Sometimes, budding entrepreneurs don’t understand that making money is a long term process. It doesn’t just happen overnight, and you don’t suddenly make millions without blood, sweat, and sometimes tears.
You have to take care of business, operations, and sometimes there are just costs out there that you’ll have to pay due to the fact that you start out with low volume of sales. I think that’s the key. Step by step, one of the biggest issues I run into is that people believe that they’ll make money off the bat. Their time schedule is completely off, and they believe that if they bring a product to fruition, the people will come. Having been around the block a few times, I personally would recommend that they shoot for their first dollar in profit. Then you shoot for ten, then a hundred.
When you’re off to the races and making ten thousand dollars a month, come give me a call. Because then you’ve successfully made it well enough to hopefully be self-sustainable. And that’s what the first major milestone of any business. To get there, you’ll still have to make that first dollar. So don’t worry less about the expenses, and more about the profit. The only reason that you would worry about expenses is if you’re selling for a loss per transaction. Then there’s something wrong with the process itself.
There are several things you usually have to know to get your business started. What’s interesting is that while you could have the great idea, there’s some busy work that you have to do and these steps are to get you ready for that busy work.
- Go to the state corporations website. Figure out if you want to go S Corp or LLC, and pay the fee and sign up for that. There will be an annual fee from here on out.
- Go to the IRS and get a EIN. You can sign up for it online.
- Go to the bank with your EIN and your articles of incorporation from #1. Open a bank account.
- Make sure you have accounting software of some sorts. You need to keep track of that stuff as a business owner. Find a great accountant for your end of fiscal year fun tax stuff that you probably won’t want to do yourself unless you’re crazy.
- Find a good attorney to represent your business.
- Make sure you put down corporate minutes as needed. Most businesses fail to do this, and if ever in a legal battle or legal audit, they get messed up here.
- Make sure you pay your annual dues and do your paperwork for the state. This will kill you in an audit too.
- Make sure you have some sort of exit strategy. This can change over time, and be multiple scenarios.
This won’t make you a success, nor will it keep you from failing. But these are things that most people that start up in business actually do not learn nor do they teach you this in business school. It’s good to know how to set it up, and how to dissolve a business since these steps are precursors to your business plan or any actual idea that you may have.
One of the things that a lot of people cannot ever do is separate out their personal life from their business. For some reason, the lines gray, and overlap. Which is fine. If you’re seeking to just run a small store, and never have anything else that you’re seeking from this, then bring on family and friends to help and don’t sweat it.
But if you’re seeking to create something huge, and you have opportunity to do so, then grasp it firmly and don’t let go. I can speak from experience that there have been more than once that there were opportunities that I only had one shot at in the businesses that I’ve owned and I made the wrong decision. This opportunity will unlikely come again, and the think that you’ll get another shot is just like thinking that you’ll get the winning lottery ticket. Again.
And when you own a corporation, you can never ever take things personal. Even if a business partner happens to be family or a friend. Business is business, and friendship and family are separate. If people hold it against you, then they’re not good business folks. Because while family and friends can help you out when the going gets tough and such, bad management teams and bad employers/employees can drag a business into ruin. Don’t ever mix the two up and feel like you have some sort of obligation.
Would I personally hand over the reigns of any of my businesses to my children? Sure, if they proved themselves to be capable. But if not, then the business would go to the hands of people that could manage it and would succeed with it. It’s nothing personal, just business.
I was reading a local article where a website developer was making a big fuss about the differences in detail in a purchase order and a contract. And I thought, wait a second here, a purchase order is a contract. They’re called one-off contracts.
Here is the difference. Contracts in general are legal documents that bind two parties into doing something. You can put as much detail or as little detail in these, but to be royally screw yourself in a court of law, corporate counsel will always detail it into oblivion. Easiest way to protect yourself is to detail away if you don’t have counsel running all of your business gigs. Purchase Orders are made by the purchasing agent where what is needed, at what time, and at what price is specified. Once this is accepted by the vendor, then it is also a contract that is enforceable. The only thing it means is that it’s a one-off contract which means it’s a one-time deal. The purchasing agent has to create another purchase order to send to the vendor, and the vendor has to accept it to create another binding contract. Again, these are contracts which means the vendor can negotiate and put in more details the same as the purchasing agent before sign-off.
What I didn’t get in the article itself was the fact that there was some discussion on level of detail in a purchase order versus contract, which is completely incorrect. Purchase orders must be signed off by the vendor to be accepted which provides the level of specification. It’s like a RFP but coming from the buyer instead of the vendor providing one. This ensures that all of the questions are asked by the vendor on what you are and are not doing when you walk into this contractual obligation.
Another interesting tidbit that I gathered from the article and quotes was that the purchase order was somewhat more generic. Having done enough contractual work in my life on similar contracts, I have to say that this is where you get burned as a vendor. In accepting a contractual agreement in a more generic and broad sense, you are bound by the contract to do all the nitty gritty detailed work that you didn’t “foresee”. And the court of law doesn’t change in this fact as you can see from patent law where if a broader patent is granted, then that broader patent usually is the one that is being infringed upon by the more specific patent.
Granted here, I’m not a corporate lawyer, but I’ve had to deal in my life with enough contracts to know when you’re going to sign into a really nasty situation or not. Most contracts have ways out, and so do purchase orders, but they have to be written in. If not, the county in this case technically could pursue this in a court of law from the details of the transaction given. Whether or not they would is up to to them.
I recently read an article about how ebooks in Japan are pirated and how publishers want Apple Japan to set up a proactive division to seek out pirated materials:
Good luck with that, publishers. Let me introduce you to something called corporate counsel. Any legal person would laugh that out of the ballpark for even being put on the
table. This is because if distribution channels like Apple have a proactive group and miss something. then they become liable in most copyright situations. No company would enter that sort of legal risk. There is absolutely nothing to gain from that type of enforcement.
You have to understand why corporations act the way they do if you wish to pursue any interests that are pertaining them. And as organizations like this get “mad” at what is and isn’t done with larger corporations, they need to sit back and realize that there is always counsel involved in every major decision. Things such as copyright will always side on the more conservative since most companies do not like paying their attorneys needlessly to fight frivolous lawsuits. The moment you can understand this concept, then you won’t be chasing the wind when it comes to corporate ethics.