By Richard Harroch, Forbes
July 15, 2018 Link to original article here
In this article, I give an overview of 35 key steps for entrepreneurs who are starting a business, with links to additional articles addressing some of the topics in more depth.
1. Understand the Commitment and Challenges Involved in Starting a Business
Starting a business is a huge commitment. Entrepreneurs often fail to appreciate the significant amount of time, resources, and energy needed to start and grow a business.
Here are some of the biggest challenges to starting and growing a business:
- Coming up with a great and unique product or service
- Having a strong plan and vision for the business
- Having sufficient capital and cash flow
- Finding great employees
- Firing bad employees quickly in a way that doesn’t result in legal liability
- Working more than you expected
- Not getting discouraged by rejections from customers
- Managing your time efficiently
- Maintaining a reasonable work/life balance
- Knowing when to pivot your strategy
- Maintaining the stamina to keep going even when it’s tough
2. Protect Your Personal Assets by Forming the Business as a Corporation or LLC
Never start a business as a “sole proprietorship,” which can result in your personal assets being at risk for the debts and liabilities of the business. You will almost always want to start the business as an S corporation (giving you favorable flow through tax treatment), a C corporation (which is what most venture capital investors expect to see), or a limited liability company (LLC). None of those are particularly expensive or difficult to set up. My personal preference is to start the business as an S corporation, which can then easily be converted to a C corporation as you bring in investors and issue multiple classes of stock.
Many business owners, however, are under the mistaken impression that they are completely protected from personal liability by filing a Certificate of Incorporation for a corporation. This is not true. The mere process of incorporating does not completely protect the business owners. To lessen the likelihood of such personal or shareholder liability, you should make sure to adhere to certain procedures:
- Always use the corporate name. The name of the corporation should be used in full, including “Inc.” or “Corp.” on all contracts, invoices, or documents used by the corporation. This clearly indicates the existence of the corporation as a separate entity.
- Always use proper signature. This means that you will sign on behalf of the corporation, using the name of the corporation and your title. You should typically use the following format when signing contracts on behalf of the corporation: