Secrets to Success for
Starting a Services Company
By Katherine Hills
Owner & Managing Director
Krush Creative Group LLC
19 April 2011
Backstory
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Grew up in Lakewood, CA
Bio Sci major at UC Irvine – B.S. ‘83
Planned to become a doctor
Ended up traveling the world instead
Kept one eye on the next move
Always accepted new opportunities
Corporate Life
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Great corporate fit
Moved up quickly
Trusted by upper level management
Offered numerous special projects and
assignments
• Often ended up as CEO confidant and
advisor
• Paid attention
Key Decisions
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No medical school
Managed profit/loss center
International Applications Engineer
European Business Manager
International Marketing Director
Jumped to agency side of marketing
Managing Director
Why not do this for myself?
Krush Creative Group LLC
• Full-service marketing, branding,
advertising, design, PR and event
production
• Launched February 1, 2005
• 100% service based business
• Bill time to nearest quarter hour
• Invoice monthly
The Decision
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Why do it for someone else?
Knowledge
Skills
Money
Market
Clients
Opportunity
Is Entrepreneurship Right for You?
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Willingness to risk – low or high?
Ability to fund your venture
What do you have to offer?
Is there a demand (short term or
ongoing)?
• How do you feel about paperwork and
management?
• Taxes required
Important Things to Ponder
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Going it solo
Taking on a partner
Percent ownership
Decision making responsibility
Management responsibility
Financial responsibility
Checks and balances
What if it doesn’t work out?
Then Ponder Some More
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“You’ll never work harder than when you work for yourself.”
“Cash is king.”
“Hope is not a strategy.”
“Having a business partner is like being married . . . without the
[fun stuff].”
• “In this world there are prospectors and there are score keepers.
Which one are you?”
• Your have to be okay with:
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Sacrifice
The word “no”
Employees acting like employees, not owners
Feeling like you’re in it alone
Asking for help
Ready?
• When you can
– live with the risk
– part with your money
– be the boss
– visualize your success
– absolutely, positively say that you’d rather
work for yourself than someone else
– not imagine another way
To Partner or Not to Partner
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Going it solo
Taking on a partner
Percent ownership
Decision making responsibility
Management responsibility
Financial responsibility
Checks and balances
What if it doesn’t work out?
It’s a Go
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Market analysis
Competitive analysis
Budget analysis
Business Plan
Articles of Organization
Name Registration (check URL!)
State Registration
EIN Number
Employment or Work-for-Hire Agreement
– Include Non-Compete
• Confidentiality Agreement
• Register URL
Surround Yourself
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Team of trusted advisors
Lawyer
CPA
Banker
Insurance Agent – General, E&O, Worker’s
Comp, etc.
• Insurance Agent – Health
• Friends and family
• Therapist
Basics
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Summary of services
Budget
Pricing
Sales plan
Execution
Support
Banking (checking, credit card, LOC)
Bookkeeping (balance, invoicing, A/R, A/P)
Insurance (general liability, worker’s comp)
Making It Real
• Office space (brick and mortar or virtual)
– Notes on Leasing
– Mailing Address
• Infrastructure
– Desks, phones, computers, Internet, servers, tools
of the trade, software, copier, FAX
• Hiring
• Marketing
Marketing – The Minimum
• Branding
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Perception
Tone
Culture
Logo
Palette
Fonts
Business Card(s)
Website
Phone/Reception
Printed Collateral (brochure, one sheet, portfolio) (maybe)
Social Media (maybe)
PPT Template (maybe)
Selling
• Online Presence - SEO
• Networking
• Business Development/Sales Team
– How will you reach your target audience?
• Certifications
– WBE
– SBA
– Minority
• Generate a professional proposal/quote
Fulfilling Orders
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Internal communications
Who does what?
Meet your commitment/deliver on time
Quality standards
Follow-up
Invoicing & Cash Flow
• Cash flow is key – and it’s tricky
• Set-up a system, e.g., Quickbooks
• Invoicing cycle – there are options
– Commencement payments
– Milestone payments
– Net 30 versus due on delivery
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Methods of payments
Late fees/penalties
Collections
Court
W2 Employees vs 1099’s
• BE CAREFUL! Specific rules apply
• With W2 employees
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State and Federal employment taxes
Worker’s Compensation
Paid holidays and sick days
Health insurance
Infrastructure (equipment, software, etc.)
You get 100% of their time (theoretically)
Protected by employment laws – hiring, firing, etc.
W2 Employees vs 1099’s
• With 1099 contractors
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W9 required
Must provide own equipment and tools
Set own working hours (you can set deadlines)
Responsible for own work environment
Able to work for other people (in fact, they should)
Self insured
Responsible for own taxes
You must report 1099’s
Why Do People Fail?
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Lack of planning
Failure to commit
Poor management
Under financed
Underestimate importance of marketing
Not perceived as a player
Inability to network
Ineffective sales channel/technique
Inability to fulfill orders
Inability to manage cash flow
How Krush Survived the Economy
• At first, power of positive thinking
• Cut costs
– Did not renew lease agreement
– Sold unused assets
– Restructured
• Converted employees to contractors
• Virtual model
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Stopped spending
Adjusted invoicing to maximize cash flow
Re-evaluated services and market (who’s spending?)
Network, network, network
Identify, bid on, fight for and win every opportunity
Parting – and Hard-Earned – Words
of Wisdom on Entrepreneurship
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It’s hard
You really, really have to be okay with risk
Set your financial investment limit up front – and stick to it
Spend as little as possible
Conserve cash
Pay as late as possible
Be willing to do whatever it takes
Always look and act like a professional
Be your own best PR agent – talk yourself up, be confident
Continuously evaluate EVERYTHING
When you wake up and loathe/hate/resent/regret what you do,
it’s probably time to move on to your next great adventure (after
all, you’re a prospector, not a score keeper)