Starting a company is risky. We have discussed that topic before in a variety of contexts through this column. This time the focus is on issues entrepreneurs should consider when they first get an inkling that they want to start a new business.
It all starts with an idea. What will be the nature of the business? Will it produce goods? Deliver services? Or do a hybrid of both – such as restaurants? Do repairs?
Each of those categories are subject to risks inherent to the performance environment. The production of goods operates in the creative domain; the delivery of services in the active domain; and hybrids in both domains.
Risk can be positive or negative, and it is not to be feared. I take the consistent position that from a return-on-risk perspective, it is far preferable to identify, plan for and address potential threats that will arise from time to time – and then to implement plans to address these threats (through the use of checklists and schedules) – than it is to reactively remediate them after-the-fact.
Once a stable business concept is settled, the next step is to storyboard. It is a sequential framework to which operational details can be added. Onward, then, to the basic elements of the storyboard.
Like any story, this one should include elements such as who, what, where, when, how and why. (“Why” might actually be the first component as you research the core niche.) The following are some of those elements for new business concepts.
- Why #1 – Operating niche: Ensure the goods and services you plan to offer are needed in the marketplace. Doing that may involve differentiating the new business from other existing or potential competitors.
- Who – The operating personnel: They can be internal employees or third-party contractors. In both cases, in this modern legal world, there are numerous applicable rights and responsibilities in areas such as engagement, performance functions and metrics, compensation and benefits, physical safety and avoiding discrimination.
- What (and where) – The operating assets: These are the physical, intellectual and financial resources used to do business. They can be of a real or personal property nature. Some of the items the company already has access to or possesses. Others you need to plan to acquire. In any case, all resources will need to be logistically accounted for and deployed, maintained and repaired, and replaced upon depreciation from service.
- When – Operational implementation: It is not good enough simply to have a well-composed storyboard. The business plan must actually function over time, or it is only an academic exercise.
- How – The operating entity: Will it be an informal venture, such as a sole proprietorship or one of a formal structure such as a partnership, corporation or LLC. In all cases, there will be liability limitation, tax, privacy and compliance issues to consider. Keep an eye towards the future. In other words, consider including the preferred exit strategy as a design element for the entity.
- A bit more How – Operational communications: As the business begins and grows, it must transmit its message internally and externally, to recruit and retain employees, customers/clients and investors/lenders and to work with regulators.
- And, finally, Why #2 – Operational culture: The new company must develop and then consistently carry out its mission, vision and values through all of its operating, productive, marketing and communications actions.
Returning to the title: “Hey! Ho! Let’s Go!” The Ramones may have thought they were simply writing and performing a fast-paced song with a strong beat. Little did they know, though, that they were creating a start-up motivator – consider, design, plan and implement, and always be flexible to make changes as-needed.
Or maybe they did.
NOTICE:
The article above is not intended to serve as legal advice, and readers should not rely on it as such. It is offered only as general information. Readers should consult with an attorney regarding their legal matters, as every situation is unique.