Are you in the planning stages of creating your own business? If so, you likely facing a gaggle of questions and tricky decisions about everything from money to employees. At some point, you’ll eventually open the doors to the new company and begin serving customers. But between now and launch day, there are at least four vital issues that every new owner has to face. They involve legalities, finances, where the operation will be based, whether to hire employees, and long-term planning concerns. Here’s a brief overview of each main area, along with details about how to handle things.
Table of Contents
Legal Entity
You might need to consult a legal professional if you want to form something other than a sole proprietorship (a one-person business entity). That’s because each state has its own laws about setting up limited liability corporations (LLCs), professional corporations (PCs), and traditional corporations, which allow you to place the letters “Inc.” after your company’s name. Each entity comes with its own set of pros and cons, as well as differing fees for setup and regular renewal. Take time to decide which form of operation is right for what you do. It’s much better to get this task right the first time, as opposed to changing things a year or two down the road.
HELOC or Not?
Every year, thousands of new business owners take out home-equity lines of credit, or HELOCs for short, to fund their operations, at least for a short while. The decision of whether or not to opt for a HELOC depends entirely on your personal financial situation. For instance, you can access the needed funds for your business via a HELOC for as long or short of a period as you want, within limitations of course.
In most cases, you’ll get better terms if you already have good credit, don’t borrow too large an amount, and keep the repayment period as short as possible. The best place to begin is to review a helpful guide on everything you need to know about obtaining a HELOC. For so many entrepreneurs, using home equity as a financial resource is the smartest, most convenient way to enter the world of business ownership.
Space
Where will you work? If you’re lucky enough to have enough space in your home, you’ll save plenty of money during the first year of operations. Many people discover that a home office works for a few months, but when there’s a need to expand space for inventory or additional workers, it will become necessary to rent an office. Part of your business plan should include this consideration. If you intend to rent office space six months from opening, now is the time to begin looking around for low-cost leases and space that suits your needs.
Bailout Point
Is there a set of conditions that will cause you to close shop? No one likes to think about the prospect of doing so, but it’s a good idea to be realistic about profit goals, what you can afford, and whether there is a set date by which you must be doing reasonably well.
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