Unintentional entrepreneur? Here's how to start a small business

A new breed of entrepreneurs has recently emerged from these tough economic conditions: unintentional entrepreneurs, or folks who lost their jobs and decided to try their hand at a homegrown business. Here's more about the trend, as well as tips for starting your own business.

Are you an "unintentional entrepreneur"?

If you are, you're not alone.

A new breed of entrepreneurs has recently emerged from these tough economic conditions: unintentional entrepreneurs, or folks who lost their jobs and were unable to find new employment, and decided instead to try their hand at a homegrown income stream.

SmartPlanet spoke with Kevin Reeth, CEO of online bookkeeping service Outright and creator of the Unintentional Entrepreneur, a site found for local entrepreneurs who started a business by the bootstraps.

Here's what Reeth had to say about this new phenomenon, as well as his list of things you should keep in mind when starting your own business.

SmartPlanet: How did the Unintentional Entrepreneur site come to be?

Kevin Reeth: It had very humble beginnings but it happened very quickly. It started as a promotion for Outright and Network Solutions for people who were starting businesses to get websites, because these days you need one -- the Yellow Pages just don't cut it.

We got a lot of feedback asking how to start a small business. A number of people were doing this for the first time -- people who had worked for other people and didn't know what it took to start a small business. It went from getting up a website to getting word out that your business exists and beyond.

We could have just said it was a promotion for these two companies, but there's a lot of great information out there and people don't know where to go.

We're good friends with Chris Hutchins and his LaidOffCamp. When you're laid off, you're not alone, there's no stigma to it, it's reality -- so we provided a resource to share tips and tricks and borrow some of LaidOff Camp's ideas for those people who didn't want a job.

We didn't just want to bring in anyone. We wanted to bring in experts who have experiences going through this. Our first event was in San Francisco, we've since had a five-city tour and we're seeing a grassroots movement and people getting really excited about this.

We set up a group on LinkedIn for people to get in there and start asking questions. We're getting 10 to 15 people a day signing up on LinkedIn; 400 people in there asking questions. It doesn't matter how it comes about, as long as people feel comfortable talking about the situation they're in and that they'll get respect.

SP: What have you learned from interest in the site?

KR: Solopreneurs tend to be very willing to help other small business owners because they know there's a lot of stuff they don't know and they don't have networks that they can get answers. There's a great quid pro quo that goes on. We like to see that. It's not just the 10 things to start business -- it's the support and relationships with business owners.

Self-doubt is unavoidable when you start a company. Things will go wrong. When it's just you, you can't really blame stuff on other people. But it doesn't matter who's fault it is. It's having a good friend, having associates. It's rocky, it's rough.

There's no silver bullet. There's no magical formula.

What you read in books and what you have to execute is very different. There's a reason why most businesses fail. There's a lot of stuff you won't learn until you do it. It's understanding the emotional rollercoaster.

SP: What kind of people are connecting with the site?

KR: The type of people we're getting are solopreneurs. These people don't even think of themselves as business owners. They describe themselves by what they do. Real-estate agents or taxi drivers are self-employed, but they don't talk of themselves as business owners. They just say they work for themselves.

They are people like you and me and everyone else. They just don't get paid through a paycheck. It's a subtle distinction, but it's an important one.

So many people get started because they have a talent. It grows from there.

SP: What's the one thing unintentional entrepreneurs should keep in mind?

KR: We tell people, "Do not spend a lot of money on the trappings of being a business owner. Don't buy the fax machine and the business cards and all of that. Don't spend the money until you have customers. Otherwise, you're worse off."

The successful people we've seen verify that there's demand in the market for what they do. You're not going to get that through Google Ad words, through an ad in the paper. You're going to get that through referrals and word-of-mouth. Now you've got free marketing.

Focus on that stuff. Don't worry about all the stuff you read in big-idea marketing books. Worry about that later. Go find three to five people to hire you, and make sure all five recommend you, and if they don't, figure out why and fix it.

SP: What are your tips on how to start a small business?

Want to start your own business? Here's what you should know and do.

1. Know that you need customers first

Make sure there's a "there" there first. As in customers.

It's all about getting people in the door. Do the legwork to get a pipeline of sales. Figure out how to drive business. Everything else after this you do as you need it.

Getting and servicing customers is where all the value is. Minimize the time spent on anything that's not that.

Without sales, you have no business. Successful entrepreneurs understand that inherently.

2. Go get customers

All along the way, you need to be networking and marketing.

Start e-mailing, posting...get on the social networks. LinkedIn, Facebook. Scale your communications and get the word out that you're in business for yourself.

Get on Twitter, let people know. Follow people who provide related or complementary services.

Go have coffee with people, go to meetups. Go have professional relationships.

Most people's initial customers do not come from advertising and marketing -- they come through referrals, word of mouth and informal marketing.

3. Create a web presence

You need some place on the Web that you can point customers to. Get a web presence, even if it's just a one-page screen. Put up a blog if you want to. Put up something, and have an e-mail address or phone number to have them contact you.

Nothing matters if you can't get customers, and they need to be able to reach you. The absolute cheapest, fastest, cost-effective way to do that is to have a website and an e-mail address. You can get a business card, but what would you put on it? A URL means "find-me here."

It doesn't need to be a standalone website, either. It can be a Facebook page, or a profile page, or a business listing on Google Maps.

3. Decide on a name

Pick a name for your business. If it's different than your given name, you need to file a fictitious name statement, a "doing business as" claim, to let the government and banks and others know.

You don't need to incorporate unless you have concerns about your personal liability, but you should check with an attorney or LegalZoom before you do anything first.

Do your research, but the vast majority of businesses in this country are sole proprietorships that don't need to do that.

4. Open up paths of communication

Make sure you have a way for people to call and e-mail you.

We're big fans of Gmail, because if you get a domain name and standalone website, you can set up your e-mail with Gmail.

We use it. My e-mail account is a Gmail account, but it bounces to kevin at outright dot com. It's free.

5. Get a local business license

Even if you're working at home, you should get a business license for the town you're working out of. [The local government] won't like it if they find out later, and it's not very expensive.

Many people don't worry about the license until they actually have customers.

6. Know that you need income before you can count it

You don't need a separate business checking account until you have customers.

You might be able to do it with a PayPal account. But not everyone can interact with PayPal, so it will make your life easier if you have a separate business checking account and credit card. When it comes time to deal with it at the end of the year, it makes life way easier. You will be happy and your accountant will be happy.

But don't do that until you have money coming in. It's very easy to spend money on your business, it's much harder to bring it in.

Not having any income sucks.

When you're filing a Schedule C, your tracking needs tend to be very simple. Don't worry about it too much up front -- when it doubt, track everything. You can use Outright software, you can use an Excel spreadsheet, you can use a shoebox or a filing cabinet. When it comes time to figure it out, take a stab at it -- if you're not comfortable with it or you're too busy, go get some help.

As you get more busy, you move into the back-office stuff so you can automate some things -- going to the bank, or writing receipts, etc.

When you find you're spending nights and weekends tabulating the finances, that's exactly when you should start thinking about using a site like Outright.

SP: In this tough economic climate, who's starting a small business?

KR: The number of people who are starting businesses out of necessity -- perhaps it was not the option that they first thought of -- is going up. That's fundamentally different than last year, where people pursued their passions and weren't at risk for their other source of income drying up.

I'm seeing people who have never had a side business, or had a dream or talent, or such thing. When you have [people with a dream or talent], they've been thinking about it for awhile. But when it's thrust upon you, it's a new line of thinking. You've got more homework to do.

On the Unintentional Entrepreneur, we're seeing more people who are brand spankin' new.

SP: How does that affect what the Unintentional Entrepreneur site does?

KR: We'll be successful if there are more successful entrepreneurs.

We're not quite sure where it's going to go from here. Maybe we'll keep doing low-tech, low-cost local meetups. We just don't know yet.

Our five-city tour -- New York, San Francisco, Los Angeles, D.C. and Atlanta -- was a hit, and we're seeing demand in the Midwest. Chicago, Dallas, Denver, those areas.

We want it to be organic, we want someone else to co-lead this.

We want multiple points of view. None of us has all the answers, but collectively we might have more.

This post was originally published on Smartplanet.com