So, you’ve decided to go into business for yourself. It’s a good thing and you’re tired of working for the man so you want to get into business for yourself. First of all, you have to determine what you enjoy doing, and whether the business you’re looking at will work for you. The first thing – before you come to me and say, “Set up a corporation for me,” or “Set up a company for me because I want to go into business” – is to formulate a business plan. Now, you may think that’s a very sophisticated process. It’s not. A business plan is basically taking what you know or what you determine the business is you want to get into.
Now, once you’ve determined your business that you want to get into, you’ve got to determine where your talent lies and what you know about this business you’re going into. For example, if you wanted to go into the supermarket business, believe it or not, or a Dunkin Donuts for example. The next step is to determine where the expertise is going to lie. Maybe the business you’re looking into, you know a lot about it and you don’t need any help. However if you’ve never been in business for yourself, there are franchises, for example Dunkin Donuts or Subway, actually lay out a plan of operation for you to follow so that you can get involved in business.
Now, a lot of people come to me and say, “I want to set up a business and I need a corporation or a company.” Before you get involved in those issues, you’ve got to determine the more important things. What type of business am I going into? What’s my expertise? And where is the money and capital to invest in this business? Now, the one thing that I can’t stress enough is: Do not get involved in a business where you’re under-capitalized. Ninety percent of the failures that I’ve seen in my forty years of practice have been people who go into business, even with a lot of expertise in the field, but are under-capitalized. The most important thing is to determine where your funding is.
Once you determine where your funding is, you have to determine where the expertise is going to lie. For example, there are certain companies and certain businesses like the supermarket business. Setting up a supermarket’s very complicated. However, if you want to go into the supermarket business and you’re somewhat familiar with what goes on in the supermarket business, the suppliers of the food products usually have systems already set up to help you open up a business. A very complicated bit of business like a supermarket is very easy to deal with when the supplier spoon feeds you and lets you know exactly what you have to do to get the business going.
You could also think about a franchise. Franchises give you more support, but you pay a lot of money for that support. You’ve got to be careful when you do a franchise because you have a partner, and sometimes it works because franchises give you the support you need.
The next critical point is determining what kind of vehicle you want. Depending on whether you’re one individual or you have partners, the most important thing is once you’ve determined what kind of business you’re going to open up and you’ve got your capital and your business plan in place, then you have to come to a lawyer and determine: How do I do it? Do I do the business in my individual name? Do I set up a corporation or do I set up a limited liability company? The most important thing for me to stress in you setting up a business is to use a vehicle that shelters your personal wealth from liability because you never know what can happen in a business. In that regard, the way to go is with a vehicle such as a corporation or a limited partnership.