Janet Cone, CMP, president, Compass View Events, LLC, Sudbury, Mass., focuses on events ranging from high-level executive meetings to multiday events for hundreds of attendees.
Robin Craven is partner with Lynn Johnson in Alliance LLC, Richmond, Wash., a meeting management, consulting, and planning company.
Kirk McNeill, CMP, is president of McNeill Inc., West Jefferson, N.C., a full-service meeting and event planning company.
Toni Sylvester, CMP, is president of Sylvester Management Corp., Irmo, S.C., whose clients include corporations, associations, and state and government agencies.
Ellen Toups, CMP, is president of Outsources, Alexandria, Va., a full-service conference and event management firm.
Corporate Meetings & Incentives: When you began your business, did you get a small business loan? How?
Janet Cone: I began by taking a course through the Small Business Administration, where I learned about accounting and tax reporting. (The SBA is the nation's single largest financial backer of small businesses. Visit its Web site at www.sba.gov.)
Ellen Toups: I turned to SCORE (The Service Corps of Retired Executives, see story, page 42), and they proved to be helpful. However, we did not end up taking out a small loan.
Of short-term and long-term loans, which worked better for you, and why?
Kirk McNeill: Short-term, to keep cash flow tight.
Toni Sylvester: I've only used short-term loans.
If you didn't need a loan, can you comment on why?
JC: I purchased my office equipment with cash and worked out of my home. At present, I have a low-interest line of credit for cash flow, which is critical in a small business. There's no sense in paying 18 percent on a credit card if expenses come in before reimbursement! Better to pay with “cheap money” and avoid those expensive service fees.
TS: I used personal funds to start my business, and I have worked with my bank to fund business growth.
ET: I'd saved enough money to do this without a small business loan. Also, we opened the business while working part time, so we purchased much of what we felt we would need and bought the equipment and memberships along the way. As of now, we have not needed to take out a small business loan — although we've thought about it many times!
One of the first things you had to think about was office space. What did you do?
Robin Craven: Both Lynn and I decided to work from home, for convenience and efficiency rather than financial reasons. Pros: no drive time, don't have to get dressed up, flexible work environment, can do office work at all hours. Cons: can do office work at all hours, isolation, many possible distractions.
ET: I rented space. It's amazing how expensive it is, but … we've done it now, and I can't imagine having it in my home. Although since this has been the worst winter in seven years, I have rethought that, too!
Can you comment either on how you converted space in your home or how you searched and found office space?
JC: I converted space in my home first by removing any home-related items and started with an empty space. I try to make it a place I want to be — soft lighting, comfortable seating. I believe that having the right tools makes the job easier and more enjoyable.
TS: I looked for office space near my home and compared prices of several offices offered for rent. It is an attractive office building in a suburb convenient to downtown Columbia, and I don't have to fight traffic. Plus it is convenient to banks, the post office, office supply stores, and other businesses.
ET: We determined the best possible space and worst-case scenario — and then drove all over town and wrote down the phone numbers in all the buildings that had an ad for office space. Basically, we networked for it just as if it were a new piece of business!
Do you lease or own office equipment?
JC: I purchased my equipment. I have purchased six computer systems in 12 years — one every two years since 1990.
RC: We both purchased. I like the idea of purchasing because as I upgrade, I have given my old computers to family members. I have also donated noncomputing equipment to a nearby school as a tax writeoff.
ET: We first leased, but then we quickly decided to buy — we bought computers, printers, phones, desks, chairs. If you keep your eyes and ears open, there's always a large company getting rid of equipment to upgrade theirs. We took advantage of that and have everything but a copier!
What office tool would you say every independent should have, regardless of the expense?
JC: The best computer system and phone system you can afford. High speed Internet access, and walkie-talkies to bring on-site. I use eight to 10 at every meeting.
RC: Definitely your computer. Both Lynn and I are chained to our computers. I spend more than 60 percent of my time using my computer every day.
When you encountered the bevy of taxes associated with a business, what was the biggest surprise?
JC: The biggest surprise my first year was that federal taxes were not deductible! When I was reviewing my deductions with my accountant, and I started calculating how much tax I owed, I was shocked. I had been so careful to put away some portion of each payment into a tax account. It didn't seem possible that I could have miscalculated by so much! But I bounced back and made sure I knew exactly what the laws were from that point on. That lesson taught me not to assume. Know that you know.
TS: I was surprised with a local business tax.
JC: As a sole proprietor, I found that self-employment taxes were quite high versus being an employee, i.e., being self-employed means that you must pay your own portion of the matching taxes for Social Security, Medicaid, and Medicare.
TS: Also, people need to factor in payroll tax when considering the cost of salaries to the company.
What advice about taxes do you have for people in terms of making sure that you can pay them?
JC: Have money set aside that you can easily get to. Clients may not be able to pay on time, or the invoice may get lost — or your contact is on vacation and leaves an invoice on their desk. So as hard as it may be to discipline yourself, set aside some portion of each payment into a separate account, or plan that an entire payment be earmarked for the IRS.
KM: Watch your cash flow.
TS: Become familiar with all of the required taxes and deadlines to pay them so you don't run into penalties and interest. Don't get behind, or you'll find that the cumulative amount is too great to pay.
Where can people find a good accountant?
JC: You should surround yourself with the best people you can find. They may cost $175 an hour, but they may be able to save you $1,000.
ET: Make sure that your accountant understands your business, your personal situation, county and state requirements, and the requirements of the business entity you have — an LLC versus sole proprietorship and so forth.
When you considered a sole proprietorship versus incorporating, how did you decide?
RC: We decided to incorporate for the liability protection, and we wanted to demonstrate to our market and clients that we are professionals and in business for the long term.
TS: I felt that incorporation signaled I was serious about being in business.
ET: The amount of taxes and benefits to a small business owner played the most important role, and the fact that our staffing fluctuates so dramatically; I made the decision to stay a sole proprietor for now.
When should a company make that decision?
RC: Early. You need to understand who you are and how you want to market yourself. I think it's important to take care of your business setup early so you can focus on marketing and working.
ET: For us, it is constant reassessment as finances change. We are thinking that if we grow, we will incorporate.
How do you know when you've gotten big enough to hire an employee?
RC: We are at that point now. Since we work 2,000 miles apart, it is likely that we will both hire a part-time person, at least initially. I need someone to handle the office/clerical/paperwork component.
KM: When you have three clients andin hand.
TS: You can begin with part-time or even temporary help and then move on to hiring someone full-time. The nature of meeting planning means that the work load is uneven, so there will often be peaks when more help is needed and valleys when it isn't. It is good to have some people — associates — you can call on to help out when you are busy.