Ask for SCORE by Dean Swanson
As an entrepreneur, you are a special breed. Not afraid to dream big and take risks, you also know that a little common sense is the key to the best job in the world: owning your own business. In this column, I’ll share an example of the resources that are available on a given topic. I chose to use the topic of legal steps every small business CEO should consider and then provide a reference article for each step as they work through these challenges for their business. Think of it as your legal toolbox.
Before you turn your inspiration into action, make sure you’re grounded by following these simple steps to launch your small business, increase your sales, and limit your liability.
1. Decide on a business type
The type of entity you choose for your business – whether sole proprietorship, partnership, limited liability company or limited liability company – determines how you file your taxes, puts in place legal protections and, most importantly, limits your liability. Incorporating your business also registers these details with the government.
To learn more, see this article: https://www.score.org/resources/matter-type-your-business-entity
2. Protect yourself with a prenuptial agreement
Cast with a partner? A buy-sell agreement protects everyone from situations that could complicate ownership. If one partner wants out, divorces or dies, the buy-sell agreement can protect against sticky situations when ownership shares are transferred to the wrong person.
Learn more by reading this article: https://www.score.org/resources/covering-your-back-buy-sell-agreement
3. Develop a business plan
The articles of association specify the structure of your small business. Will you have a board of directors, shareholders or other company executives? The statutes of the company gather these ducks and specify the rules and the calendar of the meetings. It is essentially the blueprint for your business.
Learn more by reading this article: https://www.score.org/resources/define-your-structure-corporate-bylaws
4. Write a solid business plan
Business plans wear two hats: they provide you with an overview to help you stay focused on your small business goals and strategies, and they can be used to present to banks and investors when you need financing.
To learn more, see this article: https://www.score.org/resources/developing-strategy-business-plan
5. Protect your secrets
When you start hiring people and forming partnerships with other companies and contractors, a nondisclosure agreement keeps your confidential information from falling into the wrong hands. It also specifies what information is actually acceptable to share.
To learn more, see this article: https://www.score.org/resources/protect-your-secrets-non-disclosure-agreement
6. Stay compliant with company minutes
States require that some sort of record be made of what is discussed and conducted at formal board and shareholder meetings. A business minutes can record all of these details to ensure your small business follows all the rules.
To learn more, see this article: https://www.score.org/resources/keeping-records-why-you-need-corporate-minutes
7. Manage expectations with an employment contract
People make a small business successful, and an employment contract protects everyone involved by putting expectations in writing. Injury and discrimination claims are on the rise, and while employment contracts can’t prevent all lawsuits, they reduce risk by defining rules, responsibilities, and setting everyone’s expectations.
Learn more by reading this article: https://www.score.org/resources/managing-expectations-employment-agreement
8. Build your skills with independent contractors
Some situations require specialized help, such as graphic design or public relations. If you hire a non-employee for some support, an independent contractor agreement can ensure everyone is on the same page going forward.
Learn more by checking out this article: https://www.score.org/resources/broadening-horizons-independent-contractors
9. Set up on a pitch
They say location is everything, especially if your business receives customers, sells products, or provides services on-site. A commercial real estate lease makes it possible to ensure the tightness of the rental contract and the solidity of the tenant/landlord relationship.
Learn more by going to this article: https://www.score.org/resources/opening-shop-commercial-real-estate-leases
10. Plan ahead
Your small business is an important asset and source of personal income. Should anything happen, a last will can protect your business and your family from unnecessary expenses, inheritance taxes and potential disagreements.
To learn more, see this article: https://www.score.org/resources/drafting-will-estate-planning-small-business-owners
As you follow the path of entrepreneurship, you may come across situations where you could benefit from the advice of a professional. Work with a SCORE mentor who can point you in the right direction.
Dean Swanson is a volunteer Certified SCORE Mentor and past SCORE Chapter President, District Director and Regional Vice President for the Northwest Region.