Starting a business....

[Syntex]

My friend and I were thinking about starting a business together.

I was wondering if anyone here has done so or knows how someone did it like their parents or family friend and can maybe shed some light on some of the things needed along with any problems they ran into so I can get a feel for what to expect.

If you're curious as what kind of business, it's a group home for mentally disabled adults. We have both worked in the field for 5 years so we have the training and the knowhow of what to expect and both ran houses ourselves but after looking at what it takes to actually run one we could do it better ourselves and make money doing it.

The company I work for now I have been with is only 5 years old and I came here from another one 2 years ago. They started the same way we are with just 2 people and a home and now over 5 years later is grossing millions.

Granted I understand for every successful company there are 10 that fail and there is no get rich quick scheme but with how much we know between the 2 of us I think if the ball gets rolling we could make it successful.

Some things I was wondering about was like Liability insurance, business license, taxes, paychecks, employing people, and contracts that a lawyer would need to write up and the average cost. I am still doing research and plan to take our time with this since the license to operate a home takes 3-6 months to get approved we have time to make sure we do this right and know what we are getting into.

Anyone know anything about this in particular who might be able to share their experiences?

[Omnipotent]

Don't do a partnership

also look into an Angel investor you can trust.

[Syntex]

Don't do a partnership

also look into an Angel investor you can trust.

Well I can't do this alone, the first few months the only employees will be us and on top of that he knows a lot of stuff I don't and vice versa. Also he has been my best friend for 10 years so its not just someone who I know from work who wants to do this, its someone I trust.

I thought about finding an investor because the banks have said they will not give a loan to us unless we been in business for 2 years and the best loan I could get even with my good credit would be to the market value of my car minus the 4k I have left to pay off on it which doesn't give us much to work with. Also what is this Angel investor or is that just a fancy name for it?

[Omnipotent]

Angel investors are individuals who invest in businesses looking for a higher return than they would see from more traditional investments. Many are successful entrepreneurs who want to help other entrepreneurs get their business off the ground. Usually they are the bridge from the self-funded stage of the business to the point that the business needs the level of funding that a venture capitalist would offer. Funding estimates vary, but usually range from $150,000 to $1.5 million.

Basically rich people who have the expendable income, willing to help you out at a higher interest rate than a Bank, but usually are more lenient of paybacks and time given.

[Kaslo]

Form an LLC or Private Corporation

[archibaldcrane]

Wait, the two of you would be the only employees at a group home for mentally disabled adults?

That sounds like ...WAY... too much work for two people.

Plan sounds terrible, abort immediately, regardless of the success of your current employers.

[Syntex]

Form an LLC or Private Corporation

Good idea. I'll have to look into it to see if thats something we want or to take another direction, didn't even think of that.

Wait, the two of you would be the only employees at a group home for mentally disabled adults?

That sounds like ...WAY... too much work for two people.

Plan sounds terrible, abort immediately, regardless of the success of your current employers.

It is a lot of work but I have done it before.

House first opened 2 years ago, the company I am with now had 3 employees and I worked 16 hour shifts for 2 months straight 7 days a week. Granted it was summer so I didn't have school but its not something that hasn't been done before. The company owner and my friend were the other 2.

When we start there will be 1 client and honestly if you ever worked in a home its a glorified babysitting job. You're not working your ass off the whole time your there so it is doable. It's how the other places started I don't see why we couldn't do it.

Also a lot of other business that start, say for example the restaurant industry, have the people who open it work from open to close 7 days a week for months, sometimes years because they can't afford to pay someone to do what they themselves can do for free. A lot of people do this and we would have to as well because the last thing we need is to pay someone for 40 hours a week when we are still working out the financial stuff and not to mention they have to be trained to work at the home.

[archibaldcrane]

Hmm, only 1 client?

You need a business plan, figure out how many clients you need to break even, where will you find new clients, etc.

Insurance sounds like a major hurdle in this situation. Are you able to talk to your current employer about what it took for them to start out?

[Moss]

I suggest you take an entrepreneurship or law class dealing with a business at a local college. Not to sound condescending but there are SO many things you probably haven't considered yet.

[Kellanved]

Typical generic advice perhaps, but consult an experienced attorney in the state where you intend to start the business and provide all the relevant facts about what you want to do. An experienced attorney will be able to recommend the best business organization for your business.

Above all else and whatever organization you form, make sure you get a written comprehensive operating agreement along with the articles of organization. It is extremely important to the resolution of any future issue. In the absence of an agreement provision, particular statutes set the default rules. Many of the default rules can be modified by agreement to better suit your needs, naturally take advantage of this.

There is nothing inherently wrong with the partnership form of business, depending on what your circumstances are. LLCs are primarily creatures of state statutes. They are reasonably popular because of its flexibility. It is an unincorporated business form that combines certain features of the corporate form with other features like those found in the general partnership. LLC provides pass through tax treatments (unlike corporation), and limited liability while retaining the ability to actively participate in firm management. (unlike something like LLP).

Generally, the primary goal of adopting any particular form of business organization is to protect your assets and save on taxes, I’d recommend starting by consulting an attorney with the proper qualifications.

[Ferion]

You need a business plan, figure out how many clients you need to break even, where will you find new clients, etc

This. Probably the most important thing to figure out is if there is excess demand in your area for the business you're trying to start. If the answer is no, then it is definitely not worth starting a business. You said that you worked for a company that started the same way you're trying to start and is now making millions. If you're trying to compete with them you're going to need to do something that differentiates your business from theirs. Whether it's lower prices, better care, nicer grounds, etc. You're going to need to do something so that even if there is an excess demand the customers will choose you over them, which might be tough to do. Like its been said already, I think it would be a good idea to take a class in entrepreneurship and talk to an experienced attorney in your area.

[SamanosukeShiva]

Form an LLC or Private Corporation

Seconded this, that way you dont lose your home if/when the business go south

[#686578]

Get a lawyer

[Syntex]

Hmm, only 1 client?

You need a business plan, figure out how many clients you need to break even, where will you find new clients, etc.

Insurance sounds like a major hurdle in this situation. Are you able to talk to your current employer about what it took for them to start out?

Thats the plan.

The Government gives a X dollars an hour per client. Each client is given a value of how much you are paid per hour to take care of them, more independent clients will give you less, more codependent the more money per hour. Now every client gets welfare and food stamps along with budget determined by the government which allows Y dollars for food/clothing/shelter/car/medical expenses. As long as the client gets the proper amount of things then the rest is pocketed by us.

Example, they allot 300 dollars for clothes a month. If we are able to stretch the dollar by shopping with sales and going to the salvation army and only spend, 250 of the 300 we can keep the difference provided he has ample clothing.

This is where the companies make their money along with paying employees slightly above minimum wage.

I suggest you take an entrepreneurship or law class dealing with a business at a local college. Not to sound condescending but there are SO many things you probably haven't considered yet.

Well that would be something I would do under the circumstances but it just so happens that my friends wife has a business degree, we just haven't told her yet because we want to present her with a better plan then 3 sentences and our assurances it will work without some paperwork and some hard research in our hands.

This. Probably the most important thing to figure out is if there is excess demand in your area for the business you're trying to start. If the answer is no, then it is definitely not worth starting a business. You said that you worked for a company that started the same way you're trying to start and is now making millions. If you're trying to compete with them you're going to need to do something that differentiates your business from theirs. Whether it's lower prices, better care, nicer grounds, etc. You're going to need to do something so that even if there is an excess demand the customers will choose you over them, which might be tough to do. Like its been said already, I think it would be a good idea to take a class in entrepreneurship and talk to an experienced attorney in your area.

Well the thing is that this isn't something that one, or even many companies can do on their own, it takes time to open new homes and get the ball rolling. Our company this year opened 10 new homes and has a total of 27.

Now for those who don't know our governor Granholm has in the past few years closed EVERY SINGLE MENTAL HEALTH HOSPITAL in the state to cut our budget, each one housing hundreds if not thousands of patients who now have to be taken care of through families or are left to rot on the street. Even with a dozen companies the list for potential clients is longer then santas Christmas list.

As for competing against them, the companies currently doing this are keeping their houses close so if we were to move a few counties over we would have a untapped area since most people looking to put their family into a home want it to be a close to home so it is easy to move out of the area to avoid competition but with so many clients due to the closing of the hospitals we wouldn't even need to.

Offering something different is not hard. A lot of these companies cut corners to get started which is what you do but they are doing it to the extreme level. I don't want to be like that and I know with the money the government gives us is more then enough to supply them with what they need and also give us the money to profit.

[Vandole]

call MTV and start a reality show.

[Syntex]

call MTV and start a reality show.

I think anyone could turn out better stuff then the shit they call shows on that channel now a days.

[Miragemaiden]

It's been said a couple of times, but I cannot stress enough how much you seriously need to sit down and physically WRITE OUT a business plan in full before doing anything else. This is a step that is too often skipped, but is essential regardless of the business size and will help you to define and focus your objective using information/analysis; allow you to use it as a selling tool for financing; uncover omissions/weaknesses in your planning process; and solicit opinions/advice from people, including those in your intended field of business (highly recommend you seek this advice from a good set of experts as it is necessary to prevent you from undergoing any unnecessary hardships).

A business plan generally consists of a sound business concept, your market/industry, location, management, financial control (how much it'll cost to start it/operate it and when you expect to turn a profit and how much), business focus, mindset to anticipate change (a HUGE concept to consider when building any business as roadway changes, construction, economy, heatlh, etc. (things out of your control) could drastically affect and thus bring down your business--sadly a lot of businesses suffer or go under do to these types of changes alone).

Fyi: avoid optimism. Be extremely conservative in predicting capital requirements, timelines, profits. Few business plans correctly anticipate how much money and time will be required. Hence you really need to sit down and do your research. And though you stated it'll be just the two of you, management and accounting are two areas where a lot of businesses either fail or drown in. You can have a great business, but if you don't have proper management (particularly of people), said business will suffer. Thus any type of business management and accounting class will help.

Some helpful links:
http://www.planware.org/businessplan.htm (kind of a "how to" for writing a business plan)
http://www.bplans.com/home_health_ca...summary_fc.cfm (a sample healthcare business plan you can skim through)

[Syntex]

It's been said a couple of times, but I cannot stress enough how much you seriously need to sit down and physically WRITE OUT a business plan in full before doing anything else. This is a step that is too often skipped, but is essential regardless of the business size and will help you to define and focus your objective using information/analysis; allow you to use it as a selling tool for financing; uncover omissions/weaknesses in your planning process; and solicit opinions/advice from people, including those in your intended field of business (highly recommend you seek this advice from a good set of experts as it is necessary to prevent you from undergoing any unnecessary hardships).

A business plan generally consists of a sound business concept, your market/industry, location, management, financial control (how much it'll cost to start it/operate it and when you expect to turn a profit and how much), business focus, mindset to anticipate change (a HUGE concept to consider when building any business as roadway changes, construction, economy, heatlh, etc. (things out of your control) could drastically affect and thus bring down your business--sadly a lot of businesses suffer or go under do to these types of changes alone).

Fyi: avoid optimism. Be extremely conservative in predicting capital requirements, timelines, profits. Few business plans correctly anticipate how much money and time will be required. Hence you really need to sit down and do your research. And though you stated it'll be just the two of you, management and accounting are two areas where a lot of businesses either fail or drown in. You can have a great business, but if you don't have proper management (particularly of people), said business will suffer. Thus any type of business management and accounting class will help.

Some helpful links:
http://www.planware.org/businessplan.htm (kind of a "how to" for writing a business plan)
http://www.bplans.com/home_health_ca...summary_fc.cfm (a sample healthcare business plan you can skim through)

This is a great help and resource, thanks for posting it.