Starting a business can be the most difficult but possibly the most rewarding experience of your life. But the truth is that many people have no clue where to start. However, the number of resources available to help you are in abundance.
Let’s cover some basics about starting a business and guide you through it. In addition to covering the necessary steps, we will also disclose what you should avoid preventing common business mistakes. Our firm also has a couple of additional resources to make starting a business a much smoother process that we’ll cover.
The Startup Business Plan
The first thing to know regarding your startup business plan is to understand what it should include so that it can appeal to possible investors. There is plenty of information you can add to a business plan, but lately, entrepreneurs have been making more simplified business plans and putting more focus on creating an in-demand quality product.
What needs to go into a startup business plan? Other than for investment reasons, you’ll need this plan to help you tackle obstacles should they arise and showcasing your business’s mission and vision. Be sure that your plan includes:
- Executive Summary
- Marketing Plan
- Market Research
- Financial Plan
- Operating Model
- Product/Service Descriptions
- Management Plan
There are more you can include but these are very important to have in your plan. Our firm has a Louisiana Business Startup Plan, a flat-rate package designed to help get your business started. The package provides two additional consultations designed to guide you through business formation, acquiring licenses, and getting your business off the ground.
Sure there are apps out here or software you can download that tries to make your business plan in the blink of an eye. However, the best version of a business plan you can come up with is between you and your attorney. Those other quick methods make very generalized plans, so there may be certain things not suited for your business.
The 17-Step Guide
We have a free, downloadable 17-step guide for building a business in Louisiana. We highly recommend using this as a reference in the startup process. It starts off mentioning your business plan and briefly goes over the following:
- Consulting with accountants
- Choosing a business name
- Meet with an attorney and choose an entity
- Research laws on ownership and operating/learning compliance
- Creating a legal framework
- File DBA with parish
- Tax ID
- Setup corporate books
- Open business checking account
- Capital contributions
- Protect your intellectual property
- Local licenses
- Speak to an insurance agent
- Update your will and estate plan
- Hire employees
- Start the business
We will go over some additional tips and advice for the steps in the 17-step guide. The goal is for budding entrepreneurs to have a much easier startup.
Business Plan
Remember that your startup business plan does not need to be a lengthy one. It also needs to be documented and not be an idea you simply let live in your head.
Outline the business and products and services you offer. Then, determine your market and see if there is a demand out there for what you offer.
Business Names
Do any due diligence when considering a business name. In addition to making sure no other entity is using the name you have chosen, be sure the name coincides with what your business has to offer. Don’t confuse the audience with inconsistent branding.
Business Structure
Learn the different structures for business formation and then determine what structure is best for your startup. Keep in mind that you can change your business structure down the line if need be, so no need to stress about making sure you chose the right structure. Things may change within your business where you may need to change the structure later on anyway.
Louisiana is one of the several states that offer a Low-Profit LLC (L3C) structure. If this structure is right for your startup, take advantage of the opportunity that is available for smaller LLCs.
Finances and Accounting
Before opening your business account, make sure you have the business structure setup and the Tax ID number before opening the account. They are requirements for opening a business bank account.
When making a capital contribution to a business, it can vary depending on your structure. It is recommended that what contribution amount may be intended for, especially if you are a part of a corporation startup or general partnership.
An accountant, financial advisor, and/or tax expert is important to have. When it comes to business finances, you’ll want to:
- Making sound financial decisions for the business
- Stay organized with all business transactions and expenses
- Save on taxes
Consult with a financial expert once you have a business account or when you can afford the assistance. Some startups may not be able to fully afford accounting help initially. Try to use sufficient accounting software like:
- Quickbooks
- HoneyBook
- Xero
- Zoho Books
- FreshBooks
- Sage
Some accounting software like QuickBooks offers additional live accountant help under certain pricing plans. It may be more convenient to get this way while starting up.
Consulting a Business Attorney
It’s okay if you don’t always know the correct decision to make with your business, as well as not knowing everything you need. Since Louisiana is known to be one of the most strict states when it comes to licensing and permits, a business attorney can make sure nothing you need to legally operate slips through the cracks.
They can draft up and review important documents and contracts to make sure the business is protected and that liability protection is in place for the entrepreneur(s).
Also when it comes to intellectual property, they can guide you in having proper copyrights, trademarks, service marks, or patents in place.
Insurance
As a startup, you may have to obtain insurance as you go if you have limited capital. Insurance policies for general liability and worker’s compensation may be what you need first, but other insurance policies can be set up or more coverage could be added as your business can afford them.
Insurance companies specializing in business insurance are great to seek consultation to determine insurance needs, costs, and coverage.
Tips and Advice
Some important points are related to the information you’ll find in the pdf guide. Prioritize them in the startup process.
Consult With Professionals
Your lawyer, accountant, and insurance agent are key people to have when operating your business. An accountant will help you understand how to save on taxes, maintain bookkeeping, and help with other financial concerns. An insurance agent will help understand what kind of insurance coverage you need to safely run your business.
Establish a Legal Foundation
Please do not try to cut corners when it comes to legally establishing your business. Register with all necessary federal, state, and local government agencies. Find out all the licenses and permits you’ll need to operate in compliance. Your local business attorney can help you stay up to speed.
Perfect Your Pitch
Your pitch isn’t just important for investors, but also customers. An outstanding elevator pitch is a quick way to connect with an audience whether they are spending or investing. Make sure you share your mission, products, and services. If you’re pitching to customers, share your special offers. If you are pitching to investors, share your stats with them.
Money Management
Don’t be the entrepreneur that splurges prematurely to portray an image before the profits roll in. Expensive furniture and fancy gadgets shouldn’t be a concern during this time. Keep in mind some businesses will take time before profit is made. Many entrepreneurs have compromised their lifestyles to an extent, all to achieve their long-term business goals.
It’s Okay If You Don’t Have All the Answers
You know you don’t have to do it on your right? The key here is to focus on the tasks you know how to do, while others from your team complete tasks that you have little knowledge of. Your team should complement your skills and there are several benefits:
- Less potential conflict about responsibilities
- Chances are lower that partners compete against responsibilities
- Different perspectives on decision making
Overall, you find that a team where partners complement each other tend to develop well-rounded business strategies. Ego takes a backseat and partners tap into what they do well.
Common Mistakes of Startups
A failed Kickstarter project from several years back highlights many of the most common mistakes that startups make. Several lessons could be learned from the story.
Promising Products and Services You Cannot Guarantee
A business was featured in Inc. and VentureBeat for a startup gone wrong. They decided to conduct a Kickstarter campaign and had no contracts in place. The owner collected $35,000 and lost it all to engineering problems and manufacturing disputes. One of the contributors to the Kickstarter account sued for the failure of the company to deliver the promised product.
Never accept money from a customer with no clue of when you can deliver the product or service. Nail down your manufacturing operations and be clear on turnaround times of production, costs per unit (CPU), and methods and time frames for delivering the product to the customer.
Failing to Separate Business and Personal
The owner did not incorporate their business, so guess where the funds from Kickstarter went? The funds were deposited into his bank account. The owner could have escaped full liability but instead, his assets were all at risk.
Legal business disputes could tap into your assets if you don’t keep your business completely separate. Establish your business structure, get a business bank account, and never combine the different expenses.
The Lack of Contracts
The manufacturing disputes the owner went through were a direct result of not having contracts in place. The owner’s goal was to raise $10,000 but ended up getting more than three times that. Manufacturers noticed and decided to go after more than originally planned since there was no contractual agreement to their compensation. This ultimately threw off the entire deal which resulted in a failed Kickstarter project.
Contracts should never be disregarded. A contract can be considered as a form of protection if any dispute ever arises. Be sure that all contracts are in the best interest of your business and consult with a business attorney for any help.
Failing to Protect the Brand & Intellectual Property
For many businesses, creating a name brand and logo are one of the first things they do. Usually, they’ll hire a graphic designer to do this for them. Sometimes it’s a professional agency, other times it’s a friend or family member who’s willing to do it for them.
The trick about graphic design, or photographs, website development, or any other creative work of art, is that the creator owns the rights to it. This is the default law in the United States.
Said another way, even if you pay someone for a logo, you still don’t actually own that logo; the designer does.
Fortunately, this is an easy fix. The designer and client should sign a contract before any work is done indicating that that work is being created as a Work for Hire, and the client will own all the work once it’s complete. If we’re representing the design agency, we recommend that that transfer of ownership only happens once the client makes full payment.
If the work has already been done, and the designer and client didn’t sign a contract with Work for Hire provisions when they started, the designer needs to Assign it’s rights in the work to the client through an assignment agreement.
This can be tough, as not all designers are willing to do that. Sometimes, they recognize their mistake, and are willing to sign no questions asked. Other times, they withhold that assignment until the client pays some additional fee. We’ve been on both sides of this transaction, and it’s not something we recommend. Get the contract signed up front.
There are plenty of examples of this in the news media. Dong Phuong, a local bakery known for making some of the most-loved King Cakes in New Orleans, didn’t sign an agreement prior to redesigning their brand. They wound up filing a federal lawsuit against the designers, and in doing so spent considerably more than they would have if they had discussed the transaction with an attorney first.
Once you actually have the rights to the brand or logo, you can then register your trademark for even greater protection.
Conclusion
The startup process consists of multiple steps and could be a bit lengthy, but the key is due diligence and consultation of professionals. Get all the information you need as well as guidance and assistance to startup your business. Schedule a consultation with Spera law while also using the 17-step guide and inquire about our startup business plan package.
