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LEGAL Dawn L. Drellos-Thompson

by

Attorney

Things to Know

When Starting a Business

What differentiates your business from others? Does your business offer a needed product or service that is not currently being offered within your geographical location?

2) Analysis of your market. Who is your potential customer? What are their needs? What is the correct price for your product or service? Who are your competitors? This information can help determine market need and revenue growth potential. Your local Chamber of Commerce Association may be able to provide this information or direct you to other resources.

3) Marketing Plan. How do you promote your business to potential customers? What is your marketing budget? Which strategies will you use? For instance, will you use direct mailing or internet

4) Management Plan. How will your business be managed (e.g. member-managed LLC or a Chief Operating Officer)? Who will make up your business team and the chain of command for day to day business operations or large acquisitions? How many employees will you need and what will be their employment classification? How much will you pay yourself and your employees?

5) Financing your Business. Capitalization is probably one of the most important and underestimated aspects of starting a business. How much money will be needed for your initial capital contribution? Will your business have access to a line of credit or cash until the business generates its own reliable revenue stream? Starting a business with 100% commercial financing is impossible. Let’s expand on proper capitalization, as it cannot be emphasized enough. Without an adequate initial capital investment and access to a cash fund, a potentially good business may find itself in serious financial trouble before it even sees its first customer. Inadequate capitalization may lead to bad credit issues such as the calling-in of loans or the cutoff of vital lines of credit.

Having limited capital may also lead to the co-mingling of funds or fraudulent money practices causing the loss of corporate liability protection, otherwise known as piercing the corporate veil. As an example, during the 2008 economic downturn some construction contractors were accused of theft by contractor when they used money from a later project to pay the costs of an earlier project, and then failed to complete the later project, or converted the money for personal use. Theft by contractor carries both civil and criminal penalties that may pierce the corporate veil, bringing personal liability upon the business owner. After the business owner has drafted a business plan and has established the initial amount and sources of capital needed to start and operate the business, the next decision is choosing the proper business entity. We will cover that topic in our next issue. Note: Most attorneys offer free initial consultations to discuss your business plans or, in some cases, will meet and charge a nominal fee to meet. It is worth your time to consult with a business attorney, even for a nominal fee, which may save you a considerable amount of time and stress in the long run.

Wire • ISSUE JULY 2012

1) Description of your company and its features.

advertising?

empresario

W

ell before selecting a business entity or soliciting business customers, all potential business owners need to ask themselves some basic and important questions. These questions are the base for a business plan. This plan should be a realistic snapshot of the business that includes the following elements:

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Empresario wire issue 3. (Health and Wellness)  

Its a Bilingual magazine that is focused on Business, News, Networking and much more. This issue is based on Health and Wellness.

Empresario wire issue 3. (Health and Wellness)  

Its a Bilingual magazine that is focused on Business, News, Networking and much more. This issue is based on Health and Wellness.

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