What Do You Discuss First with Clients Looking to Form a New Business?
When a client wants to start a new business, the first thing I ask about is the product or service they are going to offer. Businesses rise and fall on the quality of their offerings.
I have a lot of clients who have several years’ worth of experience performing in the field of the business they wish to form. For instance, a client could be a contractor who’s been selling a certain kind of software to the government as an employee of a well-established company for many years. She may have realized that she no longer wants to be a cog in a company’s wheel, and has decided to perform the same kind of service through her own business.
Oftentimes, the conversation with this kind of client is straightforward, because the clients understand the business, and they understand how best to offer the goods and services at issue. They are experienced in their field, and for that reason, their institutional knowledge results in their being comfortable with the basic business issues involved.
On the other hand, if I’m working with a client who is looking to change fields, the initial conversations can be a little more challenging. For example, if a client has been working in a corporate office his whole life, and he wants to become an artist, he may not know where or how to begin. He may be a fantastic creator but may not really have any experience in the art world. Often, these kinds of clients don’t understand the inner workings of their new field nor have many connections, and they come to me seeking both legal and practical industry advice.
Even though these two client scenarios seem very different to one another, from a legal perspective there’s a tremendous amount of overlap in the initial steps that I recommend. These include forming a corporate entity, deciding on a non-infringing name and logo, and ensuring that basic banking and employment systems are in place. All these topics are aimed at the protection of the new companies’ founders.
Thus, while the details will differ from one client to another, the initial conversation tends to hinge on these two key topics: the nature of the business and how best to protect its founder.
What are Important Questions that I Should Ask When Forming a Business?
First, you should be asking yourself about your present situation. What does it look like? Do you have a job that you like? Are you in a situation in which you feel comfortable? If not, what about that situation makes you feel uncomfortable or dissatisfied? Why are you considering forming your own enterprise? The answers to these questions can provide insight when it comes to timing and the nature of the business you want to start.
The decision to form a business should not be made hastily. If someone comes to me and says that they hate where they’re working because they clash with their boss, and they believe that they can do better because they have over 20 years of experience, it’s a good idea to take time for introspection before making any major decisions. For some people, a personality clash is as good a reason as any to go off on their own — but for others, it is useful to think all the way through the process required to form a business. Clients need to consider the entire network of systems that they’ll need to set up in order to operate their own shop, particularly if they’re in a regulated industry. Individuals also need to think about whether they will work from home, or if a storefront is required. There are insurance and legal steps that need to be taken care of before anyone decides to open their own business, which requires an investment of time, energy, and money.
For this reason, the first question I usually ask of clients looking to start their own businesses is, “What does your financial picture look like?” You could be the best at what you do, but if the startup funds aren’t available to get you to an initial go-live date, it may not yet be the right time to go out on your own.
Understanding the financial import of forming a business is crucial. You’ll need to know the amount of capital needed to start your business and have a good and realistic understanding of your financing options. To what extent are you going to be able to draw on sources like friends, family, or savings? If you’ll be seeking bank financing, you should also have a solid business plan in place on the front end to give you the best chance at success.
It is also important to have a good vision for what you want the business to look like at the outset. Is the enterprise going to be a virtual business, or will you have a brick-and-mortar storefront? Is this going to be a one-person operation, or will it start with a workforce? Will you be able to hit the ground running with your services, or will you need to scale up production or stock an inventory?
Considering all of these questions with a client will give them an idea of what they need, what to expect, and how to proceed if they decide to move forward with forming their own business.
For more information on Forming a Business, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling business attorney Ryen Rasmus at: (571) 660-4077.
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