Julie DeLong and Alex Mic-Podar founded Backyard Bookkeeper in 2008. (Photo courtesy Backyard Bookkeeper)

The independence, flexibility and potential financial rewards of owning a business persuade over 5 million U.S. entrepreneurs to take the plunge each year. The founders and owners of Salt Lake-based Backyard Bookkeeper, Backyard Payroll and SPC Strategies, locals Julie DeLong and Alex Mic-Podar tackle tough questions affecting entrepreneurs today. 

DeLong has written several articles for Intuit and Forbes Magazine and was an adjunct bookkeeping professor for the University of Utah. Mic-Podar has started a total of seven businesses and provides coaching and consulting services. She is a board member for multiple nonprofits and was a 2023 recipient of the Utah 40 Over 40 award. 

This is the second article in a four-part series about how to start and grow your business. (Visit Part 1 here.)

Why is it important to write a business plan? How do I write one?

Mic-Podar: A business plan creates a roadmap to keep you on track as you launch and grow. If a bank or other lender asks you for one, they don’t need it to be fancy. They are mostly looking for confirmation that you have thought things through, your business is viable and you are a good credit risk. The fancy online templates are actually only useful when you’re formally pitching to investors. Instead, focus on creating a living document that you update regularly as your plan changes. 

DeLong: There are free, simple templates online that help you write a business plan. Include at least the following:

• A brief description of your business and its purpose. This helps with sales and networking, and writing it down makes it easier to remember and tweak over time.
• A marketing plan. Include results of any market research and a list of platforms and marketing channels you plan to use. As you develop your business, use this as a to-do list.
• A budget with operating expenses, expected costs and a projection of your break-even point. I guarantee you’ll incur expenses you never imagined. Update your budget regularly and use it to determine how much revenue you need to break even. This will drive your sales goals.
• A list of resources. Where can you go to find answers? Include accountants, lawyers, professional organizations or communities in your industry, etc. Social media offers free resources and support groups, and you probably have friends and family with connections. Make a list and reach out when you have questions! 

How should I track my finances? How does this help my business grow?

DeLong: It is very important to separate business and personal expenses. Open a separate business checking account. Deposit all business income here and pay all business expenses from this account. If you use Venmo, create a separate business Venmo account. If you need a credit card, open a business card or dedicate a personal credit card for business use only.

Limiting all business transactions to dedicated accounts means you don’t have to go through personal bank and credit card accounts when it's time to report income and expenses. All your deductible expenses will be in one place.

Keeping a separate bank account also protects your personal assets, simplifies taxes and bookkeeping and gives you a clear picture of your cash flow, income and expenses. When you have accurate numbers, you can determine where to cut expenses and how to increase or focus on certain revenue streams.

How do I get funding?

DeLong: There are three basic approaches: business loans, alternative financing and bootstrapping. 

For business loans, start by finding out what business credit products are offered at the bank where you opened your business checking account. Sometimes those products are Small Business Administration loans. If you're brand new, you will almost certainly have to provide collateral or sign a personal guarantee to qualify for most business loans.

Good payroll software will calculate the different employer and employee taxes, including income tax. (Photo courtesy Pixabay)

Think of the SBA as a wholesaler. You can get certain loans directly from the SBA, but they also offer various loan products that you apply for through banks.

Many websites connect you with credit networks and match you with multiple loan products. There are a lot of really expensive loans, so be careful what you commit to, and watch out for short-term loans in particular. Be mindful of risks and manage them wisely.

For alternative financing, ask around your network, and try friends and family for crowd funding. There are multiple “pitch events” here in Utah where you present your business to an audience. There is usually a prize with some combination of cash, consulting or services in trade. 

Mic-Podar: Two regular local events that come to mind are Third Thursday and ShitPitch. There are also pitch events and contests specifically for women founders. Search online to find others! 

I also recommend looking for small business grants. WBC Utah has a list of grants available to women entrepreneurs, and there are economic development grants, too. If you just need a small amount to get off the ground, try the Utah Microloan Fund. 

DeLong: Bootstrapping is financing your business yourself. If you don’t qualify for a business credit card, for example, you can designate a personal credit card as business-only and use it to make business purchases.

If you do use a personal card for your business, don't use it for anything else. Start with a zero balance. Make credit card payments out of your business checking account. If the checking account doesn't have enough money, transfer personal funds in. Don't just spend personal money directly from your personal accounts. You want all business expenses and income in one place.

Mic-Podar: Don’t let lack of financing get in the way of launching!

Do I need business insurance?

DeLong: Businesses are not necessarily required to have insurance. Some industries require insurance, and some don’t. Find an insurance agent familiar with small businesses and see what you need. 

Even if your industry doesn’t require insurance, if you can think of a scenario where someone might sue you, you need basic business insurance. 

Insurance is always worth getting competing quotes for, even if it’s not required. The competition helps confirm you're not overpaying for irrelevant policies. You should be able to get a basic liability policy for less than $500 per year.

The minute you have an employee, you need workers’ compensation insurance, even if the employee works in an office and doesn’t do anything dangerous. Talk to your insurance agent. Most payroll providers have a workers' comp add-on (see more info on payroll below). 

If you work from home, I also highly recommend getting an umbrella insurance policy. It's good to have, whether you own a business or not. If anyone ever comes to your house or business and breaks a leg and sues you, the policy will protect you. My policy is just $11 a month.

How do I find good employees?

Mic-Podar: Think of employees as a valuable asset that you invest in. As you would with any asset purchase, take your time hiring to find the right people. It is so much better and easier in the long run to carefully hire and train good people than to make quick decisions and hire and fire multiple times. 

Make sure the position is well-defined in the job description so it attracts the right kind of candidates. Test their knowledge and abilities (if needed) in multiple ways through multiple interviews in multiple settings. People behave differently in different environments, so this will give you confidence that you have found the right person. Follow the 80/20 rule: if someone can do a job 80% as well as you can, it is worth it to hire them.

When hiring employees, Mic-Podar and DeLong advise being careful and methodical. (Photo courtesy Pexels)

DeLong: Post the job on a reputable job site like Indeed (paid), on free online job boards, or in relevant social media groups. As Alex said, take your time hiring. Don’t ever hire someone after just one interview.

Decide what's important and recognize that your employees' success is about 50% dependent on you. You can't just hire somebody, throw them into the thick of things and walk away. There has to be training and follow-up.

Tell them what you want and then follow up to make sure they’re doing things correctly. An employer needs to provide adequate repetition and follow-up and then hold workers accountable. The accountability piece is really important. 

Keep good written documentation of everything. If you discipline an employee, take notes on what happened. If you need to correct them, give them another chance or two. Avoid firing somebody without documenting that you told them how to do the job correctly and that they agreed. If you don't have documentation and they apply for unemployment, you’ll have to pay for it.

You also need to have an employment agreement in place. A lot of that can be DIYed, or a payroll service can help. 

What about payroll?

DeLong: Don't attempt to do payroll without payroll software to help with taxes and compliance. There are multiple taxes to track with all kinds of nuances to paying and reporting. Even in Utah, which is relatively simple, there are technically SIX different kinds of payroll taxes that are paid to THREE different government agencies on FOUR different forms. It’s not worth attempting to do it yourself! 

Good payroll software calculates all the withholdings and taxes, withdraws them from your bank account, sets them aside and submits them to the proper entities for you. We highly recommend Gusto, but there are plenty of payroll software providers that operate the same way. 

The software provider walks you through the entire setup process and tells you exactly what to do, how to create the necessary tax accounts and what to expect. You can also hire an accountant or bookkeeper to do it, or the software provider can usually do it for an additional fee.

After payroll is set up, everything takes care of itself. All you do is log in when you want to run payroll, enter the hours or pay amounts and the software will tell you how much will be withdrawn from your account and facilitate direct deposit to your employees.

People sometimes hire workers as contractors to keep things simple and avoid dealing with payroll. This is risky because if you act as a true employer, telling workers what to do and how to do it, then by law, it’s an employer-employee relationship, and you must withhold taxes from their wages and report wages on a W-2. We strongly urge business owners to set up payroll if this is the case.

How do I know if I’m ready to launch my business?

Mic-Podar: You will never be 100% ready. Stop looking for perfect conditions; they don’t exist. Move forward with what you have and learn and adjust as you go!