How to Estimate the Cost of Starting a Business from Scratch

How much does it cost to start your own business?

Of course, the answer depends on your business model and your chosen industry. However, a useful estimate based on a 2009 study conducted by the Ewing Marion Kauffman Foundation  puts the average cost of starting a new business from scratch at just over $30,000.

Many small businesses, particularly freelance, online and home-based businesses come in a lot lower than this, often needing only a few thousand to get started.

But averages aside, what can you do to calculate your specific start up costs? Read on.

Understand the Types of Costs a Start up Will Incur

Before you do any estimating it’s important to understand how start up costs are categorized. All start up costs (meaning the period before you start generating income) include two kinds of spending: expenses and assets.

  1. Expenses – These are the costs for operations that occur during the start up phase, although they will continue throughout the life of the business. Start up expenses include deductible items such as travel, payroll, rent, office supplies, marketing materials, etc. Expenses also include initial organizational costs like legal fees, state incorporation fees, etc. You can write off up to $5,000 in business start up costs and another $5,000 in organizational expenses in the year that you start a business.
  2. Assets – Also known as capital expenses or expenditures, these are the one-time costs of buying assets such as inventory, property, vehicles, or equipment as well as making upfront payments for security deposits. These start up assets don’t usually qualify for deduction, however, some can be written off through depreciation at tax time.

You can read more about the difference between these two and why it’s important to keep good expense records in SBA’s Small Business Expenses and Tax Deduction Guide.

Define What You Need to Spend Money On

To estimate your start up costs, start by creating two lists – one for your start up expenses and one for your assets. Your list should be informed by the aspects of your business that will have costs associated during the start up phase, such as facility improvements or the equipment and inventory you need. But don’t forget to consider items such as brochures, business cards, and website development costs or any security deposits you need to make.  Do you need the help of a consultant, tax advisor or lawyer to help you get started?

Next, categorize these items as essential or optional – do you really need to spend money on these before you start making any kind of income?

Assign Costs

Now we come to crunch time – assigning costs to your start up “to do” list. This process is always going to be a best guess, but be realistic and use past experience, research, and advice from other entrepreneurs to guide your cost estimates. Organizations such as SCORE and your local Small Business Development Center can provide no cost and valuable advice about how to calculate your start up costs.

If you use a smartphone, another option that you might find useful is the SBA Mobile App which includes a handy tool for calculating start up costs.

Whatever you do, don’t underestimate your costs, or try to force your costs to fit the amount of money you have available. If the costs are too high, consider another approach to starting a business.

It’s All in the Timing

Remember, as mentioned above, start up costs are accrued before you have income to supplement your business. So develop your budget with this in mind. For example, start up expenses such as rent and payroll are only that until your business is operational, once you reach that point they become running expenses that you take out of your profits as deductible against your taxable income. So you may want to delay some of your depreciable costs until your business is up and running.

5 Ways Your Business Could Be Unintentionally Infringing on Intellectual Property

CaptureIntellectual property is a unique legal concept that grants ownership rights over novel ideas, creations, artistic works, brand identifiers and more. Much like a landowner has the right to prohibit trespassers from entering or occupying their property, intellectual property owners have the right to prohibit the unauthorized commercial use of their brainchild.

Civil damages and penalties arising from the unauthorized commercial use of intellectual property can financially obliterate a small business, whether or not infringers knew they were doing anything wrong. Therefore, understanding the nuances between different intellectual properties and the rights they confer can be imperative to the survival of a cash-strapped small business.

But before we delve deeper into this bottomless abyss of legalese, it is important to summarize the three different types of intellectual property:

  • Copyrights protect creative works of authorship, such as drawings, pictures, articles, videos, books, musical compositions, software, etc.
  • Trademarks protect business names, slogans, logos and similar marks that carry a “likelihood of confusion.”
  • Patents grant inventors a limited monopoly to reproduce a useful and non-obvious invention in return for full public disclosure of the invention. A patent can include a unique process or method, a machine, a tool or even a chemical composition.

Now that we have a basic understanding of the different types of intellectual property, let’s examine the most common ways small businesses unintentionally infringe on one of these three protections and how your business can prevent it.

1. Using a Picture Without Permission

Small businesses often scour the web for images to use in print advertisements, brochures, coupons and websites. Many business owners fail to realize that pictures on the web are often copyrighted, and using them without permission can result in hefty fines up to $150,000.

Popular image-based websites, such as BuzzFeed, have recently been sued for using copyrighted pictures without permission. For example, photographer Kai Eiselein alleges that BuzzFeed used his picture of a soccer player without permission, demanding a whopping $3.6 million in damages. Although it is unlikely that Eiselein will recover the entire $3.6 million, he will probably garner a sizeable amount.

There is a common misconception that using copyrighted material is acceptable as long as you give credit to the original copyright owner. This is not true, and merely giving credit to the copyright owner may not be enough to prevent infringement. “Credit” is different than “permission.”

To avoid such issues, small businesses have a few different options. The safest option is to obtain permission by receiving a license from the copyright owner. Ideally, a license agreement should be in writing to minimize misunderstandings and disagreements that often arise from verbal licenses.

Small businesses can also utilize Public Domain sources whose copyrights have expired. Another source is Creative Commons, which features some media with licenses that allow for fair use, but Creative Commons has recently beenunder fire over copyright issues, so even in these cases, it is best to contact the copyright owner to receive direct permission. The last option is to abstain from third-party media altogether.

2. Using a Business Name Similar to an Existing Trademark 

Trademarks not only prevent the same name, slogan or logo from being used by a different business, but they also prevent names that carry a likelihood of confusion with an existing trademark. Likelihood of confusion occurs when two trademarks are similar and the two companies offer similar goods or services, leading consumers to believe that they come from the same source. Thus, similar trademarks can peacefully coexist if they offer unrelated goods or services unlikely to cause marketplace confusion.

A few years ago, a small bakery named “My Dough Girl” was essentially forced to change its name after Pillsbury, the conglomerate responsible for the famous “Doughboy” mascot, claimed it was too similar and could cause confusion in the marketplace. In a similar case, women’s clothing retailer Victoria’s Secret forced a small business named “Victoria’s Little Secret” to change its name because there was a likelihood of harm to Victoria’s Secret popular trademark and brand.

Before your small business invests capital in marketing and promoting a business name, logo or slogan, it is prudent to check both the same and similar trademarks within the your business’ industry to avoid any potential conflicts that may force you to start again from scratch. This article can provide guidancefor conducting a word or mark search.

3. Using a Song Without Permission

Like images, musical and lyrical compositions enjoy copyright protection. It might sound like a good marketing ploy to use a famous song or jingle to help promote your company’s offerings, but it could lead to possible lawsuits and hefty fines. Again, simply giving credit to the musical or lyrical composer will not be enough to protect your business from liability.

GoldieBlox is an up-and-coming company aimed at inspiring little girls to innovate and build with uniquely manufactured engineering and construction toys. One of its promotional videos used a copyrighted song by famed 1990s rap group the Beastie Boys without permission. GoldieBlox claimed that the ad was a parody and the use was protected by copyright’s “fair use” doctrine. This, however, wasn’t the case, and the Beastie Boys and GoldieBlox eventually reached a settlement that required GoldieBlox to issue a formal apology and to make a donation to a charity of the Beastie Boys’ choice.

4. Using a Celebrity’s Name, Picture or Likeness Without Permission

A hybrid intellectual property and torts concept called the “right of publicity” grants individuals the right to protect their name, picture and likeness from unauthorized commercial use. Many states have codified the right of publicity with statutes, while other states offer protection through common law. This concept not only protects a celebrity’s name and picture, but also prohibits impersonators that exploit a celebrity’s likeness.

Maroon 5 lead singer Adam Levine brought suit against video-game producer Activision for using his likeness in a game called “Band Hero” without his permission. The suit claimed that, although Levine allowed Activision to use his name and song in the game, he did not allow Activision to use an avatar with his likeness that sang songs from competing musicians. Levine claimed that he would not have allowed such use if Activision sought permission.

In another case, Bette Midler famously won a verdict against Ford Motor Company for using an impersonator that exploited Midler’s distinctive voice. The appellate court concluded that an individual’s voice is part of their identity and it is unlawful to imitate a voice without permission. So the next time you’re creating a new commercial or company video, be careful about impersonating a celebrity or public figure.

5. Allowing Employees to Illegally Download Music, TV Shows or Movies 

This may not be immediately apparent, but your business could be liable if employees download copyrighted music, TV shows, movies and software while at work. Two different legal theories could make your business liable for such infringement. In one such theory, contributory copyright infringement occurs when your business turns a blind-eye to employee copyright infringement. In the other, vicarious liability could make your business liable as long as the employee is acting in the “course of employment.”

Increasingly, businesses are allowing employees to listen to music while at work. If this is a perk at your organization, it is vital to ensure that they are listening to music through a legal intermediary that does not infringe on copyright. To help ensure compliance, enforcing an internet use policy could be helpful to inform employees of your business’ expectations. However, simply distributing a policy will not insulate your business from legal liability. You must continually police employees’ internet use to ensure no infringement is occurring.

Better Safe Than Sorry

If there is one thing you take away from these examples, it should be that it is better to be safe than sorry. If you are unsure whether using a picture or song will result in infringement, err on the side of caution, and simply abstain from using it. A single case of infringement can debilitate your business, and using protected material is never worth the risk of financial ruin.

The Three Most Common Pricing Mistakes

pricingAll the years I’ve been following business, strategy and small business—from the late 1970s through today—I’ve always wished for a magic formula for proper pricing. What’s the right price for this service? How should you price a new product? In teaching, writing and answering emails, this question comes up all the time. And, much as I’ve looked for the right answers, they aren’t at the back of the book.
Pricing is magic. There is no formula that works for you, or me, or any generalized group. You set your pricing as a matter of situation, strategy, costs, competition, weather, instinct and all of the above.
While I can’t really tell you how to set your pricing right, I can at least share something that I’ve learned—in classrooms, in making mistakes, in growing my own company—about how NOT to set your pricing.
Here are the three most common pricing mistakes that I see. And, just to be clear, while I wish I could drum up some rigorous research to back me, this is based on anecdotal evidence, common sense, and three decades of dealing with business problems.
1. Trying to be the lowest price provider
One of the most damaging clichés in business is the idea that the lower price gets the highest volume. The whole lower price equals higher volume idea, a fundamental law of economics, is for undifferentiated commodities, not your business or mine.
Successful lowest-price strategies are unusual. They usually take a lot of capital, resources and visibility. What works for Costco and Walmart doesn’t work for the corner store, some discount airlines and gasoline stations, but those strategies usually require a lot of capital and very large scale implementation.
2. Mixing your pricing message
We forget way too often—and too soon—that price is the most powerful marketing message you have. Do you think people don’t buy your work because it’s too expensive? But isn’t it worth it? Don’t you believe in it? It’s about positioning. How are you different from the others? Is what you sell better than the one across the street? Does your price say so?
Would you get a root canal from the cheapest dentist in town? Would you save money by buying two-day-old sushi? And why isn’t the cheapest car made the most popular?
I lost a consulting job I really wanted once when I bid $25k for it and a competitor bid $75k. The guy who gave me the bad news told me everybody liked my proposal, but they wanted the best, so they went for the higher price.
What would you rather have for dinner: a $1 hamburger or a $20 steak? We used to go to a restaurant that had really good food and surprisingly low prices. But I often wished they’d raise their prices so we didn’t have to wait 45 minutes or more to get a table. And guess what: they no longer exist. They went out of business. Do you think pricing had something to do with that? I do.
3. Underestimating real costs
Businesses go under when they run out of money. The research on how they run out of money is confusing and ambiguous, and there are rarely single identifiable causes. Still, just betting on what I’ve seen with my own eyes through a lot of years, I think businesses frequently run out of money because they underestimated real costs.
We talk a lot about gross margin in business analysis. That’s your selling price minus your direct costs. So if you buy that widget for $2 and sell it for $6, then the gross margin is $4, and your gross margin percent is 67 percent.
Unfortunately, focusing just on gross margin isn’t enough. Aside from the $2 you paid for that widget, there are all those other expenditures, including your rent, your payroll, your insurance, your electric and water bill, all of your marketing costs, and lots of hidden costs, like the computers and software you’ll need to buy next year. We call that overhead and tend to forget it. Which is a shame, because a lot of businesses forget about it all the way to the business grave. You run out of money.

3 Employees You Should Fire Immediately

failureSome employees just aren’t worth keeping around. Does your office have any of these types?

As a business owner, your time is limited; you hired a team of capable professionals because there’s no way you can do it all. Even if your organization runs like a well-oiled machine, there’s usually at least one team member who causes you more stress than the others. You may not even realize it, but these “time-suckers” hurt your business by drawing your attention away from the tasks you need to do each day.

While there are many types of productivity-zappers in an office environment, none are as disruptive as those who directly impact strategic decision-makers. These three types of people should be removed from your staff as soon as possible.

1. The Drama Queen

If your office doesn’t have a drama queen, consider yourself lucky. Found in almost every group of people, these individuals live life as though it’s a reality show. They enjoy stirring things up, then sitting back to watch the fireworks. You’ll likely find yourself frequently breaking up arguments between employees, only to find the resident drama queen at the heart of it. Whether it’s exposing what someone said about someone else or accusing someone of neglecting his work, these individuals will constantly require your attention as referee.

Unfortunately, drama queens do more than simply waste worker productivity. Their behind-the-scenes conversations are often negative in tone, and the attitude can be contagious. This is especially true if the drama queen directs attention to the company’s leadership, causing a general distaste for management that leads to greater problems within the organization.

Managing drama queens can be a delicate situation, since much of what they do is social. Some businesses have implemented no-gossip policies, but these policies are usually impossible to legally enforce. They can also lead employees to feel that their personal conversations are being monitored and judged. Instead, employers should document the behaviors that have led to incidents in the office and address them directly with the individual.

2. The Victim

One of the toughest challenges of managing people is knowing how to handle the ones who like to play the victim. These people avoid accountability for their own actions, preferring to blame others for bad situations. They’ll always have an excuse, and their constant complaints aren’t missed by their co-workers, who can even begin to develop their own victim mentality as a result of seeing others do it.

Even stickier is the employee who seems to always have some ailment. While every employer wants his staff to be as healthy as possible, there are occasionally people who take advantage of the employer’s generosity by claiming an array of medical conditions that, over time, turn out to be unfounded. Too often, the employer is left not knowing for certain if the person is truly ill or is simply trying to take advantage of the system.

The overriding issue in the workplace is how the person’s actions are impacting the business as a whole. One person’s chronic absences and refusal to participate will eventually be noticed by other employees, who likely will feel resentful about having to cover. To avoid issues, have a set policy in place regarding absenteeism, making it clear that after a certain number of days within a cycle, a doctor’s notice will be required. When an assignment impacts a vast majority of the staff, make it clear that everyone is required to participate.

Keep careful documentation of each incident and, if issues persist, have a talk with the employee about their issues. Make it clear that if the person continues to miss work or decline to participate in work assignments, action will be taken that may include termination. It’s important to review the Americans with Disabilities Act (ADA), since you’ll be required to provide accommodations if the condition falls into an area that would be classified as a “major impairment.”

3. The Nonconformist

These rebels without a cause are determined to break the rules, from the simplest to the most complex. If you have a dress code that prohibits T-shirts with slogans, this person will wear one every Friday. If you have a set procedure for how tasks should be completed, they’ll go off script every time. While some businesses are less restrictive than others, every business usually finds it must enact some rules to avoid problems and remain productive. These employees seem to see “rules” as “control” and want to battle you each step of the way.

Instead of engaging in a power struggle with these renegades, determine if there are ways you can work with rebels rather than against them. Often a rebel is nothing more than an independent thinker who wants to make a difference in the world, rather than just following along with what others tell them. If you can put these qualities to work for your organization, you may find you have an employee who can help your organization grow.

Sometimes, however, the rebel mentality comes from someone who takes it a step further and tries to take over. This person tends to come across as a know-it-all, refusing to listen to instruction and instead choosing to do things his own way. Worst of all, he may have appointed himself as a leader within the organization, ordering other employees around. If given enough time, this type of toxic behavior could drive some of your best employees away.

Whether an employee’s independent attitude is a benefit to your organization or not, it can definitely take a toll on employee morale. As others see that someone is violating company policies, they may begin to wonder why they have to follow the rules when everyone else doesn’t. For that reason, you’ll have to enforce your company policies in a uniform manner, whether it’s corporate dress code, office hours and attendance, meeting project deadlines, or some other clearly outlined rule.

Conclusion

Employee management is one of the toughest challenges for business owners. By identifying employees who drain productivity and slow your business growth, you’ll be able to remove them and bring in professionals who will help you meet your long-term goals.

Which Social Media Sites Should Your Business Focus On?

Everywhere you turn, social media is being touted as the best way to attract new customers and grow your business, but setting up multiple accounts and maintaining them can quickly become overwhelming. With social media sites Social-Media-Advertisingranging from personal to strictly business-related, there should only be a select few sites your brand should regularly use. A high level of engagement on one or two sitesrather than a feeble attempt at the top fivewill yield a more substantial return. Pick a couple, and interact with them on a daily basis. The varying sites can be better-suited for certain industries over others, and by knowing which ones could work best for your business, you can leverage your time more effectively.

Types of Social Media Sites

The right social media site will make all the difference for your business. It will allow the public to interact and become familiar with your brand and its offerings. Potential customers will also be able to easily look up your business on their device of choice, allowing your company to be at the top of customers’ minds no matter where they are.

Facebook

With over a billion active usersFacebook is one of the most popular social media sites on the web. It can be used in a variety of ways, but the best way for a brand to leverage the site is to set up a business account. These pages can be public and moderated, which allows you to control its tone and its content. The majority of the population has a Facebook page and is aware of how to navigate the site, making it the first stop for many when attempting to gain information about a company. Your business’ Facebook page should havepictures, updates, reviews and contact information. Facebook should be seen as a casual way to introduce your business to the world, so you can utilize it to show your brand’s personal side. They will enjoy seeing pictures of new products, participating in fun contests and even sharing their own experiences. If you only choose one social media site, Facebook isn’t a bad choice.

Google+

Google+ is not as popular as Facebook, but it does have certain features that can benefit your business. Users can interact with others in the broadest sense of the term, as you can take advantage of Google+ Hangouts and Parties to set up video calls that let you talk with customers face-to-face. These Hangouts can be a great way to introduce a new product or to explain how one of your services or products works. Not only will your customers be able to see and hear you, but they can also ask questions and give you feedback. Google+ will link your online profile with the reviews, maps and information that appears when users search for your business online. By completing your Google+ profile, your business information will have a greater chance of appearing at the top of Google searches, which can be invaluable for a company that’s trying to boost its market reach.

Pinterest

Pinterest is an image-centric social media site that can be beneficial to certain types of businesses, especially those that specialize in retail and physical products or creative services. Users “pin” and “repin” pictures and ideas they like and want to share, so photos of your products can circulate the network within hours. It is an ideal way to showcase unique ideas and designs made by your company. Businesses can create Pinboards that showcase their offerings, tag physical locations and interact with a unique group of people, which can go a long way to personalize and grow a brand.

Twitter

Twitter is a short and sweet way to interact with others on a large scale and on different levels. It can be strictly professional or more personal and casual. People from all over the world use Twitter on an hourly basis. It is a smart way to quickly promote a new item using 140 characters or less. The biggest mistake businesses make on Twitter is to not respond when others tweet about their company, whether good or bad. By ignoring the tweet or neglecting it, companies show a lack of concern for their customers. Properly using and attending to Twitter can be time-intensive but extremely effective. If your business can handle the demand of quick interaction, it can be a great way to communicate with the public. But if you are constantly behind on tweets, it won’t be the best use of time.

LinkedIn

As a professional site, LinkedIn is ideal for the social side of business. From important and interesting articles regarding new trends, new companies and even new hires, it can be the best resource for business leaders who want to connect with others in their field. The basic rule of LinkedIn is to keep your profiles professional, whether they’re being used for personal and/or business purposes. To increase your engagement, promote articles and information that showcase your knowledge and network in the field. Businesses can connect with their clients, team members and even prospective job candidates, but keep in mind that most interaction is done either through first-tier connections or through professional introductions. The site also features professionalrecommendations, which can be made from one connection to another and show up on a LinkedIn Profile. But perhaps the best feature is that the site allows potential employers to view the employment history and abilities of a candidate. Because of this, LinkedIn is an invaluable resource for both employers and employees.

Other Sites

While there are other social media sites on the web, the ones highlighted above are the major players in the online world of social interaction. It is important to choose at least one or two, and stay current with your updates and information. There is no need to choose all the platforms and struggle to continue creating and updating content for each; the best way to optimize your social media strategy is to focus on where your target customers are and to create a thriving place for social interaction with them.

But Which One Is Right for My Business?

The ultimate decision is up to you. Like many worthwhile investments, finding the right social media outlet(s) for your business may take some trial and error. While there isn’t a single choice that’s ideal for every business, you can still take a look at the overall functionality, audience and presentation style of each medium to find what works best for your brand.

Financial Considerations When Starting Your Own Small Business

Start Your BusinessIf you’re thinking about starting a small business, it’s important to look carefully before you leap. Owning a small business can be very rewarding, but it can also require a lot of time, energy and funds long-term. Taking the right steps upfront can help you increase your chance of success and maximize your start-up dollars. Begin by:

• Using the resources that are available to you — There are several free online resources that can help guide you through the steps of starting your own business. One of the most comprehensive is the U.S. Small Business Administration site at http://www.sba.gov. It offers detailed information on how to plan, implement or sell a small business and more. You may also consider meeting with other small business owners and professional consultants.

• Determining equipment needs and costs — Make a list of all the items you’ll need to purchase or lease to get a true sense of your start-up and operating costs. Will you need big ticket items such as business or office space, manufacturing and computer equipment? What about smaller purchases like office supplies and software? It’s beneficial to have a detailed list of your needs when making a plan and figuring out your costs.

• Adding up the other costs you may incur — If you plan on hiring any personnel, factor in the costs of any employee benefits, such as healthcare or dental insurance, that you may be required to provide your employees. Also consider any wages that you’ll pay and the fees for any legal, financial or tax advice or special licenses or permits if they apply to your business needs.

• Determining how much financing is needed — After you identify your start-up and operating costs, you can assess whether you need outside financing. Keep in mind that these sources may require a contribution from you as the owner of roughly 25 percent or more, depending on the type of business.

• Establishing an advisory team — Before you make major financial commitments or sign complicated agreements, seriously consider consulting with a financial professional, an accountant and an attorney. Treat your business financial plan and personal plan with the importance they deserve by putting them in writing. Not only will this hold you accountable, it will also give you something to refer to when difficult and inevitable choices arise.

• Setting up your financial accounts — After you have established the type of business entity you need, talk with your advisors about what kind of banking and credit services you may need. Shop around to see who offers the services and pricing that best meet your needs.

• Implementing a business insurance policy — Depending on your business, you may have special or additional insurance requirements and considerations. A business insurance policy helps you protect your investment by minimizing the financial risks associated with unexpected events, like the death of a partner, an injured employee, a lawsuit or natural disaster. Your state government determines the insurance requirements for businesses. Your financial lender or investors may also require you to maintain certain types of insurance to protect their investment. After implementing the coverage you need, annually meet with your financial professional to discuss changes in your business and whether or not they alter your coverage needs.

• Assessing your household budget — It’s easy for this “To Do” to get lost in the excitement of starting a new venture, but it’s critical to closely and regularly review your household balance sheet. Because of the income uncertainty that can occur when you branch out on your own, it’s even more important if you are leaving a stable paid position. Staying on top of how your new business venture impacts your personal finances can help you remain realistic about what you can and cannot afford for both your personal and business needs and wants.

Taking the time to carefully consider the viability of a small business venture and to create a business and financial strategy can help you feel more confident about your endeavor. It can also provide you with the information you need to make sound decisions that will more likely lead to greater success in your business and personal lives.

HOW TO MAKE YOUR STOREFRONT STAND OUT

small-business-efficiencySmall retailers may eye e-commerce,but brick-and-mortar retail locations still bring in the bulk of the revenue.

Online shopping may have boomed in recent years, but according to the United States Census Bureau, fewer than 6 percent of purchases were made online in 2013. Brick-and-mortar locations are still king, so small business owners need to make sure their storefrontsstand out for all the right reasons, says Danaria Farris McCoy.

As general manager of Freedom Crossing at Fort Bliss in Texas—the first privately operated open-air shopping center on a U.S. military base—and marketing director for ServiceStar Development Company in Greenwood Village, Colo., McCoy has seen many successful and unsuccessful storefronts, ranging from local retailers to restaurants. Here, she offers advice to small business owners on how to attract customers with their storefronts.

Do your research. 

It’s easy to get caught up in ideas on paper or online, but how much time have you actually spent observing your business? McCoy recommends standing outside your store for a day and watching your potential customers. Take notes on if they notice your signage and where their eyes go when passing by or looking at your store. Once they walk inside the store, note the areas they check out first. Then, do the same at the locations of your two biggest competitors and create a spreadsheet of the differences. This will show you what good ideas you can implement in your own business.

Keep it legal.

Before you splurge on any new storefront materials, complete the due diligence with your landlord and/or the city to find out if what you propose is permissible. “The best way to eliminate confusion,” says McCoy, “is to show a detailed plan and ask for feedback.” If you own your building, show the plans to your city’s planning, zoning, building and code enforcement department. If you lease your business location, check with both your landlord and lease agreement and the city for applicable guidelines.

Remember, less is more. 

“The old adage couldn’t be more applicable to a storefront,” McCoy says. “Competing for attention does not mean filling up every inch of glass. The simplest designs almost always get the most effective attention.” In most cases, passersby should be able to clearly see into your store.

Be SLICK. 

As you design or modify your storefront, McCoy recommends keeping the acronym SLICK in mind. Signage, lighting, imagery, and color should be welcoming and reflect your brand. Also, your storefront should always be well-kempt—the K in SLICK. “The cleanliness of your storefront speaks directly to the quality of your business,” McCoy says.

Leverage technology.

According to the Mobile Future Institute, cell phone penetration in the United States is 106 percent, which means there are more phones than people—many of whom use their phones to research your business. “Your storefront now extends far beyond your front door,” McCoy says. She recommends that business owners regularly check Yelp reviews, Google Maps and directory information to ensure that details such as store hours are accurate.

Also, consider using your storefront to promote your Facebook page or website, either with signage or new augmented reality technologies such as Layar. This technology allows small business owners to blur real storefronts with computer-generated images. The results can be rather surprising for shoppers.