Beginnings can be scary. But also exhilarating. One of the scariest things I did in my life – second to becoming a mother – was starting my own law firm. In 2011 I started Ruebel & Quillen, LLC. I will admit, we did not plan well. In our case it was a lack of time. Due to circumstances beyond my control, it was a whirlwind three months from concept to reality. For others, unguarded optimism may prevent them from fully developing business foundations. Fear and doubt can also thwart proper planning when the “what ifs” seem too vast to address head on. It may just be a lack of information and knowing where to start.
This article is intended for anyone contemplating a new business in 2015. While the year is still young, you can begin the thought work toward establishing strong foundations later.
Insight from Hindsight
There is not a Right way and a Wrong way to start a business. But having helped a number of clients with business startups, dissolutions, disputes (and having had my own), I am confident saying there is a Hard way and a Easier way. (Note I did not say “Easy” because there is nothing Easy about starting and running a business).
“Do as you go” is impractical. Once the business is up and running, there will many demands on your time. Finishing the business plan or drafting the operating agreement inevitably moves to the back burner, sometimes permanently. When the first partner wants to leave, the tensions are too high to comfortably negotiate the business valuation and exist strategy if one was not put down in writing initially.
So here are some thoughts to get you started on the road to a better business model:
1. Start early. Pressure can breed contention, controversy, and mistrust. Negotiate the terms of business valuation, partnership, exit strategy, etc. in the beginning before the necessity arises. While no one wants to plan to split up, business divorces are messy. Some mess, and the emotional toll, can be neutralized if everything is understood and memorialized in writing from the outset.
2. Speaking of divorce…Yes, I call them a business divorce because there can be the same emotions, similar objectives and outcomes when splitting the assets. Going into business is much like entering a marriage. You want the business to last, to be productive, to be a great place to be everyday. But lawyers, entrepreneurs, and if I may be so bold – architects – can be idealistic, strong willed, and very opinionated. As you would a marriage partner, it is important to confirm your compatibility at the outset. Vet the collective beliefs and desires of your partners. Discuss longterm goals and daily division of labor before you decide whether it is a good match.
3. Write out your business plan. It does not have to be a “plan” per se. It can be a vision statement, credo, your manifesto – but it needs to articulate your goals, objectives, and style. Once you have discussed these with your partners (see above) it should be relatively easy to put pen to paper.
A written business plan not only gives you a touchstone for later decisions, but it will help your consultants (lawyers, accountants, publicist) advise you. For example, a lawyer will not choose outright which corporate structure you should elect at formation. However, if you can give him or her a good idea of your plan for the company they should present you with the pros and cons and assist you in selecting the entity that best reflects your vision.
4. Assemble your team of consultants. You are an expert in your field and no doubt are smart enough to do a lot on your own, but do not make the mistake of believing you have the expertise (or time) to handle everything yourself – especially once the business is up and running and grows. There are several articles outlining the which and when of consultants, but it cannot be emphasized enough: do not be afraid to change horses! Find then team of lawyers, accountants, publicity, etc. that is the best fit for your needs. And if they are not listening, are not responsive, or do not fit – find someone who does.
Be bold in 2015 and start your business! Good luck!
I would like to thank Joseph Vigil and many of my clients for insights and comments in contribution to this article.