Accounting Basics(Optional)

I believe that understanding some basic accounting principles is a must for a future entrepreneur. The reading included basic information about General Ledger, Journal Entries, Cash Receipts and Disbursements cycle, payroll, bank reconciliation, investments, and other topics. However, I would like to give an example showing understanding of accounting is significant.

I’m taking an Auditing class, and we had a lecture on Fraud. A family friend was an accountant at a small family business for a long time. She used about $500,000 of business money on her personal needs. It was going for some time, but one day she booked her vacation on a business credit card and it showed up on the statement. Business owners would never think she could do something like. They were not interested in looking over accounting documents, and never checked/reconciled the cash balance. There are millions examples like this one. Entrepreneurs should have basic idea of accounting principles and should show interest to finance activities within the company.

Dot Com to Dot Bomb

I heard about Dot Com and Enron Bankruptcy in almost all my classes. We discussed Enron bankruptcy, some accounting issues and unethical behavior that led to bankruptcy. We also discussed how the market crashed in 2000. However, I didn’t really know what exactly happened with Dot Com Industry. Professor outlined five stages of the Dot Com to Dot Bomb process:

1. An innocent beginning.
2. Boom!
3. Insanity!
4. Bust
5. The crawl back to sanity.

Internet and networking was really new for people. People were paying money for having an email address. The industry was changing very fast. Other companies started providing services for free for which other companies still were charging. A lot of companies went public. The equity on the companies in Internet sector and related fields rose rapidly. However, It was all based on fiction. Some people made a lot of money; some investors lost billions of dollars. As a result, public lost confidence in the nations’ securities markets. In 2002 Sarbanes Oxley Act was issued.

Michele Armstrong

Michele Armstrong is a HR senior manager at Vulcan, Inc. She worked 8 years for this company. First of all, I would like to say that I’m graduating this quarter and applying to so many places right now. Her advices were really valuable. I learned about the process of job posting, applicant systems, and hiring agencies. The first source of recruiting is Employee referrals. The next one is Graigslist.com, Linked In, Twitter and Facebook. I didn’t know that companies could post open positions on facebook. Another valuable advice was a salary offer negotiation. I was always feeling uncomfortable to talk to employers about salary. Now I will do a salary research before coming to an interview. I was also amazed when Michele said that they check credit history. After she explained the reasoning, that the person will treat company’s finance the same way as his personal finance, I thought that it is a good procedure. Her lecture was also helpful for writing a business plan. She explained that compensation growth should be determined on early stages of the setting up the company, because it will be hard to fix it later.

Derek Young

Derek graduated with politics and biology degree. He opened his first company in 1999, second in 2000, and 3rd in 2001. If it worked, he continued working on it, if not, he was moving on to something else. He never took outside money, because he said it would change the whole business and his world if he had to pay to outside investors. He was working in Apartment Management Company. They had quick writers, designers that provided extremely high quality. However, this business was cost effective.

Right Now he has few businesses which are Exit 133, Suite 133, and Seasonal View. He started Exit 133 project in 2005, when he still had a full time job. This project has a community draw, people support it. Seasonal view is his main source of income right now. He began this project with few friends that were frustrated with their jobs and wanted to do something else. Derek said that being flexible is important in order to be entrepreneur.
His income is coming from multiple sources: writing articles for magazines, outside consulting, and seasonal view.

I was amazed how he said that he has conference calls at 5 o’clock on Monday mornings. After I wake up at 6 o’clock I’m still in a sleep mode for a few hours. Derek was a good example of self-motivator. I enjoyed listening to this guest speaker, and I learned that there is a lot going on in Tacoma community. There are so many people who care….

1 question was asked to a guest speaker.

Bruce Kendall

Bruce Kendall started his presentation talking about branding. Branding is very important. It is sending message to the market. Economic development Board for Tacoma with its CEO, Bruce Kendall, create Jobs and Wealth in the area. They are creating opportunity for citizens and businesses of Tacoma-Pierce County. Their primary job is making product, selling it to another outside market, and bringing money to this market. 31 % of Pierce County employment is in Aerospace, Boat building, Business services, electronic shopping, clean tech, and others. Bruce said that it is impossible to do everything. The big five clusters are Aerospace, CleanTech, IT, Life Science, and Logistics International Trade. I learned about incubators, places for start-up Companies that have discounted place with receptionist, accounting services, and etc.

Building out your own company

Before building the company, I will get an advice from a lawyer with some experience in entrepreneurship. Second person I advise would be an accountant. Accountant will help to do the budget and project the revenue and expenses, will estimate the cost to start up the business and tax effects. I will also get some advice from a successful entrepreneur who went through opening the business and who could share valuable lessons they learned a hard way.

The funding of company is important element. The first resource would be myself and my savings. Second resource is family and friends. Next resources will be Angels and VC.

Choosing and building a team is also important element. Assembling people doesn’t make a team. Employees should have passion to achieve a common goal. High Tech company will need a president, tech, marketing, advertising, lawyers, accountant, HR, developers, designers, graphics, sales, customer service, production, Q&A employees.

Guest Speaker- John Dimmer

John’s lecture gave a good idea of process of getting money for the business. He outlined the order of resources we should use. First, the owner will try to save and invest money as much as he/she can. Second source would be friends and families that should give 25k to 150 k. Personally, I would probably like to skip this source due to chance of losing good relationship with friends and family members. Third source would be angel investor. I have never heard of those guys. They are private individuals who invest money in start-up businesses and meet the definition of accredited investors. Finally, the last source is Venture capital that could provide 4 million and up.

The article “How to Negotiate a Term Sheet” by Tom Taulli was also helpful. I didn’t know a lot about Venture Capitalist. It gave me a basic idea of the process and things I should be aware of. I realized that people can get in financial trouble if professional advice is not used.

Jon Goodman

I really liked Jon Goodman and her lecture because she was talking about business plan and giving advices learned from her own mistakes and her own experience. In my opinion, those advices are more valuable than reading the theory in the book about business plans. One of the valuable suggestion/ advices she had for future entrepreneurs that would give motivation to anybody is “Entrepreneurs have no failing, they have experiences.”

Before writing a business plan, feasibility analysis should be performed which will show if the product is attractive to the market. A lot of research needs to be done. I loved how the speaker said that “if you steal from one, it is plagiarism; if you still from many, it is research.” Other advises when starting a business were hiring experienced advisors, lawyers, and seasoned accountant.

Strengths and Weaknesses starting a business

Some of my strengths starting a business are patience, punctuality, willingness to help people and answer any questions. I am goal oriented and I am not giving up. I think it is important for entrepreneurs to see their goal in front of them and try to achieve it by overcoming barriers. Accounting skills is another strength that gives me ability to back up the idea with numbers, see potential problems or opportunities in the company. In addition to above listed strengths, I would like to add computer, customer service, and team working skills.

The first weakness starting a business is I’m not a risk taker. If I am taking any risks, I will evaluate all pros and cons of the specific situation. I would draw the picture of the worst failure scenario, and if it doesn’t look good, I wouldn’t take that risk. Sometimes it takes me too much time to make a decision. To be an entrepreneur, people need to make decisions quickly. Shyness, lack of experience dealing with mean people are other weaknesses.

Guest Speaker-Ron

Ron’s lecture gave me a better idea what the business plan was all about. One of the important things I learned was the significance of the first step in writing the business plan, identifying the audience. There is one business plan, but it should slightly be different for two types of users. First one is for investors, which is showing the growth and business in a Long Run. The second one is for internal purposes showing the plan for the next quarter, for example.

When I was reading the business plan template, the projection of revenue section made me to stop and think about it. In a new business, with a new technology, no previous data on pricing, no number of items sold I would have to make projections of revenue. Ron answered my question. The revenue projection can be made up on facts.

5 Business Ideas

Here are my Business Ideas:
1. Live video wedding transmission. Since nowadays weddings are held in various places and not all invited guests are able to attend it, it would be great to have the wedding be video streamed live over the internet. So, the relatives can share the joyous moments. It is simple to do, but cost affective.
2. Digital menus for restaurants. The menu screen will display a message from a chef, his/her biography, and favorite/suggested dish; list and pictures of the dishes that are offered to customers, brief history of the dish, suggested drinks, FAQ’s, option to order or call a server. Kids menu will feature an entertaining option for kids. I will have to evaluate the cost and research the potential customers for the product. As of right now, it seems to be a great idea.
3. Vending closet for home. I always had a dream to build a closet with digital features of a choice of clothing like on-line store. There will be a screen with list/pictures of shoes, sweaters, coats, and everything you have in the closet. Instead of pulling everything out, you can scroll through the pictures, make your selection, and have it vended out to you.
4. Onsite gas delivery. For convenience matter people will pay the money for someone to deliver a gas for them on the spot thru the online request.
5. Easy Beverage. Happened to have no cash or credit card in the wallet but really thirsty? No problem. Walk up to vending machine, dial in your cell number and after 4 –digit confirmation (could be any), enjoy your beverage. The cost of the drink will appear on your cell phone bill.

Opinion on etrepreneurship reading

Entrepreneurship is a challenging profession. A lot of people looking at entrepreneurs assuming it is a perfect job. You don’t have to work for anybody; you are independent and can set your own schedule and your own salary. I heard on the radio that one lady wanted her husband to open own business, so he could set his own salary. She realized that owning the business is way more challenging than she thought when they faced the problems.

Some of the disadvantages the author of the text mentioned were frustration, burnout, and sorrow along the way. I absolutely agree with this statement.

My mom used to be an owner of the little store selling outwear clothing. I was little at that time and all I remember is her hard work and often time frustration. My aunt opened the company for manufacturing some chemicals for hospitals about 5 years ago in Belarus. Only now, the company became profitable. She experienced some hard times where she had to pay salary to employees from her own pocket. My mom and aunt became entrepreneurs in a time when there were no good paid jobs in the market in Belarus.

It is more challenging to be the technology entrepreneur because of the fast changing technology market. In order to be successful, Owners of the company and their employees have to always come up with new ideas to fulfill the customer needs.