A Sure Fire Microbusiness Guide

By Dave Aizpitarte

No one tells you what you really need to start a business.

Sure, passion is good, and so is determination. But you need tools, information on how to incorporate, what accounting system to use, and what other resources you need to really get started. Twenty years ago, David Aizptarte gave a talk on starting a microbusiness, and several people told him he should write a book about that. This is that book.

More than a Small Business How To Guide

This book is more than just advice. It includes templates and tools you can start to use right now to get yourself, your family, and those around you ready to launch your business. Because even a small business is no small feat. You'll need agility, patience, and tools that make everyday tasks more efficient.

The Tools You Need

While David offers great business advice for anyone who wants to start a small business, perhaps the most valuable part of this book is the appendices: filled with templates from your business plan to petty cash forms, from contracts to safety manuals. It's like a business in a box, and you can download and customize every template to meet your needs.

 

You'll learn:

• How to write a business plan.
• Business pre-planning.
• How to set up your business.
• Marketing your business.
• How to manage growth.
• Hiring and managing employees.
• And how to manage everyday operations.

From an author with over 30 years of business experience, you'll find these tips and templates an invaluable resource for you no matter where you are in your microbusiness journey.

• Language: English
• Publisher: Dave Aizpitarte
• Release date: Aug 26, 2021
• ISBN: 9781737009009

Book preview

A Sure-Fire Microbusiness Guide

A Sure-Fire Microbusiness Guide

From Startup to Maintaining a Truly Small Business

David Aizpitarte

DMJD LLC

Copyright © 2021 by David Aizpitarte and DMJD LLC

All rights reserved.

This e-book is licensed for your personal enjoyment only. It may not be re-sold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each recipient. If you’re reading this book and did not purchase it, or it was not purchased for your use only, then please return to your favorite e-book retailer and purchase your own copy. Thank you for respecting the hard work of the author.

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First Digital Release, August, 2021

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DISCLAIMER:

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The publisher and the author make no guarantees concerning the level of success you may experience by following the advice and strategies contained in this book, and you accept the risk that results will differ for each individual. The testimonials and examples provided in this book show exceptional results, which may not apply to the average reader, and are not intended to represent or guarantee that you will achieve the same or similar results.

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In addition, although the publisher and the author have made every effort to ensure that the information in this book was correct at press time and while this publication is designed to provide accurate information in regard to the subject matter covered, the publisher and the author assume no responsibility for errors, inaccuracies, omissions, or any other inconsistencies herein and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause.

This book is dedicated to my wife Joanna and my two daughters, Daniela and Miren, and their significant others. If I have one bit of wisdom to impart in this life, it's family is where it's at.

Contents

Introduction

1. Lessons Learned Along the Way

(some of them hard)

2. Business Pre-Planning and You, Inc.

(setting the stage)

3. Planning Your Microbusiness

(rolling up your sleeves)

4. Setting Up Your Business

(getting ready for the voyage)

5. Marketing Your Business

(get out there)

6. Keeping Track of the Finances

(so they don’t run away)

7. Getting and Managing Projects

(staying on top)

8. Hiring Employees and Subcontractors

(starting the family)

9. Managing Employees

(being a parent)

10. Strategies Once You’ve Made It

(some more thoughts)

FREE RESOURCES

Appendix A: Business Plan

Appendix B: Articles of Incorporation

Appendix C: Fact Sheet

Appendix D: Chart of Accounts

Appendix E: Petty Cash Form

Appendix F: Scope of Work

Appendix G: Private Job Costing Forms

Appendix H: Government Job Costing Forms

Appendix I: Subcontractor Agreement

Appendix J: Exclusive Teaming Agreement

Appendix K: Timesheets

Appendix L: Expense Report Form

Appendix M: Construction Daily Report

Appendix N: Job Tracking Report

Appendix O: Quality Assurance Policy

Appendix P: Employment Agreement

Appendix Q: Commission Agreement

Appendix R: Employee Manual

Appendix S: Safety Manual

Appendix T: Annual EEO Policy Submission

About the Author

Introduction

When I started my environmental consulting business 30 years ago, I went to several seminars on how to start a small business and was disappointed in the lack of any good, detailed advice. I was told that to start a business I just needed determination and passion, but what I really needed was the basic tools like how to incorporate, what accounting system to use and the myriad of supporting resources every business owner needs. Fortunately, over a long and painful period of time I managed to collect and refine these resources. Now, I can share them with you.

Twenty years ago I gave a speech on starting and maintaining a microbusiness at the Idaho Governor's Business Opportunity Conference, and I was approached by several people who said I should write a book on the topic. I'm at that ownership stage of microbusiness heaven where I have people under me who handle the day to day operations of the business, so I now have some free time to write this book.

I want to warn you though, starting your business won't be easy, but I am confident your chances of success will increase if you follow my recommendations. This book takes you step-by-step through setting up your microbusiness and provides sample forms and manuals to help you create your own business plan and forms. All of these forms are available for download on my website to use as templates. Modify them to fit your specific application, and then be sure to have a professional review them.

I've included many cautionary tales of situations I've personally witnessed during my years of advising potential entrepreneurs. I learned early on that just because someone might be a great engineer or technical expert, it doesn't mean they have business sense, which can lead to problems. My hope is these stories will help you learn some things to avoid if you want to have a successful microbusiness.

So why am I using the term microbusiness instead of small business? I have observed a shifting of the definition of small business away from truly small businesses to large small businesses. The Small Business Administration (SBA) size standard for small business has grown so large as to become meaningless for those of us that are true small businesses.

For example, a business in my field, environmental consulting services is classified under the North American Industry Classification System (NAICS) code 541620 and can have up to $15 million in annual receipts and still be considered a small business. A company of this size can have several hundred employees and multiple offices. My gross sales have never been more than 10 percent of their number, and I typically employ a staff of 12 to 20 people. When I started my business in 1994, the SBA total receipts defining a small environmental consulting business were about one third of what they are now. Anybody starting a business thinking they will get any advantage by being designated a small business will have to immediately compete with what I call a mega small businesses.

My definition of a microbusiness is a business earning less than 10 percent of the SBA's definition of a small business. So if a small business is defined as a business with less than 15 million dollars in annual sales, then a microbusiness would be a business with less than 1.5 million. Microbusinesses are typically closely held Ma and Pa operations with approximately a dozen employees and less than 2 million in annual receipts. My feeling after 30 years of experience running a microbusiness is it is an entirely different animal than small business, and therefore demands a different business philosophy, personnel and financial management approaches.

If you are starting a business that meets my definition of a microbusiness, then this book is for you!

One

Lessons Learned Along the Way

(some of them hard)

Every successful microbusiness owner starts thinking as a businessperson long before they actually start a business. I wanted to start this book by sharing some of the many life lessons I have learned throughout my long and meandering career. These experiences taught me that I wanted to start my own business. The lessons learned since have helped me be successful in that endeavor. A continuing mantra throughout my life has always been move forward, look for opportunities to advance and make decisions that change my life for the better. All these lessons, including the painful ones, have helped my find my niche as a microbusiness owner.

Always move forward, no matter how painful it is.

I grew up in the '50s and '60s in a little town in Washington where, if you can picture the television show Leave It to Beaver, I was the Beaver. We had a traditional family where the mom stayed home and the dad worked, something you don't see much of anymore. I went to Washington State University where it took me seven years (due to delays caused first by a motorcycle accident and then a head-on collision) to finally get through school. Because I had a low grade point average, I came to realize I just needed to get through college and graduate. This especially hit home after the second time I dropped out of school. I tried to get a job with three years of college and no degree and realized that is something that will get you nowhere in the business world.

I had a good blue collar job all the way through college, and although I took a financial hit when I started my first professional job, it put me on a different and more financially beneficial track in the long run. After I graduated from college my first job paid me half what I was making at union job I had at the paper mill, but as I will discuss later, at the mill I was at the top of pay scale as opposed to starting out at the professional bottom after I get my degree.

So lesson one: finish what you start even if it's tough and you're not hitting your expectations of excellence. When we hit a snag in a project at my office, I like to say it's like the wagon has gone off the road and into the mud. When that happens, everybody needs to push the wagon out of the mud even though they're going to get dirty. Move forward!

Take any advice with a grain of salt.

During my college career, one of my advisors told me to stay away from the environmental field and go into medical technology. This was in the '70s and things turned out to be the opposite of what he had predicted. The environmental field exploded during the '80s and the medical technology field shrunk due to automation. Do your research and do what you think is best. Try to avoid doing what other people think is best for you unless you agree with them. Finally, always trust your instincts.

In business, watch out for the advice from an inexperienced business consultant.

I went on to graduate school at night in Seattle and got a Master of Business Administration (MBA) degree, which only made me dangerous in the business world. It wasn't until my fifth year in business I finally wised up and actually understood how to run a successful business. MBAs really don't know much coming straight out of school and are full of the latest and greatest business strategies, ones that might ruin a business. This is also true of the small business consultant whose experience is with a fortune 500 company or the seasoned academic who has experience in the classroom but none in the real world.

Leadership is all about consistency.

After getting my MBA, I moved back to Portland where I helped my dad, who was working for a small environmental consulting business. During this time, I learned about microbusiness and the many mistakes a microbusiness owner can make. Even though this business had become somewhat successful over its lifespan, the owner’s business philosophy was inconsistent with his stated goals. Basically, he wanted to market in the general environmental field but was only really interested in air quality. I only lasted about a year, but I did learn how to do microbusiness accounting, tax reporting, and marketing, important skills I used when I started my business 12 years later.

Know your strengths and weaknesses.

My first real job was inside sales for a chemical distribution company at their Portland office where I struggled and came close to quitting. I was really not suited for that job as I am not a detail-oriented person. Simultaneously I got caught up in some internal politics. While I was in the outside sales training program, the management started to promote another guy around me into outside sales. Instead of quitting, I transferred to a much smaller facility which had many of the characteristics of a microbusiness. The job responsibilities were more diverse and fit my skill set. This meant I was more interested in my work, which in the end made me a good employee.

Find your niche and help your employees find theirs.

Because of my experience being in the wrong position and the demoralizing effect it had on me, I know how important it is to find your niche. When I have had to let incompetent employees go, if we are on good terms, I try to say, Maybe this is not the job for you. Because of my experience having had the wrong job myself, I feel there has to be something that person can do well and be happy doing.

In the consulting world you have to have employees who are interested in the profession they spent four years in college studying, sometimes with another two years of graduate school on top of that. It's amazing to see individuals who spent up to six years studying something they have no interest in pursuing as a career. I also blame colleges for misrepresenting what a college degree will get you in the way of a career and for feeding students' high expectations of what they will do in an entry level position.

I had one employee who was not interested in his profession at all and spent all his time on fantasy football. It got so bad he would talk about his fantasy team during project meetings, and after three months I had to terminate him. He did not know his strengths and weaknesses and was surprised when I fired him even though his coworkers counseled him on his underperformance.

Being your own boss is one way to protect your interests.

If you work for someone else, the management of the company is not necessarily looking out for your best interests. After leaving the chemical distribution company I bounced around to several companies, and it was during this time I got my distaste for large organizations where politics can take the place of performance as a standard of measure.

In a microbusiness, you don't have that luxury because what you do has to work and has to be profitable. You really don't get a loyalty medal when you work for larger organizations, which has been illustrated by the layoffs and business closures over the last couple of decades. I've had hard-working friends who were part of a division that got shut down in spite of all their hard work and dedication. Companies will play the loyalty guilt card if you want to leave, but I have found all companies, large and small, respect employees who are independent and confident in themselves and are willing to move on if they can improve their career.

For a successful business, hire and retain quality people.

Of all the companies I worked for in my entire career working for somebody else, only one company still exists, which was the first, most traditional chemical distribution company. I worked for an environmental hazardous waste disposal firm that had a 300 percent turnover rate in my department the four years I was there.

I was hired with a group that either quit or got fired and was replaced with another set of employees eventually also either quit or got fired, and they were on the third go around when I finally left. There was so much turnover I got to the point where I knew it would soon be my turn no matter how well I performed because of the internal politics.

The formula the upper management of this company used to grow the business was to use entrepreneurial sales reps to start the business and compensate them with a high commission and a low salary. Then using a painful termination process for these sales reps, they would replace them with a second tier salesperson at a medium commission rate when the market started to get established. Finally, with no concerns about these second tier employees, changing the compensation structure and replacing them with order takers when the market matured. There were many issues of mismanagement and lots of infighting, and the company ended up getting bought out by another environmental firm. To be successful in a career or microbusiness, hiring and retaining quality people is critical.

Be sure there is a market for your product or technology.

I left the hazardous waste disposal firm to go to a startup offshoot of a large company that was involved with a new wastewater treatment technology. I call it my year of living dangerously because it quickly became obvious the technology was not going to work and I ended up leaving the company.

In yet another example of big company coldness, I gave my two week notice, and on the day I left the vice president had my exit interview and then immediately shut down the division and laid off 25 people. It is important your technology or product works, and it is also marketable. It’s also important to know when you work for a company and the technology is not there to be prepared for the management or investors to pull the plug and cause you to lose your job.

Be financially responsible with your business.

I left the wastewater treatment company to go to a consulting firm where I only lasted three months, which was a disaster. I got out of there as quickly as possible. I only remember two things about the three months I worked there. One was my interview which involved getting drunk in a bar with an alcoholic sales representative.

The other was a legendary story I was told about the owner selling all his retirement investments to make payroll when the company didn’t have the money to pay the employees. At the time, I thought that was really gutsy and showed true entrepreneurial spirit. After 30 years in business, I now realize it was dumb and showed the owner hadn't done his financial planning, had not developed a solid line of credit, and didn't make necessary personnel adjustments before the company's financial situation became a crisis.

Manage your business wisely.

The company that brought me back to Idaho could be the subject of a master's degree thesis on stock scams and how not to run an organization. I came on as they had just done an Initial Public Offering (IPO) on the New York Stock Exchange. The initial strategy was faulty; before the IPO, they brought several companies together that didn't complement each other and actually competed with their existing clients.

The stock didn't sell at the price they had hoped for, so they didn't get enough cash to properly invest in the growth of the firm. So we partied with the money, flew everywhere and built the corporate office on a golf course we bought over the vehement objections of the major shareholders.

When the old clients got their hands on the new company brochure and saw one of the divisions was their competitor, they immediately fired us causing a substantial drop in sales. This of course caused the stock to go from $10.00 per share to $1.00 per share and eventually resulted in our getting kicked of the New York Stock Exchange. Plus, it’s demoralizing to get a bunch of stock options you would have to pay $3.50 to exercise and then turn around and sell them for $1.00.

I called this company's bonus program a disincentive program because it was tied to the total company performance. So when our division was doing well and the other divisions were doing poorly, our bonuses were terrible. Then when our division was doing poorly and everybody else was doing well, our bonuses were great.

A sign the end was near was that right after I left the bonuses stopped, but you could fly back to the corporate offices on your own nickel and get a free round of golf there. After three years of this nonsense, the money ran out and the party was over, so I moved on to a division of a railroad company that did environmental cleanup work.

Move with the market while protecting your brand.

An interesting story about the railroad company environmental division I worked for demonstrates how large companies operate. I probably shouldn't have been hired in the first place for two reasons: it was a hazardous waste processing and cleanup company and the market for their services had peaked. This is because the amount of hazardous waste being produced by industry was drastically decreasing and hazardous waste sites were getting cleaned up.

The second reason is the company offered poor service at an expensive price, causing what I call brand decay. It's like Cadillac in the '70s, Harley Davidson when they were bought out by AMC, companies at one time had a great product or service and continued to market as if they were still the top of the line, but in reality the quality of the product or service had deteriorated. It's entertaining to see commercials for these companies purporting to be the best and then seeing them getting skewered by negative reviews on the internet.

So, my advice to you is to protect your brand reputation, which for a microbusiness means you personally and also your company when you have employees. The more value added you can create with your brand, the more it will add value to your product or services and make your profit margin higher.

Listen to feedback and make adjustments.

The environmental division of this major railroad was purchased before my time through a hostile takeover. After the takeover, the new president moved the corporate offices from Oklahoma City to Houston because he thought Oklahoma City was too small a city for him. After the hostile takeover and because of the move, the new president lost most of the senior management, but more importantly the clerical staff that actually ran the business. There's an old saying an executive secretary can run a department for at least six months if the executive vice president disappears. My analogy for this company is the president cut off the head of this company in Oklahoma City, moved it to Houston and tried to transplant it onto another body.

So the operational and billing side of the business became so bad our clients were constantly complaining about how messed up the service and invoicing was. When we complained to upper management about it, they got tired of hearing it, and told us to just be quiet and continue to sell poor services at a high price. This set up an adversarial relationship between us and our clients, making them the enemy.

Sadly, because of they did not have options the customers had to use us even though our prices were high, and our customer service was terrible. The culture in the sales department was so bad we would treat our customers poorly, not care about their complaints, and made fun of them behind their backs. The customer is not your enemy!

You have to listen to complaints by both your employees and your customers and try to fix them, especially if they are serious. For a microbusiness, it can be lethal to ignore problems of that magnitude, and you especially don't want to tell your employees to be quiet. I have seen companies fire several rounds of salespeople before the upper management actually starts to look at the problems with their product or service.

Another example of and unresolved problem was when I worked for the stock scam company one of our clients wasn't paying us on our invoices. So I sat down with the Chief Financial Officer (CFO) of this company to go over all the invoices and it showed he actually owed us less than what his books said he owed.

This was a substantial amount of money and his response was to cut me a check immediately and say, Let's forget about it. The president and I were friends, so I told him what the CFO said, and that he needed to fix the problem. He didn't do anything which in a year caused major financial issues with his company, which he complained to me about bitterly.

It puts any salesperson in a funny position when they see something blatantly wrong with a client's company. The quandary is do they say something and get in the middle of some internal politics, or keep their mouth shut. So, if one of your vendors steps up and points out something wrong in your company, please listen to them, because they are taking a risk in doing so.

Be ethical when transitioning from employee to employer.

Within about two weeks of coming on board with the environmental division of a railroad company, I realized the job wasn't going to work out and started looking at either building or buying a business. (In chapter 2 we’ll talk about starting your business two years before you start your business.)

After doing the research during the evening and on weekends, I incorporated my business and put it in the refrigerator. It would have been unethical to work on my business while employed full-time by somebody else, or especially to work in competition with my existing employer. After two years on that job I called my boss and said it was time for me to go, and would he please fire me. He laughed and told me that they were actually already planning to fire me, and he was flying up in two days to do just that.

It’s important to know when it’s time to go, and 30 years later we are still friends because it really wasn’t his choice to fire me. As you go into the microbusiness world and run your own company you will realize it’s just business, and business needs to be separated from personality.

Communicate with your employees about their performance.

As a microbusiness owner, it's important for you to know how your employees are performing, and they know how their performance stacks up. In baseball, there is the player who thinks he is great, but doesn't have the statistics to back him up. In business there is the employee who makes one big sale or does a good job on one project and then wants to renegotiate his contract. It's a painful exercise to sit down and inform them that they are not as wonderful as they think, because typically you bump into unrealistically large and equally fragile egos.

Cultivate a positive culture in your business.

In order for your microbusiness to compete with the large corporations for both business and employees, it's critical you offer a positive, healthy alternative to the detached culture of a large corporation.

Having been in several large corporations before I started my own company, I am what you call a corporate refugee. I can empathize with everybody out there who is working their 10-12 hour days and weekends for the big company. My experiences ranged from okay