(00:00:00) It's six minutes past eleven o'clock in. This is midday on Minnesota Public Radio marks it a click here in the st. Paul Studios and joining me. This morning is small business Expert Candace Campbell from the University of Minnesota's Humphrey Institute Candace Campbell is also chair of the national business incubation Association. Thanks so much for being here this morning, and hopefully you won't be snowed in to the Minnesota Public Radio (00:00:20) Studios. Thanks for having me (00:00:22) for the balance of the hour. We'll be talking about what it takes to start your own small business, and we hope to be hear from you if you've always wanted to work for yourself, not someone else now is your chance to ask about advantages and disadvantages of being your own boss. If you have a question about starting a business and you're listening in the Twin Cities area, you can join the conversation by calling two two seven six thousand that's 2276 thousand in the Twin Cities metropolitan area outside of the Twin Cities anywhere. You can hear the broadcast. You can call toll-free at 1-800-222-8477 you Outside of the metropolitan area with your question one eight hundred two four two two eight two eight. Well Candace Campbell you may or may not know the statistic and I probably should have asked you before we started the program but small businesses account for a huge percentage of the total business that's conducted in this country. Do you have any idea what percentage that is that where could you just talk about how important small businesses as a whole are to the economy of the (00:01:23) country? Well large part of the economy is driven by small businesses. It's really important to what is produced but there's a lot of employment and small companies a lot of work that's being done. Even by large corporations is being contracted out to smaller companies. What's interesting is what's been happening the last 20 years in terms of small business sort of self-employment micro Enterprise development between 1970 and 1988 it grew by 63% and by a definition that you would say someone who has their own company. About 12% of the total employment in the u.s. That is self-employed. (00:02:03) How do you account for that? Tremendous growth over the past 20 30 years. (00:02:08) Well, if you look at the economy, you can see that over the last 20 30 years large companies have been sloughing labor, but our output has continued to grow so obviously it's going somewhere and a large part of that is going to smaller companies during the last couple decades small companies have accounted for the majority of the net. Well, in fact all of the net employment growth in the country part of that is because they're sort of quote unquote leaner and meaner a lot of innovation has happened in small companies a lot of ability to get the product out the door and and do so in a cost-effective manner so many many companies have started up in the last two decades and that continues to be part of the (00:02:51) trend kind of preparing for this. I was kind of thinking about it myself and wondering whether technological advancements. I mean you can have a fax machine you can have a computer you can have These office pieces of office equipment right in your house that must have something to do with it as (00:03:06) well. No, absolutely. There's a lot of people that can work out of their homes. In fact, some Studies have been done about the push of telecommunications and there's one guy who talks a lot Phil Burgess out at the center for New West talks a lot about the fact that the planes are being populated by something that he called lone Eagles and these are people that can continue to do their business whether it's consulting or investment analysis or other kinds of brain power jobs from nice retirement home. Where a home on a lake with a view or whatever as long as they have a fax machine and a telephone line. (00:03:45) Okay, you're listening to midday on Minnesota Public Radio Candace Campbell is a guest and we will be talking for the balance of the our about what it takes to start your own business and a lot of people already on the phone lines. I'm going to give the number out again though. If you have a question, you can join the conversation. By calling 2276 thousand if you're listening in the metropolitan area. The number once again is 2276 thousand outside of the Twin Cities. You can call toll-free with your question anywhere. You can hear the broadcast. You can reach us by touching or punching into your phone. 1-844-202-2727 one eight hundred two, four two two eight two eight. Let's go now to Mike and Minneapolis. Good morning. You're on the air with Candace Campbell. Yes. Thanks for taking my call. I'm currently self-employed. I provide a service business out of my home. However, I'm interested in possibly making a change. I some creative part of me wants to look into starting something new that would also be a small cell phone business and I'm still not even sure if it would be a product or a service but I wanted to ask if you could suggest some resources to help people in the process of determining a good viable business idea. I've already read books in the library. There's so many of them about small businesses that look good for the for the 90s and Etc, but Are there other places you can go where people can help you or you can use certain resources to to kind of investigate and look up look up look up ideas and and come up with something. They might be Innovative and and might make some good money to at the same time. I'll hang up and listen. Thank you. (00:05:15) Thanks for the question. That's sort of what I'm here for a large part of my life has been about trying to get companies to resources to help them either grow their business or get started about five or six years ago. I did some research following about 500 startup companies that were in business incubators in the US and Canada. One of the lessons of that is the best source of business advice and assistance are other businesses. So you want to go where you can get some advice and help from your peers. We happen to be fortunate in the Twin Cities because there are is a vast number of organizations people programs events that are targeted to people who want to start their own companies. So here's a few ideas. Are you first of all the state of Minnesota puts out a book that is a wonderful resource. And if you don't have it, you have to get it. It's called a guide to starting a business in Minnesota. It is Soup To Nuts on on starting businesses and has a whole list of resources in the back with telephone numbers Etc. In order to get that book. You can call two nine six three 871 or if you're not in the Twin Cities, it's eight hundred six five seven three eight five eight. So that's that's one place. Obviously libraries are good place, but that's not going to help you sort of narrow and focus your business idea typically. I would recommend that people go to these programs on starting out small company the University of st. Thomas has one. The next one is April 12 that goes from 10 to noon. It's free. It's called creating a successful Venture. They have a number of programs in their Center for entrepreneurship and it's held Downtown Minneapolis. That's their phone number if you want it is 962 4,200. If you look at the Pioneer Press Monday paper, there's a business calendar and every week. There are a dozen or more kinds of events that you can go to. There's a entrepreneurs Club. There are a number of events that I recommend you start going talk to other people that are in your same situation. Ask them questions about market trends the key thing is maybe to focus on a business concept that makes sense for you that's based on your own experience and knowledge of a market and perhaps if you want to grow bigger find some (00:07:43) Partners, how do you go about different reading your defining what your business will be if you made the decision that yes, I want to work for myself if you're lucky enough or if you have saved the money or whatever. It might be that you have some Capital to get into it, but you don't know what you want to do. How do you go about defining that? (00:08:02) Well, I think that you need to certainly write a business plan and that's when everyone will tell you that will Help you really create the business, but if you don't have a business concept, where do you start? It's my recommendation to most people that you not do the dartboard approach people tend to be successful at things that they know. It's just like most writers should write about things in their own and life and you know, start thinking about what you know, and what you do. Well, what are your skills? What are the markets very often people convert a hobby into a business something that they've known about for years something that they did as a child start to do an inventory of your own skills and go after it that way another alternative is to explore franchising opportunities. That's where someone else has the business concept. What you need is the management capability and the capital in order to get into (00:08:56) business just so this is clear to everyone who is listening. Why don't you explain what franchising is and some examples of franchising? (00:09:05) Well the most popular Most common one that you might see is is the fast-food Enterprise those have been around for a long time. And the concept is that you're buying a business Enterprise on method of delivery advertising Etc. Typically, you you purchase the rights for the franchise and they vary significantly from industry to Industry. And then often you may pay royalties on sales back to the franchisor. The good news is that you get trained and the the other good news is that you have a range of sort of expected profits. If you do everything that's told so you're relying on the franchisors to give you that information about business management. There are lots of new opportunities for franchising one of the most interesting ones was I remember maybe 10 11 years ago. I got a call from the guy who started this company that is called. Mailboxes Etc and I had been doing this research on small business and he said Gee do you think I'm crazy and I said, well, no, obviously there's a need for this kind of thing where you can go and do faxing and Mail Packages and have a mailbox and whatever that has become one of the more successful franchises in the country and is a way to think about getting into business one of the dangers in franchising for some of the very very creative or entrepreneurs is that they think gee I'll start my own franchise and one of the lessons there is that you have to do the first or first and the second store second and not think about having 500 stores on day one. You have to do it. Right what in one place before you can expand Across the Nation (00:10:56) what kind of capital does it take? I mean one would think from the outside here that it might take a lot a lot of capital to all sudden own a McDonald's or something. (00:11:04) Yeah. I haven't looked into it lately, but I think that franchise in the Twin Cities are maybe three to five hundred thousand. (00:11:14) Okay, so you that's almost even more than a small business at the onset then. (00:11:19) Well, absolutely and and really most of the time there's a waiting list for the the most successful ones. And so the cost of Entry is (00:11:26) significant. Okay, let's go back to the phone lines Harley in Minneapolis. Thanks waiting. You're on the air with Candace Campbell. All right. Thank you for taking my call. I wonder if you could speak a little bit about I guess managing a business and if there's any resources and I guess it's a specifically what I'm looking at is that I do have a small business and as I've allows the the year has passed there's some things that I just don't know technically with respect to accounting skills. Now, I've done some things like use a software package to be able to Do you know do my checks and keep my books that way to become more efficient now, I'm looking at trying to put together some type of inventory control program. So I have some skills, but I guess my if you could talk about resources or places I can go to to kind of fill in the gaps Harley if you would we'll get to that in a second. But explain why you decided to start your own small business if that's your situation. I think it kind of runs in the family. My mother has a beauty shop and I don't know I think they're just something inherited me to be independent and I kind of like to do what I want to do. I don't like to be told what to do. I sometimes have problems with somebody who maybe because of their age In the company who might be set in their ways but might not be as bright as I am. So I have some problems with that. What's the biggest surprise you ran into when you when you did open your small business probably say the environment and the sense that sometimes whether it's other well how to explain it. But the environment that you do business in some kind of sometimes can cause problems for you because they may not accept that business initially and it can be very difficult as far as even going through the incorporation. If you have like one particular contract with a particular business and if that doesn't go well so I mean there can be, you know, a lot of emotional anguish to get Okay. Well you have a question about resources now for people who have their own businesses, but need some help with Management training. What about that Candice Campbell? Okay. (00:14:17) Well Harley, I know one of the things that just to back up on what you said. It's typical that people who had parents that were in business often start their own their own companies mean this is this whole thing about sort of examples we learn from mentors and we have people in our lives that sort of create an environment that gives us the the sort of risk profile to go out and start our own spur some people they want to work every day and want to know what all the rules are and they're not willing to take risks. So I think that's part of it. But the other thing that comes along with starting a company is what I think you've described which is you know, two things one is that you don't really know where to start unless you've done it before which is why other companies and their experience can be so helpful and these kinds of meetings are this business incubation notion that I've been working on for 10 years is to get companies to talk to each other and help each other through the learning curve because you know, once you've done it you've mastered That in a sense now you make a lot of mistakes along the way but the key is to reduce your risk, which is what you're trying to do. You're trying to figure out how it is that you can do your accounting do your inventory control and and build your business so that you can have a greater profit again. I encourage you to look every week in that business calendar. I've often seen programs on inventory control. There's basic accounting kinds of things, you know, you don't I think that people I remember I had my own consulting firm and I had several employees at one point. It was definitely a small business nice to sit down and you know, I get depressed for about five minutes and then I'd say well I got a problem solve it and I'd sit down and write a list of all the things I needed to do in my business and then I realized that each of those sort of took money which I didn't have but I was able to find resources that would substitute for the for that money. So there are these kinds of courses, but you should Remember that you don't have to do everything yourself and sometimes it's better to go out and spend you know, a hundred bucks a month on an accountant than it is to try to do everything yourself. It is important. However that you at least have a very high level of trust with the service providers that you hire and or have a basic knowledge of what you're doing so that you can really manage your company. Well (00:16:39) and you really seem to be saying that people who have been successful in business more often than not will be likely to help other people that are starting out and they'll take an interest in it which might be surprising to some (00:16:50) people absolutely and if you can if there's a cut, you know, if your company is similar to another one call up another company. I mean, they might see you as a competitor, but if you can find somebody who's been in the business for a while join a trade Association talk to them find out how it is that they run their business the small business administration has this Ace Program of retired corporate Executives. They also have the score program of retired Executives that can Come out and work with you, you know, it's mix and match sometimes because it's not the best contact unless they know about the nature of your business, but there's some great resources that you can get for free in your company. (00:17:30) Okay. We'll go back to the phone lines bill in Minneapolis. You're on the air with a question for Candice Campbell High with regard to writing a business plan. I want onions on competition in advance of starting a business particularly with respect to research and competition and a local area and I'll hang up and listen. (00:17:50) Absolutely. There are some key parts of a business plan a one obviously is your business concept. You need to know what it is that you're going to do and Define that how is it unique or what's special about that? The second part really is the market and there's two parts to that market one is knowing how big it is. That is what is the market demand? It's who's going to who's buying this stuff? And what are they paying? And how big is that market? So you want to know that it's actually out there unless of course you have some new Innovative product that hasn't been sold yet. But there are even ways to look at that the second part of the market analysis is your competition because you need to know if there's this huge Market out there who's serving it already and you're trying to get into that market is there room for you? And if not, then you have to be bigger and better than your competition. I want to tell you about something that was involved in getting started and it's another wonderful resource for the state of Minnesota. It's called Minnesota project Outreach and I was president of this nonprofit corporation for two years the university and the state legislature along with our what is now Minnesota technology Inc. Started this information service for small companies that allows you to access this information either online or by the telephone and they have 1500 databases. You can go and search your competition. You can find out if they're in the D and B, which is done a Bradstreet files how big they are how many customers they are. They have their other business data sources in Minnesota project Outreach also has information on markets that can help you do that market analysis information on Technologies. If you need a particular kind of part for your company, you don't know where to buy it. They can do a vendor search for small companies. As our startup companies the first three uses of this are free and I'll give you those phone numbers because it's a wonderful service in the Twin Cities. It's 8517750 and the rest of Minnesota. It's 800 3387005. So the first three uses of this are free, there are 75 Public Access sites around the state and you can access it also by phone and it's an online service that I recommend you use so you can get information about companies in let's say a specific neighborhood that are operating the same kind of business as you are now, there are Market analysts and if you do need to take a business plan to a bank or a set of investors, they may rely on your analysis, but they may also want you to go to a third party source that has some respect in this market area. (00:20:30) Okay, it's 27 minutes past eleven o'clock and you're listening to midday on Minnesota Public Radio marks a tech liqueur along with small business Expert Candace Campbell from the University of Minnesota's Humphrey Institute can is Campbell also is the chair of the national business incubation Association. If you have a question about starting your own business, you can join our conversation by calling to to 76 thousand in the Twin Cities. That's two two seven six thousand. If you're listening in the Twin Cities outside of the metropolitan area anywhere, you can hear the broadcast 1-800 to for 22828 is the number to call that toll-free number. Once again is one eight hundred two, four two two eight two eight. Let's go back to the phone lines Jim. Thanks for waiting. You're on the air the morning. Good morning. Yes Candace. I'm approaching my 30th anniversary with a large Twin Cities company and I was thinking as a golden retirement out like a business of my own but I'm fearful of it. And what doesn't come for me and he is when I walk around the malls and I see high rent being paid in nobody going in the door and Good morning for some help to the hand getting over that. Hmm (00:21:42) you're looking at a retail business. Well, I'll tell you one of the greatest motivators of people who start companies is this fear of failure. So don't lose it because sometimes if you're if you're too sure of yourself, you can make more mistakes than than if you have a little bit of fear and trepidation on the other hand. My answer to that is what I like to do with the business plan or market analysis is you know, a lot of these techniques are highly sophisticated. But today really what they do is try to narrow that window. So you have a sense of what your range of risk is. There are if you go to if you're looking at a retail operation and you go to a building manager or Mall manager, whatever they can give you all the statistics you need to know about the market profile the people who are in that place, but I also recommend that you go around and talk to the Companies that are there the other businesses that are operating and find out what their experience is. Not that people misrepresent the real estate, but just as a confirmation of of the numbers and the trends that you see going one of the things that is a potential resource for people is looking at companies that have been there awhile and often there are people let's say in your situation that are looking for a way out. They wanted to retire in their children have gone off and become other kinds of professions and they're interested in and selling their business. So you can also look at buying an existing business rather than starting from scratch. (00:23:27) I suppose we couldn't get through this program without bringing the statistic up how many new businesses fail What's the percentage? (00:23:34) Well it varies by industry but people typically say that in the first five years, maybe 50% fail some 80% and I have this thing that I talked about which is sort of easy in Easy out. The highest failure rates among businesses are restaurants and a lot of service companies that don't take a lot of money to get into business. The lowest failure rate is maybe 15% manufacturing, but you think about the Hoops that you have to go through in order to start up a manufacturing firm, you know that do some business plans and market analysis and get some loans from companies the more Capital intensive. Typically the lower the failure rate, but weeds out a lot of people in the process. (00:24:20) Okay, let's go back to the phone lines a lot of interest in this topic. Tony and Rosemont. You're on the air. Good morning. Good morning. I've got a question for you. I started a small business last year as a way to help me with my taxes. I also have a full-time job. But this is something I do at home. Pardon me. I'm fighting off a cold this week. I've got a question for you about how the Chamber of Commerce Works how that helps small businesses or any business for that better. And also what's a good way for small business advertised considering how expensive it is to reach your potential customers. (00:24:53) What is your (00:24:55) Market? Well, I do image scanning. I scan for me photos or line art into a tips and things that people can use in newsletters and advertisement computer users. I guess newspaper. Pope newsletter Publishers. Well helpful can Chambers of Commerce (00:25:14) p-well Chambers of Commerce can be very helpful again. They're an any business kind of organization. They're interested in business issues. Generally. It seems that in the Twin Cities. The chambers are certainly interested in They often have subsidiary organizations that are let's say it Down Town Council. So they have a focus on the downtown. I know the Minneapolis Chamber is very actively involved in trying to help the economic development of the area through some task forces and getting large and small companies to work together more on the policy end Chambers of Commerce are great for Market information. They can put you in the right direction. They have great information in the retail sector more than others. I think that for your business you would really want to look at doing some research on the potential users again go to these meetings mean if you can stomach it or get somebody to go represent you and put some business cards down and put some brochures down because one of the best ways to Market really is By Word of Mouth getting some satisfied customers that kind of thing. You know, Direct Mail usually has a 1% Spots and advertising is certainly image building and that can help with a phone number and that kind of thing but getting some good clients word of mouth is really the best way to go in terms of building your company unless you're looking at quitting your other job and doing this full time. Then you need to have a whole marketing strategy. (00:26:54) Okay, and is advertising one of the biggest problems of small business faces because they just simply do not have the capital that these Fortune 500 companies have or is that not the case? (00:27:06) No, the two biggest problems with the two reasons that businesses fail are under capitalization and lack of business management. So, you know, I would tell this story in December. I was in Berlin and I was asked to give a talk about starting up small and medium-sized businesses in eastern Central and Eastern Europe and I give this little story about well, I'm from the Twin Cities and I said there are three atoms of starting a business money market and management and in and I never in my life thought I would be talking to a group of adults and said that in a capitalist system money is both the means and the end of a business Enterprise. I mean, I never thought that I'd have to say that but it's certainly an Eastern Central Europe that's the case. So either having enough money or managing your money. Well are really Key issues for a business advertising per se is not really a major problem because if you have a good product and you deliver it well at a good price the word will get out about it now clearly if you're if you're selling hula hoops or something you need to do National Rollout campaign. So it really depends on them on the market but those two issues of getting enough money and keeping it in your business are (00:28:26) critical. Okay about 25 minutes now before noon you're listening to midday on Minnesota Public Radio and Candice Campbell is here this morning and we're talking about small businesses Harry and Minneapolis. You're on the air. Good morning. Good morning. I'm in the computer business for the past four years or so. I've been a computer consultant and instructor and I'm looking at some opportunities to move into product development and it's totally new to me. And so I'm trying to find some resources to help me analyze the business idea. Another question I have is how much Capital worth in a startup company, you know, how do I decide how to divvy up the pie between, you know myself who's the Brain Trust and the person with the pockets? And also when do you know you need to hire employees? And when is it okay to just to go with as a one or you know to person shop. Hmm. It's been the balance of the our probably working this out. (00:29:18) All right, what would an okay product development? And (00:29:22) what was the second question how how to balance the the equity in a startup company between the capital people and the people who can actually run it you wanted also know. When do you know when you're ready for (00:29:36) employees? That's right. Okay. Well, those are really excellent questions when you get into Product Development, I've worked with a lot of people who have who have ideas for starting companies and typically they're in some new area of technology or some unique product. You know, this is sort of the R&D phase. If you will you need to really understand that you have a product that works. You have to get through the testing of it and convince people that you have a product that's worth doing. So there's both the sort of technical part of your product being able to do what it says is going to do and then the market part which means that there is a need for this in the world. You can get some help on this. There are a number of organizations in the Minnesota area. There's an inventor's Congress in Redwood Falls every summer and that's a great thing. If you want to go out there and talk to other inventors. There's an organization of inventors in Minnesota and you can call them up. And talk to them again. You know, I really the sea then the inventors Resource Center is located in Redwood Falls. Their phone number is 5076372344. You might also want to think about who are the users for your product and clearly look at the market there and see what other what other companies there are maybe that this in these days that is the 90s and especially in terms of product development there tends to be this trend toward what's called strategic alliances that is larger companies are really good for marketing distribution and small companies are good for product development and maybe even manufacturing. So you might want to think about doing finding a partner both to finance your company and also to help do this marketing and distribution if you have a large Market application in terms of the equity You know, there's a lot of debate on this and there always will be many entrepreneurs think that they should own a hundred percent of the company and there's this rule of thumb that you can own a hundred percent of something that's worth nothing or you can own, you know, five or ten or twenty percent of something that's worth millions. This has happened over and over again that each person that you bring into the company comes in to add some value and you want to add that value not only in terms of capital but also in terms of experience in terms of credibility in terms of their ability to bring other money in and get get to get out to those (00:32:17) markets. That's when the real good negotiations begin when you sit on and roll the sleeves up (00:32:21) and try absolutely and it has to be a win-win obviously some people like the closely held companies where they own a hundred percent of everything, but you have to be willing to take those risks and and be able to find a capital on your own so it's certainly about It'll work terms of employees, you know, it's you know, you have to lot of times it's fits and starts these days. One of the fastest growing company companies in the country is in least employees that is both in terms of Executives and also in terms of clerical support or line employees so that you can try it for a while and and you'll know when when you're paying your employees and the company is growing you're able to meet your market demand and when you're not but you have to decide if you're going to be on a growth profile, you know, map it out in your plan and stick with it (00:33:15) beautiful explain just real briefly least employees. What are we talking (00:33:19) about? Well, we're talking about temporary services that kind of thing. Although very often you can get involved in a company that has it for six months or a year. You can you can buy a corporate execs and CFOs and other people that way it's one of the interesting things about Our nation we can not only sell product but we can and services but we can sell (00:33:40) labor Candace Campbell is a guest and you're listening to midday and Minnesota Public Radio just for the record here. We she gave out some some phone numbers for some organizations that might have some information to help you out. If you're trying to start a small business. I will give those phone numbers at the end of the program about 20 minutes from now, so you may want to get a pencil and paper out so you can write those down if you have an interest in contacting any of those organizations, let's go back to the phones. Now Jeff in Plymouth, you're on the air of the morning. Hi Fairy of the question. My wife has been interested somewhat in network marketing people have approached her and they claim this is the wave of the future Etc. You know the Amway type things in that Dimension price, but this is a different type. I'm just wondering what your comments are and as a prospect for a small business and also future prospects. network marketing (00:34:37) I don't II I'll tell you my personal feeling is I just read the most recent Forbes Magazine of the 400 richest people in the country and the founders of Amway or among them. But what that means is that they made a lot of money and some of the people in that network marketing made some and some made less and less and less so it you know, whether it's a sort of pyramid organization or or multi-level marketing or whatever you want to call it, you know, they work fairly well and there's a lot of supporters an awful lot of people involved personally. I it's not my style but it works for some other people and I don't really, you know, I don't want to say that there that's not the way to go. But you know you want to look at what is the value that you would get for being in that as opposed to doing it on your own? (00:35:27) What what should you look for there any dangers to particular? Relationships like that with the direct marketers and (00:35:36) you know, I think that people should approach getting involved in these kinds of organizations just like they would in starting their own business and really look at what is the capital and what is the time and energy involved in in doing this for themselves, you know, do your own business plan, even though they may give you this the formulas and the workbooks and the handbooks and guidebooks look at it for yourself because there are many people who buy the kits and get started and they lose their motivation. Now that's not a fault of of the organization. It's the fault of the person who got involved. So if you're going to make a commitment to it, you have to make it work and that doesn't matter whether you do, you know Amway or Mary Kay or if you do something on your (00:36:17) own these gaining or decreasing in popularity. It seems to me and I'm probably hear from somebody on this but it seems like they were maybe a little more popular in the late 70s early 80s. I don't know though. That's just antidotal. (00:36:29) Well, you know both a number of Companies have have done quite well, and we actually is developing a lot of new products and getting having some sort of different subsidiaries there. You know, you name it. There are a lot of ways to get into business and I think Americans have have invented and or used almost all of them. (00:36:50) You're listening to midday on Minnesota Public Radio. Candace Campbell is my guest and we're talking about what it takes to start your own small business 17 minutes before 12 noon. Let's go back to the phone soon Minneapolis. Good morning. Hi. I was wondering whether or not to incorporate and what are the advantages of doing that and how to decide I guess whether or not to do it or not. Let's start with the basics here to what is basically incorporating your business. How does that make it different from having just your own small (00:37:21) business? Well, the notion of an incorporation is that you create an entity which legally is like an individual and so It is a you know, kind of separates the liability and from you as an individual there are. Some advantages to incorporating. It depends on the size of your business at depends on the nature of your business, whether you have liability issues how you're going to treat it. A lot of companies are our Partnerships and there's you can do subchapter S corporations. You know, there are I would recommend that you either buy a book at this thing about starting a business in Minnesota, you know, you can go to a lawyer but lawyers are they're not business advisors their technicians. So if you say, you know incorporate me they'll do it, but they won't necessarily give you the ideas about why or how so I would go to a small businesses Assistance Center or go to some seminar about this and see how it applies to your (00:38:30) company. Actually just a basic fee for incorporating. I think maybe it's only a couple of hundred dollars. It's not as expensive as some people might think is that (00:38:37) correct? No, it's it's not, you know, you have to file the papers and and then you know, the thing is that you have to Port separately for the corporation on your income tax then as an individual so you can do it on your schedule a Schedule C or or do it as a or you'd have to separately do it as a corporation. It's really an individual thing and (00:39:04) Just part of a business plan it make the decision. I suppose most people do incorporate though to remove liability from themselves and their belongings. That's probably the big reason, (00:39:13) right? Yeah, and you know, if you have employees that helps to be a corporation because because of a number of those issues to deal with employment and accounting and that kind of thing. There are a number of sort of sole proprietorships. It really depends on the scale of your company. (00:39:32) Okay. Let's go back to the phones and take another call Vaughn hand in st. Paul. You're on the air with Candace Campbell. Oh, yes. Hello Candace. Hello. Oh, yes, it's Vaughn McKinney calling out of st. Paul. I'm in the preliminary stages of beginning my own company here in the Twin Cities. And so I'm pretty excited about that in terms of the name. The name I want to use is Morningstar Fine Arts Incorporated. Basically, it would be where I would be marketing my telemarketing my artwork as well as my musical talents and I know that in terms of with my economics and capital. I'm very limited. So I'm looking at the prospect of of renting office space in the in Minneapolis in terms of like Twin City executive suites that type of thing what I'm concerned with at this level is probably getting the financial backing are there any organizations that might look at working with an individual in terms of getting that company started but because I know I would in terms of to getting a solid portfolio. First of all, I know I would need good easel paints stuff like that is this where a small business incubation Center would be a good fit? (00:40:50) Yeah. Absolutely. In fact, there's a couple of things I want to tell you about one. There are a number of business incubators in the Twin Cities and what that really is is a building that Offers low cost base on flexible terms. You don't have to sign a one-year lease. Sometimes you can get involved there for a couple months get a little office get a business address. They have typically shared services like phone-answering copy machines that kind of thing and then often they have business advice or assistance right there, or they can help you out getting your business up and running and then sometimes they have revolving loan funds or access to Capital and then the fifth ingredient which is what I call kind of synergy. I mean you're there with a lot of small companies so you sit down over coffee or you see him in the hallway and all the sudden you're saying gee, you know, what did you do when you got that letter from the IRS or who did you call or who do you use and it's that sort of network that really helps and there are a number of those in the Twin Cities A lot of them have waiting lists at the moment and but they're good place to go and consider starting up your business because you can do it kind of on a month-to-month basis. You don't have to have thousands and thousands of dollars in order to get started. It but what I want to tell you about and I don't know if you know about this already or tell the other listeners to I just learned about a program that organization and st. Paul is running for people who want to start their own business and it's out of the neighborhood development center of an organization called wind which is Western Initiative for neighborhood development and they have this micro-enterprise training and Loan program and they're doing this in six neighborhoods in the Twin Cities 5 and st. Paul and one in Minneapolis. And st. Paul. It's Frogtown Selby auroras and Anthony West 7th in the west side and in Minneapolis. It's on the North side. Anyone who currently has 34 thousand dollars a year in income or less can qualify to go. They have this intensive training for entrepreneurs for months every week. They have people who every other week you meet with the class and on the other weeks you meet with the instructor and Build your business plan. They help you do the marketing market analysis. And at the end they have a micro-enterprise loan pool that may help you get the capital. You need to start up your company, you know, a lot of times it's on it's on a phase basis or what we call in tranches where you know, you might get $500 and then you according to your plan. You might need another thousand at this point to go to a trade show or or do you brochure or something like that? So I recommend that you look into that phone number there is to 908 145. (00:43:38) Okay, let's take another call Roger in Stillwater. Good morning. You're on the air with Candace Campbell? Hello? Yes. I'm an electrical engineer and I have a friend who's a mechanical engineer and we're looking to going going into business for ourselves creating industrial Machinery custom machinery for manufacturing. And my question is what I'd like to be able to do is to keep some Independence between he and I but yet work for the same company name and is there a way to create a business where you're both working under the same company name and you both have a say a sole proprietorship or Corporation or something like that? hmm hmm would be just something that have to work out legally, probably right? (00:44:33) Yeah. I don't know what the I mean. I'm sure you could do some kind of organizational structure where you each had a sole proprietorship and then but you know, I think the deal is if even if you had a subchapter S you'd have you know, you'd have to file partnership partnership returns, you know, you can do a lot of stuff as a DBA or (00:44:58) what is a DBA by The (00:44:59) Wailing businesses. Okay, you know, it's just sort of AKA also known as or you know, whatever. I really don't have the expertise to give you the best advice on that. I'm sorry. I'm sure that you know, there's certainly a way you can work it out the the if it's separation of Financial Risk that you're interested in. You can certainly trademark the name it seems and then both use the trademark if Both owned it and then have separate companies. Now that's clearly a way that you could go about it. So, you know register trademark the the name and both use it and then you'd both be licensed to use it and then you'd figure out between the two of you what the use of that is that's one way to do (00:45:45) it eight minutes before 12 noon. You're listening to midday on Minnesota Public Radio and Candice Campbell is here. She's from the University of Minnesota's Humphrey Institute, and we're talking about what it takes to start your own business J and Browns Valley, you're on the air with a question. Yes. We are a manufacturer of several products and we've been Distributing our products through mail order. However, we're looking at a new product that we would distribute through like chain stores Home Centers just Distributors hardliners manufacture reps. I have three questions one is when you're looking at manufacturer reps. What should you look for to the product is called oil eater and is in the automotive accessory business and what type of prices percentages what type of resources would be best for me to use to determine those type of (00:46:31) answers Okay, I would say that if you're looking at manufacturers reps, you know clear you want to look at Allied products that they're selling if they already have a knowledge of that market that's worth an awful lot. So you want to look into manufacturers reps who service that auto accessory Marketplace and you know, obviously you want to choose among a number of them and make sure you have the best deal and then, you know, see what the relationship is. I've known a lot of companies that have gotten involved with with people and they tend to to change either have a good experience or they get involved for six months or a year mean have clear expectations about what they're able to deliver and get it all written out and you know, I I go by this kind of thing about you know, you get what you pay for so price is not always the best determining Factor. I would recommend also that terms of your business, you know, try this project Outreach number see if you can find some more about the audio accessory business that you can get key people in that industry or industry Association get the lists look into specific companies. If it's if you need to do a deal with them and find out who is their director of marketing, you know, I would also use that as a check about your manufacturing reps, you know interview them just like you would an employee or any other business (00:48:03) associate. Okay time's running out. So we want to get as many callers in as we can men suck you're on the air with a question for Candice Campbell. Yes. Hi. Carl I'm a college student right now and I'll be graduating in June and I'm thinking about going into business sometime but I don't know. What is the best direction to take you need to go to business school or get some kind of business experience. I'd like to do like trade with Korea someday in the long run. (00:48:30) Hmm. Good well. I'll tell you there's nothing that speaks as well as experience. And on the other hand the time to get your education is is your entire life. So if you want to go to business school, that's great, but that's not sufficient to start a business. You really have to have the experience whether you go to business school or not. So, you know, I highly recommend that you look into doing some business school training if you want. But again, if you have an opportunity to get into the into the businesses that will help there. There's a again for you, you know, I had an opportunity to work with people before I started my own company and I think that was very very helpful, especially when you're looking at International Trade. I mean, there's a lot of nuances there. There's a Twin Cities import-export group that meets I think once a month you might go and get involved with them see if there's a company that you could Work with there's a lot of part-time MBA courses in the Twin Cities that you could look into. So I think you're on the right track. We have a global economy and we certainly have great opportunities for import export (00:49:48) businesses as we sort of close off this hour and this topic how to start your own business can is camel could you just please outline briefly some of the biggest mistakes people make who want to get into business for themselves? Hmm and they end up at the 50% that fail. (00:50:05) Yeah. Well, you know the thing about it is that you know, I really am a believer that experiences our best teacher and you'll look at the history of entrepreneurs and you'll find out that the first two businesses failed in the third one was a was a winner. So failure is not always a completely negative event. You learned a lot in the process and that's a good thing. The biggest mistakes. I think that people make is is this notion of thinking that they have enough money and they don't have enough money or not really paying attention to the to the books and the shop and trying to be bigger than they think they are. (00:50:48) Okay. Well Candace Campbell. Thanks so much for being here. Hopefully a lot of people are going to spend the rest of their afternoon working out their own business plan Candace Campbell has been the guest to the Saturday. Midday. She is the fellow at the University of Minnesota's Humphrey Institute, and she's also the chair of the national business incubation Center. Thanks a lot for coming in. Thank you some of those numbers real quickly that we're giving out earlier guide to starting a business in Minnesota can be yours by calling 2963871 outside of the Twin Cities one 865 73858 Minnesota project Outreach is 8517750. That's one eight hundred three hundred five for Minnesota project Outreach the inventors Resource Center. You can call them at 5:07 637234. Our and the neighborhood Development Center from the Western Initiative for neighborhood development is 2908145. The technical directors for this broadcast have been Clifford Bentley and Bryant honest and kitty Isley produced the program. I marks a deck like thanks a lot for tuning in. Midday on Saturday is supported by the oriental rug company specializing in sales and service of handmade oriental rugs and located in Minneapolis at 50th and Bryant.