Topic: Business Planning
Plan Your Business for Survival!
know intuitively that there is risk to business enterprise. We have all seen restaurants come and go. We
have heard the statistics: 50% of all businesses fail in the first year, and
95% do not survive the five year mark. Fortunately, those statistics are just
urban legend (or a little exaggeration to make a point). There is risk to doing
business, but that risk can be minimized and managed.
Anyone who wants to get
rich quick should play the lottery. Going into business is not for you. Making
money is a motivating factor, for sure, but successful businesses are more
often started with different primary motivations. Love of the product or
service, desire to serve other people, belief that a better product or service
can be provided, and wanting to make a difference in the world are the stuff
that successful business people are made of.
Most businesses do not make money
at the start. A successful business needs a solid foundation, and that sold
foundation requires planning and capital. Not taking the time and money to
build a solid foundation is a recipe for failure.
The foundation of a
successful business is built with professional help. A good CPA, insurance
agent and attorney are essential to managing and minimizing the risk. Involve
them early, and include the cost for these services in your business start up
plan. It will cost more than you expect,
and it will cost more than you want to pay. If your business survives five
years, however, those costs will long be forgotten, but the benefits will
endure. Approximately, 50% to 55% of startup businesses still survive five
years later. Plan for survival!
Part of a business survival kit includes legal
planning. Insulate yourself from personal liability by incorporating or
organizing as a limited liability company (LLC). Take the time to understand
what it means to operate a business as a corporation or LLC. A good attorney
should not just do the paperwork; a good attorney should educate you on the
reasons for incorporating or organizing your business and how to maintain the
business as a corporation or LLC to protect you from avoidable exposure to
Business survival includes ongoing maintenance of the
corporate or LLC form of business. The legal work is not finished when the
corporation or LLC is formed; it has just begun. A corporation needs bylaws,
and an LLC needs an operating agreement that makes sense and works for you. The
formalities of the corporate or LLC form of ownership must be maintained in
everything that is done and includes ongoing attention. Maintaining those
formalities is not difficult, but they are often ignored, and sometimes to the
peril of the business, or worse (personal liability).
No one goes into business
planning for the business to end. At some point, potential business ending
events must be considered. Business survival depends on it! Any time that two
or more people are involved in the ownership of a business, some thought needs
to be given to things like: what happens if one owner wants out; what happens
if one becomes disabled and is unable to perform; what happens if one dies. If
you have not planned for these things, and if you have not provided mechanisms
for addressing them, such events are often a death knell, even for a successful
business. Talk to your lawyer. Plan how
these events will be handled. Plan for survival!
Kevin G. Drendel Drendel
& Jansons Law Group
111 Flinn Street Batavia, IL 60510 firstname.lastname@example.org
This article is not intended to
provide legal advice or create or imply an attorney-client relationship. No
information contained herein is a substitute for a personal consultation with
an attorney. For more information, visit www.batavialaw.com or call (630)
Lay a good foundation for your business.