Everyone has heard people say that running a small business is not easy. It takes hard work that must be sustained over long hours and days with many personal and family sacrifices being made. More difficult than this, however, is starting your own business from ground zero. This is because it not only takes long hours and personal sacrifices, but also takes supreme dedication, careful planning, good instinct (business sense) and a generous amount of personal financial investment. In other words, it takes all that you have and a lot of what you don’t have to get the job done right.
I have worked with many small businesses who have started from scratch or who have newly acquired an existing business. Both of these types of business owners work very hard to fulfill their dreams of being successful entrepreneurs. They are learning new skills and solving new problems. Their plates are so full with daily operations (preparing and serving food, performing service calls or making retail sales) that they inevitably start cutting corners with very important organizational decisions and business strategies. In the beginning years of a new business, the most important steps that ensure long-term success are those at the organizational level, not the functional or operational level. These “large decisions” are much more important than those of daily operations because they form the foundation and framework of the organization. With a secure foundation and operating structure, a business can maintain itself while you perform whatever trade or service your business was born to do.
When I advise and guide new start-ups or businesses under new management, I usually find several common problems that occur because of poor planning, lack of experience or from cutting corners. Below is the number one and number two mistakes made by small business owners and operators during business formation or initial operations. The best thing about these mistakes is that they are completely avoidable. In future newsletters, I will list additional mistakes made by new entrepreneurs and will give advice on how to avoid them too.
The number one mistake made by new businesses is not seeking attorney advice or guidance before making important decisions. Consulting an attorney to help you start your business may be the most important decision you make as a new entrepreneur for two reasons. First, he can help you analyze and develop your business plan so that you have a clear path to follow that will help you avoid expensive pitfalls and brick walls. Second, your attorney can help you select the proper business structure for your venture that will allow you to function properly for your industry or market, but will also protect you and your family from personal financial liability in the event of a business mistake or accident.
Most people are smart enough to realize that they cannot defend a lawsuit by themselves without professional help, but do not realize that getting professional help in the beginning is the best way to avoid a lawsuit. That being said, the second most common mistake made by small businesses is handling contractual matters or legal disputes by yourself. Wouldn’t you rather pay small amounts of money getting help to avoid problems rather than paying large sums to fix them? A very common example that almost always ends up biting the business owner later on is downloading a legal document or contract from the internet and merely changing the names. This is one of the most foolish actions a business can take. Why? Because each business is completely unique with different: business models, structures, ownership interests, employees, products, markets, experience, financing, location, size, assets, different levels of risk acceptance and a million other things. Downloading or creating your own business and legal documents will lead to many problems in the future. Guaranteed. Having an attorney with knowledge of your business who can help you draft your legal and business documents is the best way to protect you from future lawsuits, labor disputes or contract breaches.
Obviously not all decisions require advice from your attorney, but all major ones should go across their desk before you take action. If you think you cannot afford an attorney, think again. Our office offers many affordable options for small businesses that can be tailored to your organizational size, your needs or your revenue levels.