What if you have a grand idea and you wish to put it into motion? Have you created the prototype of your product or do you need funding? Are you providing goods or services? Whatever stage you may be at in your venture, we hope you will consider these issues as you solidify your thoughts and take action:
- Whether you are applying for a small business loan or not, consider writing out a 1-3 year business plan. By memorializing your thoughts, you will be better able to see what is missing. What are your immediate goals? And your long-term goals? What are your costs and income projections?
- Create an organizational or work flow chart to visualize how things will get done and the timing for each sector of work or services to be rendered. How much must be done, by when and who will follow-up or keep track?
- Will you form a company or work with a partner? How much will you and/or your partner initially invest? How will you locate the balance of funds needed? Are you able to invest funds as they become necessary? If so, to how much? Will all partners contribute in the same way?
- Whose idea is it? Is there something to protect? Are you sharing it with the others? Will compensation be split accordingly? Who will make the decisions? Will others need to consent? Will there be personal liability?
- What if the partners disagree – is there a mechanism to break the deadlock? The operating company may suffer if a majority shareholder does nothing. This can be addressed in the bylaws; operating agreement or shareholder agreements.
- Consider the need for formalities and annual costs.
- What happens if you pass away? Should your interest be in a trust or an irrevocable trust? Who are your heirs – will they be able to operate the business? Do you wish to profit share with your employees?
- What government filings are required? Do you need a license or special permit? What about government approvals? Do you have an ingredient list?
- Should you file a service mark, trade name or trademark? Should it be local or national? What labels will you use – what will they say?
- What agreements and contracts do you need? How will you pay whom for what? For how long a term? What are you buying? Can it be returned? Who bears the risk for shipping? Are there rules for customs and duty?
- What are your insurance needs and limitations? Does your lease or other arrangement require special coverage? Can you get it?
- Do you have an employee policy? What are your rules? How are tips handled? Will you retain employees; consultants; independent contractors; or subcontract out work? Are there immigration issues? Will you be seeking foreign funding?
- Will you place ads? Where? And what will it say? Who is your target market? Will you hire a marketing consultant or ad agency? How will you enter a new market?
- Do you need a distributorship agreement? Will it be exclusive? Are you licensing your rights to someone? Will you need to set up a franchise?
- What other filings do you need? Tax numbers; department of commerce filings; labor numbers; liquor license; building permits; department of health inspections; or a PUC license?
- Where will you be? Office, home or virtual? What Social media will you use? Will you set up a website?
- Create a team – Do you need an: Accountant/Insurance Broker/Real Estate Broker/Attorney/Engineer/Architect/Marketing/Public Relations/ Distributor/Trucking Services/Escrow Company/Appraiser/Title Company/Business Evaluator/Customs Broker Etc.
- Set a budget. Open a bank account – check different types of accounts.
- Don’t give up!
There are so many different considerations for each investment project but we hope this list will help you as a guide to work through the maze of confusion. Many of these questions are new to many of our clients but they are important to consider when forming a new business enterprise or structure. Although it may first sound like a list of obstacles, you will be glad that these issues (and more) were addressed before vs. later when trouble or confusion comes your way? Be ready to undertake anything and don’t lose sight of what you wish to accomplish.
Have a good understanding of where you are and what you need and where you want to go. Adjustments can be made along the way. The most important thing is to get that grand idea into motion!
For more, please contact Christine A. Kubota.