“Is there anything I should know before I start my company?” I wish I had a dollar for every time I’ve been asked that question. When we sit down with our clients, we focus on building a solid legal and strategic foundation for their business. But we also take the time to talk with them and help them understand any potential pitfalls that could ruin their company.
I’m Neil Fridman with the Fridman Law Firm PLLC. Today, I want to share with you five things you must know before you start your business. These are based on my years of experience helping entrepreneurs start businesses and the time I’ve spent guiding them to success.
1) Take the time to plan
Here’s number one on my list: Take the time to properly plan your business. Taking the time to develop a solid short-term and long-term business plan can mean the difference between success and failure.
When you are looking at short-term to midterm planning, you should consider how much startup capital you need, your sales strategy, and how you’re going to acquire new customers. You also need to plan on what kind of equipment you’ll need, and which key positions you’ll be hiring for.
Long-term planning
Long-term planning is totally different. While you’re assuming your business will survive the first three years of operation, you want to begin to shape bigger goals and strategies for your company. This is the time to be aggressive, while still staying reasonable with financial projections.
How much equipment and personnel will you need? What will your market share be? How will you handle your biggest competitors in the market? The first few years of building and running a business are all about getting a foothold in the market and surviving. Hopefully, you’ll make some profits too.
From year four onwards, you’re looking to move to the top of the market in your industry, and quality planning will help you get there.
2) Don’t assume your idea will work
I can’t tell you how many struggling business owners I’ve spoken to who never really considered that their business might fail.
Yes, you can be successful. But know that success is not a foregone conclusion. You should gather actual customer and market data in order to meet potential needs and solve actual problems that your customers or your market is facing.
Once you’ve spoken to actual customers, you should create a simple service or product based on their feedback. If you do this, you’ll automatically be ahead of the game. The most dangerous thing you can do in a business is to assume you’ll be successful.
3) Be careful when hiring friends and family
Hiring your best friends and family to work alongside you seems to make sense when you start a new business. But let me warn you: working closely with friends and family can be dangerous. Arguments and fighting within your business can easily ruin relationships forever.
And when your business is finally successful, you will quickly learn that greed and love of money can splinter even the closest of relationships. If you do decide that working with close friends and family is the best decision for your business, you must work with your attorney to draft the proper documentation that will protect your company if there should be a fall out.
4) Don’t aim to be the cheapest
You don’t have to be the cheapest to win. All customers aren’t created equal. Most startup owners have the tendency to undercut the competition in order to get their foot in the door and build some momentum. Unfortunately, this rarely ever works.
A new company’s sole focus should be on making its products or services the best they can be and charging its customers a price that reflects that quality. If you take the time to collect data in your market and plan accordingly, you’ll be able to build a great team that can push your business forward.
The last thing you want to do is try to undercut your competitors when you have a better product or service. There’s always someone out there who can charge a lower price than you.
5) Don’t be afraid to take the leap
Don’t be afraid to take the leap. We can talk all day about your business plan, your team, and so on, but I believe some of the best businesses are still waiting to be launched because of fear. And at Fridman Law Firm PLLC, our goal is to help equip entrepreneurs with the tools they need to start and build successful businesses. But we also want to help them feel confident that they can be successful.