5 Tips to Starting Your Own Business
In this COVID world we are still living in, people are - more than ever - reevaluating what they want from their careers, determining if they should pursue a passion that has been dimly lit inside them for quite some time, and how their work life should complement (not dominate) their lives. For some, it could mean that they are yearning for a change in their career. For others, it could mean that they are ready to start a new business venture on their own.
Over the years of practicing law, Laura and I (Amy) have not only helped our clients with forming and incorporating their new business ventures, but we have also lived through this “startup” phase of a brand new business when it came to opening our law practice together in November 2020. Yes, we are attorneys. We litigate matters and handle transactional work for our clients day in and day out. But, we are also business owners. While we opened our law practice together so that we could practice law every day in our own firm and on our terms, we also were not blind to the fact that our law practice is still a business. We cannot neglect the fact that we must keep servicing our business of law, too. This was very clear to us from the beginning of our business relationship. For today’s blog, we wanted to share 5 tips to those of you who are starting your own business. Our five tips are:
Decide what business you want to start.
Cast your vision for your business and your life.
Decide what legal structure works best for your business.
Decide whether and when you will onboard employees and/or independent contractors, if at all.
Consult with an attorney.
While it may seem obvious, our first tip is worth repeating: DECIDE what business you want to start. Is this new business simply an extension of your current career (i.e. attorney) and you want to hang your own shingle and open a solo practice or partner with a colleague? Are you ready to pursue a passion project, such as writing a book or becoming a financial coach or opening a boutique? Is your business on a virtual or e-commerce platform, or are you looking to open a brick and mortar business? What if the new venture pulls from a little bit of each area, where passion and purpose align? No matter what you decide, you need to make a decision and begin to create the roadmap to the success you want to achieve in this business model.
That brings us to the second tip: CAST your VISION for this business and your life! Do you crave more time with your family? Is the two-hour PLUS commute each day weighing you down? Is your “side hustle” booming so well that you can sustain it as your full-time business venture? Do you want to ditch the 9-5 work hours and create your own schedule on your terms? How will you be compensated? Do you have a financial goal in terms of revenue for this coming year? What are your actual expenses and how much revenue must you bring in in order to meet those expenses? Once you start to truly cast your vision for the long-term, you can begin to determine what your goals are (the bigger ones) so that you can chunk those larger goals into bite-sized, reachable goals, from which you can determine your progress along the way.
Our third tip is to DECIDE what legal structure works best for your business. Are you working alone, insomuch as a sole proprietorship makes the most sense? Do you have any partners, or do you plan to offer partnership to a current employee or colleague of yours? Do you have shareholders in your corporation? The legal structure will depend upon the particular circumstances and the organizational structure of your business. For this reason, we strongly suggest that you speak with legal counsel to determine which structure is suitable for you. An attorney can help you determine any agreements (operating, partnership, etc.) you may need in order to define the terms and roles of your business relationship. Also, we strongly suggest that you consult with your tax and financial professionals to determine if the structure makes the best sense for you in terms of tax consequences.
The fourth tip to consider is DECIDE whether and when you will onboard employees and independent contractors, if any. Will these positions be full-time, part-time, or perhaps a virtual assistant could fulfill the needs you are looking for. Can you afford them? This cannot be overlooked because, if your vision for your business is to not carry debt, then you need to consider whether you can afford an employee right now based on your revenue and the anticipated return on the employees’ value to the business. Will your company offer health benefits? Retirement plans? Health savings plans? Consult with your legal and tax professionals to determine what legal and tax consequences you should expect with onboarding an employee or an independent contractor. Once you have determined the foregoing, you must have a written agreement with your personnel. The agreement will define the roles of the employee and the relationship you share with them. I liken this agreement to a form of protection — it protects your business and it protects the relationship you have with that individual. As Laura and I always say, draft and finalize your agreements when the times are good; it will prove to be crucial if, and when, the relationship deteriorates.
Our last tip is CONSULT WITH AN ATTORNEY. Sure, we have peppered all of these tips with that recommendation, but we cannot stress the importance of this step. From speaking with our clients in the midst of a dispute concerning a business relationship, we know that many of our clients did not reach out for counsel early enough because they did not know if they could afford it. To this we say: 1. You will never know unless you ask, and 2. This is an investment into the protection and creation of your business, and thus, sometimes the quality and value of the work you will receive will far exceed the costs you will spend down the road when issues arise. We cannot ever guarantee that issues will be 100% avoided, but when you plan and forecast these issues and set them into your agreements and strategic planning with your legal (and tax) professionals, it will set you up for success much more smoothly than waiting for the shoe to drop and something to go wrong before addressing that issue. It is always better to have an attorney in your corner to consult with - from the beginning and along the way - so that, when you do need to tweak an agreement or pose a question, you have a trusted professional who knows your business, you, and your needs.
And one last thing - you can call this tip 5b - find a mentor. Find someone who is already doing what you want to do or along the same lines of what you would like to create, and reach out to them to speak about how they started and what to expect from the business. If the mentor has the heart of a teacher, they will want to pay it forward to you and help in whatever way they can. Respect that mentor enough to come to your conversation prepared - bring a list of questions and respect that individual’s time. This can help you in your planning process to anticipate certain issues you may not have otherwise thought of beforehand.
Look, we know how exciting it can be to start a new business. You may want to simply hit the ground running and start serving your clients/customers or creating your body of work or manufacturing your products. But, you cannot skip the steps we have outlined here. They are like pouring the foundation to the house known as your business — and your dreams. Take the time to set these goals and visions in writing so that you can create your roadmap to success, and THEN, you can get to work!!
Disclaimer: The information contained in this post is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls and communications. Contacting us, however, does not create an attorney-client relationship.