The perils of small business
This article isn’t meant to discourage anyone from starting in a small business
I bet you’ve thought about it. You’re sick of the full-Windsor corporate grind, or you’re looking for real purpose in your day-to-day, or maybe you take a bite of that burger and think that yours really are so much better. And that’s when it hits you – I should open my own place. Yeah, I should. I can do it!
Yes, yes you can. But be careful what you wish for.
Fact: 20% of small businesses fail within the first year of formation.
Fact: nearly half fail within five years.
This article isn’t meant to discourage anyone from starting or participating in a small business.
The purpose of this article is to demonstrate the respect that’s commanded when considering whether to start a small business.
These decisions shouldn’t be made lightly, and I’m hopeful this article will prepare you to make an informed decision by balancing the risks and rewards against the inescapable realities that will come with your small business.
Below is a checklist of items to be acutely aware of as you lay the groundwork for your new business.
- BE PREPARED TO FAIL. Being prepared to fail doesn’t mean you’re resigned to failure – it means you need to be contemplating various outcomes and preparing exit strategies at multiple junctures.
- KNOW THE MARKETPLACE. If you can’t intimately discuss at least five prospective competitors in your industry, you’re not ready.
- HOW ARE YOU DIFFERENT? What differentiates you and your product or service from those already in the market?
- HIRE AN ATTORNEY. Hiring counsel to help you get off the ground is just part of the cost of doing business.
- TELL YOUR ATTORNEY WHAT YOU WANT. A good attorney will listen, process what you’re saying and then translate your narrative vision into available business structuring options to achieve some or all of your business goals.
- WHERE IS YOUR MONEY COMING FROM? The cash you need to get the wheels turning and ultimately launch is going to come from three places, and three places only: the bank, investors or your own pocket.
- WHO ARE YOU PARTNERING WITH? Give yourself a fighting chance by getting some industry know-how on your side or bringing consultants in to help.
- BECOME A TAX EXPERT. You know what I mean. Hire a CPA or other tax professional if your budget allows. At minimum, you need to understand your tax burden and the pile of forms that need to be filed throughout the year.
- UNDERSTAND YOUR LEASE. Commercial leasing is one of the most unnecessarily complex evils that exists in our world (maybe slight exaggeration). A good leasing attorney can help you understand the big picture, the specific items you really need to know and the applicable market and industry standards.
- HIRE WISELY. Start by building the right team behind the scenes – attorney, CPA, design professionals and consultants. Then get the right group of employees in place to take your business forward.
- ARE YOU MARKETING YOUR BRAND? Look, I’m just the attorney, but even I know that you have to create messaging and branding that connects with and excites consumers.
- DO YOU OR WILL YOU OWN ANY INTELLECTUAL PROPERTY? This is copyrights, trademarks, patents and few other things. Your intellectual property represents exponential value to you and your brand, so take the time to properly handle these matters sooner rather than later.
- REGULATORY CONSIDERATIONS. There are three biggies here: basic business licenses and permits at all required levels (local, state, etc.); data security and privacy; and workplace compliance, both federal and state-level.
- WHAT INSURANCE IS REQUIRED? This includes general liability policy, professional liability insurance, interruption insurance, property and auto insurance, an umbrella policy and, of course, worker’s comp if your company will be having employees.
Okay, great work, you’re now prepared to prepare to get your small business off the ground. I hope this thirty-thousand-foot discussion is helpful to you and that your expectations are grounded deeply in reality.
This article shouldn’t temper your vigor or belief in yourself and what you’re offering. This article is just letting you know there are a handful of items that require that vigorous attention that you may not necessarily have at the top of your checklist.
I wish you good fortune.
For more information on this topic, visit www.minorbrown.com.
Kevin Tibolt is a business attorney whose passion for serving others guides his every move as an advisor, strategist and team member. Kevin relishes the role of outside general counsel to his clients, where he can gain a holistic understanding of his clients and their businesses. His practice includes forming businesses, corporate governance, mergers and acquisitions, debt and equity financings and commercial contracting. He can be reached at firstname.lastname@example.org or 303-376-6051.
(Content for this sponsored article provided by MB Law)