4 Important Things to Know when Starting a Business
Congratulations. You have a great business idea and you are ready to get it off the ground.
There are many things to think about before embarking a new business venture. The mistakes that lead to business failures are usually the result of not asking the right questions or taking the proper steps.
You should never start a business without first doing financial projections.
Have you considered all the budget items? If you leave out small ones, you probably also left out big ones. Are your projections realistic or are they fantasies? What are your contingencies if expenses exceed budget, or if you do not meet revenue goals?
Are you getting into business with a partner?
Just like in a marriage, business relationships can sour. What if your partner decides she wants out? Or gets sick or dies? What if you no longer want them as a partner? This is where Shareholder Agreements or Operating Agreements can serve to alleviate what could otherwise be costly and debilitating battles. Talk to your lawyer about a good ‘contract’ between partners that covers all the bases.
Consider the worst case scenarios.
What if the access road to your business goes under construction? What if a competitor opens up in the area? What if your product becomes obsolete. Make long lists of all the things that could go wrong. Visualize even absurd possibilities. Categorize them by level of likelihood. Study your top ten. Do you have a plan for them, other than “we will cross the bridge if we get to it?”
Talk to other small business people.
Getting excited about your business also means you may not be seeing the forest for the trees. Talk to people who are successful in business or professionals who understand business and ask them to give you honest assessments of your business plan. Be willing to accept and ponder all perspectives, and be prepared to change your ideas, or to move on.
Julianne Frank, Esq.
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