StartupNation |
- Secrets of Bootstrapping From an Entrepreneur Who Leveraged his 401(k)
- Tax Challenges You Need to Know Before Starting a Business Abroad
- The Right Technologies Will Boost Your Startup’s Productivity
- A Healthy Work Culture = Happy Employees, Happy Customers
- WJR Business Beat: Startup Oakpoint Skyrockets to Success (Episode 362)
| Secrets of Bootstrapping From an Entrepreneur Who Leveraged his 401(k) Posted: 16 Feb 2022 09:00 PM PST
If you've never bootstrapped a business, you're going to need to be prepared for the unexpected. I learned this myself when I transitioned out of the U.S. Army and became a federal decision officer for the Department of Veteran Affairs. Delays in the system impacted my income and my ability to provide for my family, causing me high feelings of anxiety, guilt and hopelessness—feelings many of my fellow veterans experience when integrating into civilian life. Soon, I realized that my experience working with the VA could offer other veterans critical guidance and expertise to help them not only get their VA claims approved, but improve the benefits they would receive from those claims. This realization planted the seed for what would eventually bloom into my own business, Seven Principles, although I soon realized that building this business would require funding my day job couldn't offer. Like most other entrepreneurs who don't have access to funding, but know that the service they can provide others is vital, I decided to bootstrap Seven Principles from the ground up. I started my business at my kitchen table and scaled it without investor funding, leveraging my 401(k) while working for the VA. No, it wasn't easy, but it was absolutely worthwhile. Now, I want to help others understand how they, too, can learn the hidden secrets of bootstrapping to grow their business. How to leverage your 401(k) to bootstrap a businessNow, before you go about leveraging your 401(k) for funding to bootstrap your business, make sure you've created a fundable business and that you've exhausted all other funding options, both traditional and alternative. Digging into your retirement should be a last resort since you won't be able to contribute anything to your plan if you have an outstanding loan. One way to circumvent this, should your 401(k) plan allow it, is to roll over your plan into a new one for your business, especially if you need $50,000 or more to get it started. A rollover for business startups, or "ROBS," is possible if your business and 401(k) meet specific criteria. First, make sure your business is registered as a C Corporation since this is the only type of business that can sell its shares to a retirement plan account, which is what you'll need to release to access funding. Next, create a 401(k) plan for your C Corporation. No plan is a one-size-fits-all for every business, so consult with experts on what plan would be best for you, your company and its employees. Once this is done, you can rollover your 401(k) plan into your new ROBS plan. The next step is the most important in this process: You'll need to issue shares of your C corporation's stock that your ROBS 401(k) can purchase. This step is so important because it is the vehicle that puts funding from your 401(k) into your business account, which is how you will access it. When going through this process, keep in mind that there are a lot of rules, regulations and risks involved. For you to successfully leverage your 401(k) in bootstrapping your business, those risks must be navigated and rules followed to a letter. Be prepared to make up the costs of learning from mistakesOne of the most critical tests of leadership — be it in military service, politics, business or everyday life — is how you, as a leader, will react to failure even when you believe you did everything correctly. Now, no veteran should have to wonder how they can lead a company if they can lead people in times of war and combat. The principles of leadership remain the same. It's only the context and setting that change. Regardless, leading a company you bootstrap, like leading soldiers into combat, will force you to improvise, learn and adapt when mistakes are made. And they will be made.
When bootstrapping your business, essentially all its operations are funded directly by whatever capital you have access to. Hiring, paying and letting go of employees who aren't the best fit for your business all come out of your pocket. The cost of marketing — creating emails, websites, CRM pipelines, as well as automating these processes and going back to improve them — doesn't come from outside investors or alternative financing. Every step forward you make with your business will be met with new challenges. When bootstrapping a new business, navigating those challenges also comes with added costs. At some point, you're going to have to find out how you will recover from those costs and the mistakes you will inevitably make. Oftentimes, we entrepreneurs believe that we are the only ones who understand our business and the vision we have for it. In bootstrapping that business, we become even more emotionally and financially invested in it and its success, but we still have to remember the limitations of our abilities and knowledge. If you find yourself struggling to stay afloat or recover expenses, seek the advice of others who have been in your shoes and lean on their wisdom to guide you. Final remarksUltimately, there is no single assured way to successfully fund and grow your business, especially when bootstrapping. The path forward is full of unknowns. There are bound to be times when you feel like scrapping it altogether, but those times are when you need to focus on the mission your business seeks to accomplish. If that mission is to help others and improve their quality of life, keep refining your process until you see results. If you can place yourself in the shoes of your clients and customers, you'll be able to understand their wants, needs, and expectations and structure your business around these factors. It won't come quickly or easily, but nothing worthwhile ever does. Verizon Small Business Digital Ready: Help for Small BusinessesBig news. StartupNation and Verizon are bringing something special to all small business owners. Verizon Small Business Digital Ready is a free resource for learning basic business skills, the latest digital technology and more. Sign up now. Download more information HERE. StartupNation exclusive discounts and savings on Dell products and accessories: Learn more here. |
| Tax Challenges You Need to Know Before Starting a Business Abroad Posted: 16 Feb 2022 09:00 PM PST
America is called the land of opportunity, but some entrepreneurial ventures are better suited to other countries. Digital nomads around the world have proven the viability of starting a business from your laptop and running your company from anywhere in the world. Even if you don't start your company abroad, you might want to expand its operations to international territories sooner or later. But whether you are starting your first company or looking to expand, you need to know about certain tax challenges and benefits that affect all expat entrepreneurs. We'll cover some of the international tax challenges companies face and offer tips on how to avoid a regulatory nightmare as you expand. Financial account reportingFirst and foremost, if you have any international bank accounts, assume that they will need to be reported no matter what. All U.S. citizens have to pay taxes on worldwide income, not just the income they earn in the States. Because of this, structuring your business as a foreign partnership or foreign corporation will not allow you to evade tax payments. While there are a couple of exceptions, it's better to report all income from any foreign or international accounts you have. Take a Fresh Look at Your Business FinancesAdditional tax formsOn top of that, any international business ventures you own will require you to file extra tax forms. These include Form 4571 if you have a foreign corporation and Form 8865 if you have a foreign partnership. These tax forms have to be attached to your standard U.S. tax return, which will be filed at the end of every year between January and April. Note that neither of these forms replace your typical U.S. tax return, so long as you are a U.S. citizen, you'll file taxes in essentially the same way as if you still resided and did business in the United States. Be sure to check out these resources as you start your business. Foreign tax benefit recognitionSome budding entrepreneurs are excited at the possibility of receiving certain tax benefits if they run their businesses abroad. While this may be true for some foreign entities, it's not universally true because the U.S. doesn't necessarily recognize tax breaks from other nations. This is not unlike insurance and other similar financial logistics. Insurance is an increasing concern for people as there has been a 50% rise in the number of people purchasing a comprehensive life insurance policy since the pandemic began. Yet many expats are in for a rude awakening when they realize they have no international coverage with health insurance, life insurance, and more. In the same way, you need to make sure that the U.S. shares the same tax break or has an equivalent before assuming that it will affect your finances. Because each nation has different business structures with different licensing, incorporation, and permit requirements, it would be wise to contact an accountant before setting up shop abroad. They'll be able to tell you if your chosen country has similar or identical tax breaks to U.S. business tax codes. Claiming special tax creditsIf you have a U.S.-based partnership or sole proprietorship abroad, you might qualify for various tax credits or exclusions. These are only available to expatriates. Keep in mind, however, that claiming these credits can be tricky and your standard tax return will not assume that you claim them. You'll need to report all income you earned while abroad on your personal tax return and meet various IRS requirements for living abroad. Both of these conditions must be met before you can claim any expat-specific tax credits. Getting in with a bankLastly, remember that various banks may not agree to service your business if you are a self-employed entrepreneur. That's because the American IRS forces foreign banks to report on American accounts. This costs the banks extra time and money. What's more, according to recent surveys, over 40% of online business owners report being totally dependent on digital banking services for their financial needs. You don't want to be stuck in another country without a digital banking service, or some other way to access U.S.-based accounts. With that in mind, research possible banks ahead of time so you know where you can set up your finances before beginning your business abroad. Tax tips for expat entrepreneursAs you can see, there are lots of financial considerations when starting a business abroad. Cross-border freelancing adds complexity, but there are some things you can do to make your life easier. Here are some tax tips you can take advantage of to enjoy some serious savings come tax season. Choose the right corporate structureThink carefully about what is an ideal corporate structure when setting up your business abroad. One of the best examples would be a limited liability company (LLC), as such companies are disregarded when it comes to taxes. All the income for your company will flow through your individual tax return, so you don't have to file separately for your corporate entity. Of course, no matter what business structure you choose, be sure to file the right form. For instance, foreign LLC owners must file Form 8832 in addition to Form 8858 if they want to retain their disregarded status for each year following their initial filing. File the FBARAll expat entrepreneurs need to file the Foreign Bank Account Report (FBAR). Furthermore, be sure to file Form FinCEN 114 each year before April 15 if your business's foreign bank account holds $10,000 or more at any point during your tax year. Downloading these forms and filing them correctly will prevent you from getting hit with excessive fees by the IRS. Remember to report if you're self-employedSelf-employed digital nomads may think they get off scot-free, but it’s not that simple. You still have to adhere to certain filing tax codes, so be sure to report your income fully when tax season arrives. Specifically, file Schedule C with your U.S. expat tax return. Even if you're a freelancer, you still have to file so long as you earn $400 or more in income. Expat self-employed entrepreneurs are still required to pay the 15.3% U.S. self-employment tax, in addition to various social insurance taxes to one’s host country. Claim all available deductionsLastly, take advantage of any available deductions. The U.S. allows expat business owners to access tons of tax credits and other benefits so long as they are outside the U.S. for a full year or within a foreign country for 330 days consecutively within a 365 day period. One of the best examples of a special tax credit is the Foreign Earned Income Exclusion (FEIE). This is a special exclusion intended to help Americans living abroad so they aren’t taxed double. This year’s FEIE deduction lets expat business owners (and regular travelers or dual citizens) exclude up to $108,700 of all foreign earned income from U.S. taxation. Read up on IRS tax codes and tax breaks for foreign entrepreneurs to see everything you may qualify for. It might result in serious savings for your business at the end of the year. ConclusionStarting a business abroad could be the best decision you've ever made, but you can make it even better by knowing how much you have to pay and what forms to file each tax season. Keeping all of this organized and ready to go will ensure you aren't fined unfairly and help you save money during the initial expensive years of your business venture. 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| The Right Technologies Will Boost Your Startup’s Productivity Posted: 16 Feb 2022 09:00 PM PST If you ask a room full of new entrepreneurs what they've struggled with most, they'll likely tell you something about productivity. From focusing on low-priority tasks to managing processes manually, productivity woes plague new business owners. With countless to-do lists, goals to chase and dreams to manifest, it's no wonder entrepreneurs are pulled left and right. With so many tasks to manage, how can new entrepreneurs stay as productive as possible? How can new business owners go after their goals without burning out? One way is by choosing the right technologies for their business. If you're in the market for some productive business tools to streamline your new business, you're in luck. In today's article, we'll walk you through how to choose the right tools for your new business step-by-step. 9 Habits Successful Entrepreneurs Use to Increase Productivity |
| A Healthy Work Culture = Happy Employees, Happy Customers Posted: 16 Feb 2022 09:00 PM PST
Roughly 25 years ago, I teamed up with Dr. Larry Patterson to found Eye Centers of Tennessee (ECOTN). When we launched the business, you could count the number of people who believed in our venture on one hand, and probably have a digit or two left over. That didn't deter us, and we jumped into the project headfirst. Today, the practice has grown immensely. As I type this, there are nine ECOTN locations — including a state-of-the-art surgery center — across the Upper Cumberland (a massive geographical expanse stretching from Tennessee into Kentucky) with a physician roster made up of 15 optometrists and ophthalmologists, and a support staff of more than 125 professionals. Suffice it to say, much has changed since we first opened our doors as a team of 10 — except the foundational elements of our business culture and our commitment to providing the greatest patient care possible. No matter the type of business you run, whether it's in health care or the technology sector or fast food, a well-functioning culture typically yields happy customers. And happy customers are usually repeat customers, which you need to have to grow your business. At ECOTN, here are the five primary culture principles we've built our business on over the past quarter century. They enable us to maintain an incredible team of professionals who create a patient experience that keeps our neighbors across the Upper Cumberland coming back from one generation to the next. Sign Up: Receive the StartupNation newsletter!Clarity is keyThere is an old saying that "to be clear is to be kind." That's true, but clarity is also a requisite component to a well-functioning culture, and that clarity needs to start even before an employee's first day on the job. It is imperative that management teams be strategic when hiring employees. Leaders at young businesses often throw bodies at needs, but hiring people indiscriminately because work demands are piling up is a surefire way to fail. Instead, managers need to clearly create job descriptions that address specific needs, and then hire accordingly. It's also imperative that during the hiring process, management be crystal clear about both the work deliverables a potential employee will have, as well as the tempo of that position. Workers need to know what's expected of them and have an understanding of the work environment they'll be required to work in. Fewer things lead to an unhappy employee than out-of-line expectations. If they walk in to work on their first day and they are greeted by a world completely different from what they were expecting, chances are strong they'll be looking for a new job that weekend. Must-Read: 5 Leadership Traits No Entrepreneur Succeeds WithoutWalk the walkA healthy work culture is set from the top, but for that culture to really thrive and be something that customers love, there has to be buy-in from everyone at your business. And if you want to have a healthy culture from the C-suite to the front desk, then your leadership team has to truly walk the culture walk. I believe that one of the most harmful things you can do, culture-wise, at your business is to say your business operates from a lofty set of culture principles, yet no one actually adheres to them. Empty words, in this regard, are actually very powerful. Just not in the way you'd want them to be. On the contrary, if your full staff sees your leadership team respecting each other and everyone who reports to them, it will encourage the entire organization to mirror those actions. It is easy to forget that every move a leader makes is watched, and what people see is cataloged and rarely forgotten. An effective leader will model healthy, respectful behaviors, and those actions will set the tone for the rest of your team. Monkey see, monkey do. If you want to have a company culture that is manifested through the people you hire, it all starts with you. Your team will see your commitment to a positive culture, and your customers will experience it through your employees. Don't set it and forget itAt ECOTN, all office staff begin their tenures on a 90-day probationary period. It's common for people to consider a probationary period as a time when a new employee is subject to constant evaluation, but we see it as a two-way street. We're evaluating the new worker and, in turn, they are evaluating us. During this three-month window, we consistently check in with a new hire to see how they're adjusting to the rigors of their new role and the spirit of the workplace. If we've done it right, by the time an employee hits Day 90, we know and they know if it's a good match. No surprises. Of course, it doesn't stop there. I'm a former Marine officer, and one of the Marine Corps' guiding principles is to "know your men." The belief here is that you can't help alleviate problems if you (a) don't know about them, and (b) don’t know how your (wo)men are experiencing those difficulties. At ECOTN, our "officers" are our managers, and they spend their days in the "trenches" with their teams at the front desk, sizing new frames, preparing for surgery, or any other number of daily requirements. We want our managers to know what our employees are going through and how their workloads are impacting the business. That attention leads to workers who feel valued, and an employee who feels valued is more likely to show a customer they're valued, too. Employee Engagement: 7 Trends to Secure Your Workforce |
| WJR Business Beat: Startup Oakpoint Skyrockets to Success (Episode 362) Posted: 16 Feb 2022 10:09 AM PST
On today’s Business Beat, Jeff talks to a cofounder of Oakpoint, a dental support company that in just three years of existence is on the verge of a $100-million revenue milestone. Turn in to the Business Beat, below, to learn more about Oakpoint and its trajectory:
Tune in to News/Talk 760 AM WJR weekday mornings at 7:11 a.m. for the WJR Business Beat. Listeners outside of the Detroit area can listen live HERE. Are you an entrepreneur with a great story to share? If so, contact us at editor@startupnation.com and we'll feature you on an upcoming segment of the WJR Business Beat! Jeff: Good morning, Paul! We’ve got an amazing entrepreneurial story to highlight this morning on the Beat. This is a story of two cofounders, Mick Janness and Erik Strang, and their startup known as Oakpoint. Mick, tell us about it. Mick: Hi, Jeff. So Oakpoint is what’s referred to in the industry as a dental support organization or a company who supports dental practices in nonclinical functions. So we’re processing all the payroll. We’d support them in all their human resources functions. We’d support them in all of their health care benefits, selections. Anything that the doctor does not deliver clinically we’ll support behind the scenes. Jeff: Mick, amazingly, you guys started this company just three years ago, and you’re now already closing in on the $100-million annual revenue milestone. Mick: 2019, we launched with one supported practice. I’ve been in dental for let’s call it 12 years. Built and sold a previous company from zero to $30 million. We did that in 36 months and then moved on to found Oakpoint. We’ve grown to $70 million in total revenue. By the end of let’s call it March of 2022, we’ll be at $80 million. Go forward, run rate, revenue, just really incredible on a straight trajectory we think by the end of the year to be on a $100 million go-forward run rate. It’s really difficult as you can imagine, right. It’s starting from complete scratch. Now we’ve got infrastructure, we’ve got a support team around us. I think the way we feel about our trajectory right now is that we’ll double the business over the next three years based on where we sit right now. We feel extremely confident of that. Our trajectory is strong, our platform’s strong. We can very easily kind of rinse and repeat the process. At this point, the hard work has been done so to speak Jeff: So more than anything else, Paul, a story like this one going from an idea to a $100 million in annual revenue in just three years, goes to show take two capable, driven entrepreneurs who have a good idea, but moreover, who along with their dedicated team, pour their collective focus and energy into making it a success proves that entrepreneurial dreams like this one can and do come true. Hats off to Mick, Erik and the entire Oakpoint team. Check them out at oakpoint.us. I’m Jeff Sloan, founder and CEO of startupnation.com, and that’s today’s Business Beat on the Great Voice of the Great Lakes, WJR. The post WJR Business Beat: Startup Oakpoint Skyrockets to Success (Episode 362) appeared first on StartupNation. |
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