In speaking with a colleague this week, I realized that I may have missed some pieces in my last blog aimed at people thinking about starting new businesses. It’s not that anything I said was wrong, but that there are some other points that business owners (and potential business owners) need to think about that deserved a little more spotlight. So here is my attempt to shine that light.
A slight word of caution first. None of these notes are intended to be, or should be taken as, advice for your particular situation. In fact, one of the biggest takeaways should be that every situation and every business is different. The key is that you want to address these things to make the decisions that are right for you and your business.
One of these decisions that have to be made is what type of business you are going to be from a legal perspective. I don’t want to use this space to go deep into LLCs, C Corps, S Corps, etc. - I mean, we’re still early here, you don’t want to go to sleep already. Suffice to say that there are differences and things such as whether you are going at this alone or have partners and how you will pay the taxes for the business (to be probably too simplistic, whether you account for it with a separate business return or on your personal return) all come up at this point.
Another key thing is going to be how you define success. If this is only something you ever envision to be a side gig, success could simply be not losing money. Then again, you may want that side gig to pay for a vacation for your family each year. And is that something that could be accomplished in the first year or will it take two or three to bring to fruition?
But then, what do you have to do to make that happen? Are you producing a product? If so, how many of that product will you need to produce (and sell) to get there? Are you providing a service? If so, how many clients will you need to serve to get there?
Then again, you may be looking to start a business that is immediately going to be what you do full-time. Defining success can be very different there. How many customers will you need to get enough money to get by? How many customers will you need to make enough money to get to a higher, thriving level? Will you be able to handle that time commitment? At what point will you be able to bring in new or more employee(s) and continue to grow?
Being a little bit deliberate in these areas will help you move you toward those success benchmarks. And you can’t be expected to have all these answers – or even know how to arrive at them - from the start. I could never claim that we will have all these answers for you. I am confident, though, that we can provide some of them and point you in the direction of where to find the ones we can’t.
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