How to Start a Business: Assembling Your Small Legal Team in 2020
According to the U.S. Bureau of Labor Statistics, there is a 1 in 5 chance that starting your small business will fail by the end of your first year. You can do everything right, but still there may be external factors that may cause your startup to go under, or in some instances, not even get off the ground. Simply put, there are inherent risks in being a small business owner.
The decision to “hang one’s own shingle” is a commitment to assume both personal and professional risks. From the onset of your venture, you are responsible for all aspects of your business. You manage the day-to-day operations. You build and maintain client relationships. You are responsible for growing the business. All of this is in addition to balancing your family life and personal commitments.
As your business grows, there will be some responsibilities outside your experience that will require professional expertise. Additionally, there will also be some business tasks that are just too mundane or too time-consuming that it is not an effective use of your time taking you away more important projects that will grow and develop your business.
The bottom line is few business owners can be successful and grow without a legal team of trusted advisors. When starting your business, below is a list of four indispensable advisors that you should add to your team:
- Certified Public Account (CPA): Selecting a qualified and experienced CPA is the first and most important advisor to add to your team. A CPA is a trusted financial advisor who helps you and your business plan to reach your financial goals. Your CPA will help with essential functions related to the financial health of your business including the development of a budget, tracking revenue, monitoring key performance metrics, managing payroll, and most importantly, preparing state and federal tax filings. Your CPA will know you and your business inside and out and should be consulted on every major decision of your business.
- Business Attorney: When you start your business, it is important to have a trusted business attorney that can assist you as your business grows. From the start, a dedicated business attorney can help you select and form the right entity for you and your business (i.e., sole proprietorship, LLC, Corporation, Partnership, etc.). When starting your business, a business attorney can prepare various management and ownership agreements to set the playbook for your business—this is especially important when you go into business with other people. As your business grows a business attorney can help you secure financing, negotiate contracts and leases, advise on employment matters, and assist with debt collection and dispute resolution. A business attorney plays an important role in protecting you and your business.
- Local Business Banker: Developing a professional relationship with a local business banker will prove to be an invaluable relationship especially when you start a business. A local business banker will not only help you set up the necessary business bank accounts (i.e., operating and payroll accounts), but he or she will coach you on how to effectively use credit and other available financial resources to help your business grow. Additionally, if you do not have a direct business mentor, an experienced local business banker will be the next best mentor for you and your business. A local business banker has experience working with a wide range of businesses and has a critical understanding of your local economy. Most importantly, a local business banker will be able to help you network and develop relationships with other local business owners that could lead to long-term, mutually beneficial relationships, and clients.
- Commercial Insurance Broker: Commercial insurance is essential to protect your business and assets. As some point, something will go wrong and the failure to maintain the right coverage or right policy limits could have catastrophic consequences for you and your business. It is important to develop a professional relationship with your commercial insurance broker. Your broker must fully comprehend the risks inherent to your business as well as the value and potential liabilities of your business. Your commercial insurance broker will know what you need and can provide cost-effective insurance coverage. It is important that you effectively communicate with your broker so that as your business grows, your broker can properly advise you on necessary changes to your policies, coverage, and liability limits.
It is important to onboard these legal advisors from the very beginning of your business so that your business planning will be coordinated across each advisor. Each advisor will work with you every step of the way as your business grows to help you to evaluate risks, challenges, and needs of your business. Additionally, as your business grows and becomes profitable this legal team will inevitably expand and these four key advisors will be there to let you know when it is time to welcome new members to your support team.
- Choosing the Best Business Entity for Your Business - November 20, 2020
- How to Start a Business: Assembling Your Small Legal Team in 2020 - August 19, 2020