You have a great idea and can’t wait to get started, but have you thought about what your business will look like 6 months from now? Three or four years from now? While it is difficult to make projections and nothing is set in stone, a good business plan can serve as a guide and timeline for implementing tasks.
Good advisors can help your business grow faster and manage the risks inherent in any business. We would recommend, all business have a system in place to manage legal, tax, book keeping and payroll, and insurance issues.
3. COMPANY FORMATION
Decide on what form your company is going to take: C-Corporation, S-Corporation, Benefit Corporation, Partnership, LLP, LLC, or Sole Proprietorship. Each form has different pros and cons. The choice of entity effects the start-up costs, taxes, and liability issues. If you have partners or other shareholders, then the agreement between partners and shareholders should be completed prior to selling any goods or services or entering into any contracts. Since everybody is optimistic and excited in the beginning it is much easier to manage disagreements between partners on how to operate before starting a business, as opposed to trying to deal with them afterward.
4. FINANCING–WHERE WILL THE MONEY COME FROM?
How will you finance your business? Will you use your own money or borrow cash from friends and family? Will you take out a home equity loan? Line of credit? Are the terms of these loans fair? If a bank loans you money, what collateral are you required to put up?
What types of risks are inherent in your business? Many risks can be insured, an insurance agent in conjunction with your attorney can help manage your liability.
6. CASH FLOW
A tax professional can help determine what type of accounting to use. What type of payment plans will you offer your customers? Do customers need to pay upfront or will you extend them credit? An attorney can help you manage delinquent account receivables. Don’t leave your business hanging by a thread, because one large customer is late or defaulting on their obligation.
7. VENDOR MANAGEMENT
What types of goods and services do you need? Do they require you to enter into a contract? Does the contract automatically renew? How long before payment is due? Knowing the length of your contract and when your account payables are due will help you manage your cash flow.
8. INTELLECTUAL PROPERTY
You may need to protect your idea, brand, or invention. Copyright, Trademark, and Patents are all intellectual property.
9. EMPLOYMENT LAW
Who are your employees? How will they be compensated? Who are your independent contractors—make sure you don’t cross the line from independent contractor to employee. Consider creating an employee handbook and code of conduct addressing issues such the treatment of confidential data, trade secrets, fraud, harassment, insubordination, overtime pay, etc.