Is it time to start a new business?

By Angelo J. Bolcato, Esq.

While the daily business reports show a trickle of good news regarding big business, little attention is given to small and mid sized businesses. One bright ray of light that we still see shining brightly is the entrepreneurial spirit that most small and mid size business owners exhibit. While some businesses have struggled to stay afloat, an interesting trend that we’ve noticed is that a number of our new clients are displaced workers who have decided to make the bold leap into businesses ownership.

The decision to start a business whether it’s starting from scratch or purchasing an existing business requires a desire to succeed, which when mixed with a moderate degree of preparation and planning can prove to be quite rewarding. Many people have the desire and drive to start a business but ask for help when it comes to the preparation and planning. How does one turn that good idea into a viable business?

It all starts by doing your homework. There are many good tools available to help organize and start your business. An internet search for “starting a business” will return a number of websites and articles designed to assist. One good website is the United State Small Business Administration’s ( (http://www.sba.gov/smallbusinessplanner/index.html). Also, trade publications and websites geared to the specific business that you are interested in can help you focus on the issues that business owners face and provide guidance in addressing these issues as you prepare to move forward.

Will you be going it alone or will you have partners? If there will be multiple parties involved in the ownership it is crucial that the roles of each person are spelled out in order to minimize disputes and so that everyone knows what’s expected of them. These issues should be hashed out and put onto paper in the form of an Operating Agreement (LLC), Shareholder’s Agreement (Corporation) or Partnership Agreement.

As part of the homework process you should also determine logistic issues such as will this be a home based business or will you need a separate location? In determining the location you’ll need to consider who your potential customers are and what area will provide you with the most benefit. For example, a retail business generally requires high visibility in order to develop business. Will the business location be owned or leased?

Speak with your professionals, chances are you business attorney and accountant may have experience with the specific type of business that you are considering and will be able to help you avoid some common problems that their other clients have experienced.

Are you considering a start up business or an existing business? An existing business has a number of benefits it usually has existing advertising, a customer base, trained employees, established procedural systems and it may be possible to have the seller at least partially finance the sale. Some of the down sides are that you may have to un-do problems created by prior owners, if there’s an existing location it may not be optimal based on your plans and there may be hidden problems that the seller is less than willing to reveal. A start up business is a clean slate, however there’s no track record to rely on for financing, the costs for obtaining equipment and inventory may be greater than buying an operating business and there isn’t the option for seller financing.

Regardless of the type of business that you choose, one area that is key to new business planning is developing a business plan. While the plan can be somewhat informal, the more thought that goes into the plan and its presentation the better prepared you will be when submitting it to potential lenders. The plan should include:

1. Business description-what are you doing and how will you be doing it?
2. Competitors-who are they, what are their strengths and weaknesses and how will you set your business apart from the competition?
3. Management-who will be running the business and what are their duties?
4. Location-where will you operate the business and will the property be owned or leased?
5. Marketing-what’s the plan for getting and keeping customers?
6. Personnel-who do you need to make the business succeed?
7. Financial-how much is this going to cost, where will the money come from and if it loan is involved, do you have collateral and how much time will you need to repay the loan?

How will the business be initially financed? Will you be using savings, seller financing and/or a loan from a financial institution or some combination?

While there are a number of issues that have to be considered when starting a new business the road doesn’t have to be a daunting one. A little preparation and assistance from your professionals and you will be well on your way to turning your business dream into a reality.

 If you would like to discuss your specific business name or other business issues, please feel free to call or e-mail Angelo Bolcato, abolcato@lcrlaw.com.

Angelo J. Bolcato is a partner at Laddey, Clark & Ryan, LLP, and is chair of the firm's Corporate and Business Law Practice Group.  For more information on him and his practice, click here for the Our Attorneys section of this website.