So, you're ready to start your own business venture. Great! Get off on the right foot by following these Do's and Don'ts for starting a new business.
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- Do seek advice and use the research resources from organizations such as the Small Business Administration (SBA) and your local Small Business Development Center. Talk through your business idea with a mentor from the Senior Corps of Retired Executives (SCORE).
- Do network with successful entrepreneurs to find out what they did to found their successful small businesses.
- Do prepare a detailed written business plan. The effort you put in at this early stage will pay off in many ways later on.
- Do network with your local chamber of commerce, local civic organizations, trade groups, and organizations of local small business owners. You can meet established companies that may become suppliers for you, successful entrepreneurs who have advice for you, and potential business partners who can join your company board. You may even find potential customers.
- Do get to know your potential customers. The insights you gain from market research and first-hand interaction with your customer base will prove invaluable. They can help you tweak your products and services, enhance your business model, and develop an effective marketing strategy and a strong social media presence.
- Do invest in technology. This is the age of e-commerce. Even if you have a brick-and-mortar shop, many new businesses will also need an online business portal to reach potential customers.
- Do talk with a business attorney as early as is reasonable. For your lawyer to provide the greatest assistance, it helps to disclose everything about your proposed business venture and past business experience, both positive and negative.
- Do discuss the advantages and disadvantages of the various forms of business entities. Choosing the right business structure is your first and most important decision.
- Do limit your liability for your business by incorporating your business or organizing it as a limited liability company.
- Do discuss all of the ways you can further limit your personal and corporate liability with formal partnership agreements, a written employee handbook, written employment agreements, detailed buy-sell agreements, up-to-date supplier contracts, etc.
- Do talk to a tax or a business finance professional. Using good bookkeeping and good business practices from the start saves headaches later.
- Do get acquainted with the particular business laws and regulations of your state.
- Don't try to do everything yourself. Setting up a business is complicated. Get advice from experienced small business owners. Hire skilled employees when you need them, including short-term experts. And get advice from a business law attorney when you have important decisions to make that could have legal consequences. Don't know a business lawyer? Get a referral through a business network.
- Don't play fast and loose with your management plan. If you have co-founders or business partners, work with a business attorney on a contract that details everyone's responsibilities.
- Don't start your business under-capitalized! Insufficient startup funds is the most common reason for new business failure. Look for small business loans and grants. Pay close attention to cash flow. And never divert the money you've set aside to pay withholding taxes into operations. The IRS has a long arm.
- Don't make expensive office space and furnishings a high priority unless you are in an "image" business. High startup costs can make or break a business so don't do more than you need to. Take a look at your marketing plan for guidance on the image you want to project.
- Don't print your stationery, business cards, and promotional materials until you have had a trademark attorney conduct a search of existing state and federal trademarks and pending trademark applications.
- Don't ask or permit your employees to breach confidentiality or non-competition agreements with their previous employers.
- Don't sign company contracts in your individual capacity. Rather, sign them on behalf of the company as an officer of the company.
- Don't put off buying insurance.
- Don't give up 50% of your company to investors in your first fundraising effort.
- Don't pass up opportunities for free publicity.
Getting Legal Help
There are plenty of lessons to be learned from successful business owners who have gone before (as well as those who failed). Following best practices and avoiding avoidable pitfalls will give your venture a better chance of succeeding. Contact a business and commercial law attorney licensed in your state for help.
FindLaw's Starting a Business section contains a variety of other articles and resources to help you get started.