business you can generate. There are many options and carriers around today, so prices are competitive. Carriers can be found in your Yellow Pages.

Finally, a fax machine is essential, whatever your business. Fax machines today are not expensive and usually combine a number of very useful functions such as copying and scanning. While Internet faxing services are available, they are not always reliable.

Mail

If you will be running a business that will entail a lot of mail, you should get a postage meter. Available only though rental contracts, postal meters are U.S. Postal Service approved and will mark your envelopes or packages with proper postage. The USPS estimates using a scale along with a postage meter can save businesses up to 20 percent a year in postage costs. And best of all, you can reload your meter over the phone or via the Internet from sites like Stamps.com.