So you want to start a business?
Congratulations! Planning, launching, and running your own business makes for one of the most exciting and rewarding life decisions you can make. While the process can be pretty straightforward, there are a few potential traps and pitfalls to watch out for. This website will give you an overhead view of the process of forming and running your own business from start to finish. It will also provide a general roadmap for getting your venture off the ground. But remember, this is only an overview and roadmap. Your own circumstances will undoubtedly be different from anyone else’s. So you will need to build a plan that is custom tailored for you and your business.
The first, and arguably most important, consideration in starting your own business is how you will protect yourself. While it may sound strange at first, it is imperative that you take the appropriate steps to protect yourself personally, and all that you have and worked for, from the business you want to start. Your business should be a distinct legal entity from yourself; this will protect you by granting you limited liability. Limited liability means that the liabilities and obligations of the business are not liabilities and obligations of you personally.
Corporations, limited liability companies, and various types of partnerships all grant their owners some measure of limited liability. Owners of startup businesses can expect to be on the hook for certain things with personal guarantees (as we discuss elsewhere on this site), but limited liability in general can protect you from many unforeseen circumstances involving your business.
Second, and just as important, you must set realistic goals for yourself and your business. While remarkably successful businesses have occasionally sprung up seemingly overnight, this is the exception rather than the rule. Your business plan (discussed below) should focus on realistic and obtainable goals. Do not be afraid to challenge yourself, but it is unlikely that you will make the next Microsoft overnight.
Along these same lines is the concept of scalability; how large do you see your business becoming? How many orders, jobs, or projects can you manage? What kind of additional workforce or facilities will you need to increase your output? While setting your goals, it is important to think about these kinds of issues down the road; after all, you wouldn’t want to enter a five year lease for a small office space if you see yourself possibly tripling your headcount in two years.
Another area of concern, especially as you start bringing in outside investors, is what the ownership of your business will look like. Are you starting out alone, or do you have a co-venturer or two? Who has final decision-making authority as you get your business off the ground? How much autonomy and authority will your employees have, especially if they are not themselves investors in your business? The answers are different in every case, and the mix of investors and, consequently, control of the business can easily change over time as it grows. It’s never too early to start thinking about these kinds of investment and governance issues.