Why You Need a Business Lawyer to Help You Start Your New Business

You’ve decided to start a new business. Congratulations! Where do you go from here? Do you hire a business lawyer or do you need an accountant? An accountant will certainly help you with your taxes when you are ready to do so. But how do you decide what kind of entity you should be? You’ve heard of limited liability companies, but you’re not sure this works for your business. Everyone seems to have an S-corp. Is this what you need? What you really need is to find a good business lawyer. A good business lawyer will help you understand the myriad decisions you will need to make for your business and will help you to start off on the right track.

Depending on the type of business you have and the number of investors in your business, you will need to talk with a business lawyer about entity formation, copyright or trademarks, insurance and other ways to protect your personal assets. The money you invest in a good business lawyer at the beginning of your business, will save you significant money down the line. Here are a few ways a business lawyer can help you:

1. Entity Formation. In California, we like to advise our new business owners to form an LLC – a limited liability company (unless this is not available for your type of business, such as a licensed contractor). The main reason is simple: experience shows that most small businesses will not hold annual meetings and keep minutes. Failure to keep up corporate formalities as a corporation can have devastating effects. A creditor can “pierce the corporate veil” and a court could find you personally liable for the corporation’s liabilities. With an LLC, the failure to have meetings and keep minutes is not considered a reason to pierce the corporate veil in an LLC. A good business attorney will talk with you about the type of entity right for your business and assist with setting up the company correctly.

2. Trademarks. If you work hard to come up with a name or design a logo, don’t you want to protect it? By filing for a trademark with the U.S. Patent and Trademark Office, you can protect that name or logo. And a business lawyer will help you to understand the important of doing this first – rather than waiting until you have established your business. The worst thing you can do is spend a lot of money marketing your brand, just to find someone else has registered that name – or a similar name before you.

3. Contracts. Contracts for each small business is a must. Some people feel that they can download contracts from a website, but do you know who wrote the contract? Do you know who it was written for? What state law applies? It is not a good idea to start your business with a contract from the internet. Let a good business lawyer prepare the contract you need for your business. Intellectual Property. Is your business a media, design, or another type of creative business? If so, you will find it much easier to deal with trademarks and copyright protection registrations if you have a lawyer. Even if your attorney does not normally handle intellectual property, they will have referrals for you so you can find the right intellectual property specialist for your business. Normally, these will be people the lawyer has worked with before and can recommend based on prior experience.

4. Insurance. Insurance is required for a business, but it is not enough. You need to have a business entity to protect your home and personal assets. Hiring an attorney for your small business may not seem to be a requirement if you’re not facing any legal battles. This is not true! You want an attorney who is familiar with you and your business, so if you do end up in a legal mess, they’ll be able to smooth it out. Hopefully, before it ends up in court.

5. DBA. Some people use a DBA for their business name. This is good to have and a business attorney can help you with the filings required.

It is crucial for new business owners to hire a good business lawyer to assist them in setting up their business. You want your business to be successful, so be sure to start off with the advice of someone who understands what your business needs.

How To Make Certain That Your Business Will Fail

Businesses, like many things in life, fall into two general categories: successful businesses and those that are not so successful. The successful ones grow profitably, generate cash flow, show increased value over time and operate smoothly. Those “other” kinds of businesses…don’t do any of these things and usually fail.

Here are 15 ways to make sure that your business fails….or conversely, things not to do.

1. No priority on marketing. Many times the most successful businesses don’t have the best products or services. What they do have is good marketing…and they make it a priority. In difficult economic times many businesses cut the marketing budget first. That is a mistake. If your business isn’t pursuing many channels of marketing, then it is at risk.

2. You do not have a detailed cash flow budget and projections. Cash flow is not a function of your bank statement. Many small businesses look at their bank accounts…if there is money there…they’re OK. Cash flow and profits are not the same…and the primary reason that businesses fail is that they run out of cash.. It is essential to know how much cash you have, and how much you will need in the near and mid-term. Anticipate the unanticipated, use multiple scenarios, plan for a variety of circumstances…all of these things and more can go into your cash flow projections to make sure that you are ready for anything.

3. You run your business by the seat of your pants. Businesses that last cultivate talent….not rely on the owners/founders. Successful businesses have documented processes and systems in place that help the business run smoothly and grow with or without the presence of the owners or a single key person.

4. Your business is not differentiated. If you offer the same product at the same price as other businesses you likely won’t last long. You need something to differentiate yourself from the pack…even in a small way. Your advantage could include people, product leadership, great operations, or other unique factors…from the supply side of the business to the service you offer customers. Find that uniqueness, capitalize on it and you’re ahead of the pack.

5. Your customer service is poor. Most businesses won’t admit to having bad customer service, however many do. In the current marketplace word of mouth is the internet…and bad customer service stories are all over it. It is crucial to understand your customer’s expectations and measure up. It is critical for your employees to “make the difference” by taking opportunities to turn service around. The key is training and standards and most of all….communication!

6. Your business lacks focus. Know who you are. Small business owners have an entrepreneurial spirit which frequently means lots of things going at the same time. Successful businesses are focused. Understand what you do, where it fits in the marketplace and stay with it. Your customers will repay your efforts by understanding your business and parting with their cold hard cash!

7. You have the wrong people. Your most important asset is your people and having them in the right jobs. If you don’t have the systems to train, recruit and retain your good people…and get rid of the poor performers your business is in trouble.

8. You spend money on things that don’t move the business forward. If you have defined your mission, your customer base and have an understanding of your business, you know where to spend your money. Many businesses spend their cash on things that make someone feel good, but don’t move the business forward. Take stock and review your expenses frequently….making sure that you use all of your financial resources on things that are important to your business and that you eliminate unnecessary and unproductive expenses.

9. You don’t communicate your mission or purpose. If your mission and strategy is all in your head…it isn’t doing anyone any good. Your employees are allies and can implement your strategies on a day to day basis. You will be surprised at the contribution your employees will make if you let them in on the “secret”. They will find things you missed and contribute ideas you never thought of.

10. Your fixed costs are unnecessarily high. There are always ways to reduce fixed costs.. Thanks to technology and outsourcing, you can cut many of the costs you assumed were unavoidable.

11. You have the wrong attitude. Businesses fail everyday because the owner’s ego and desire for status gets in the way of business. Control is not the be-all-end-all for business. Be a leader and recognize talent. Place your emphasis on the bottom line rather than your ego.

12. You don’t live by the numbers. Measure the key indicators of your business. Pick a number of indicators that really mean something to you and live and die by the metrics. These measurements will be different for every business…but changes in the metrics that you follow indicate something that needs your attention…and now.

13. Your business has no control over its’ environment. To be successful you need some control over your vendors or customer…not face excessive government regulations, not have excessive competition or be in an industry that is easily entered. If all of these factors are in your favor…you could be golden. If they are all working against you, you could be in lots of trouble. Take stock of these forces and determine your place.

14. Your cash flow is upside down. If you revenue comes in only after you have put in lots of cash you are constantly at risk for significant loss. Your risk is heightened by the revenue cycle. Companies like this don’t usually go the distance.

15. Your crystal ball doesn’t “do” revenues. Understanding the cash flow, budgets and the metrics of your business help you understand that putting certain dollars in the business yields certain revenues. While all businesses occasionally face uncertain revenue streams, the survivors in business have plans in place to deal with these variations…and can predict their revenues within an acceptable margin. Your Ouija board should consist of reports and evaluations of your business done with meticulous frequency.

If you find yourself identifying with more than a couple of these “symptoms”, it is time to re-evaluate your business. By eliminating these problems you are well on the way to having a successful business.

Business Planning – The Number 1 Reason Why Many Businesses Fail

The number of start-up businesses continues to grow at an exponential rate giving the owners the opportunity of being their own boss, something that was once the domain of the rich. Businesses are started for a variety of reasons; many after redundancy and others because of a great idea or passion for a subject. However, on average, 30 percent of new businesses fail within two years and 60 percent fail within their first four years. For many business owners who do survive they exist with a mediocre income and many years struggle, often returning to a full-time role.

With the rewards so high, why do so few businesses survive and why do so many under deliver on the owner’s expectations.

One of the key reasons for business failure is because of inadequate business planning. Many small business owners are fearful of the complexity of business planning and believe that is only for larger businesses, and that they need to hire a management consultant to help them, usually at, great expense. However, there is an old clich from the world of Project Management that says “If you fail to plan, then you plan to fail”. So here we look at the four stages of Business planning and what each means.

The Business Plan

The Business Plan contains key financial information about the estimated cash flow targets, proposed overhead costs, projected sales volumes and growth targets. Business plans are provided to business angels and banks for funding and can be quite simple. The key principle in constructing the business plan is that you must be realistic. Business plans can be constructed in a spreadsheet and often you bank will help you as they have a vested interest in your cash flow.

The Business Strategy

Most start-up businesses, particular freelance consultants and sole traders have no strategic plan, believing that this is the domain of big companies and that they don’t require one. The strategic plan usually contains four key sections: The Vision, Current Position, A plan to deliver the vision and a broad definition of the services products that the company is to provide. Imagine a ship without a navigation chart; would you leave your business to the same fate?

Operational Plan

This is the mid term plan that makes sure that everyone working in the business is clear on their role and what they do on a day to day basis. Many sole traders become busy fools filling the working day with tasks to justify their existence.

Tactical Plan

This is totally reactionary and gives the owner a short term view, often daily or weekly plan to focus on the immediate priorities.

So to help you on your way we have included sections on business planning in our “Grow Your Business Guide”