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Starting a New Business? Here’s What They Haven’t Told You (Part 2)

March 3, 2013   |   By Vela Wood

If you haven’t already, read Starting a New Business? Here’s What They Haven’t Told You (Part 1). And here are the rest:

Growth is expensive

Growth usually means more people. Not only does more people mean a higher payroll, but also it means more office space, more desks, more computers, more decor, more copiers, more phones, etc. Before you add another employee, figure out what your current revenue is per employee, and make sure that you can maintain that with the additional resource(s).

You will be involved in a lawsuit

You’ll need to sue for something (probably a payment owed to you), or you will be sued for something (hopefully not a payment owed to someone). The worst part of a lawsuit is the anticipation prior to the actual filing. Once it gets filed, you will be greatly disappointed by the pace. It never gets resolved by the end of the episode like it does on Franklin & Bash or Harry’s Law. In fact, there’s a good chance that Harry’s Law will be cancelled before your lawsuit is concluded. (Update: I think Harry’s Law was cancelled last fall. This upsets me).

Banks are impossible to work with

It takes an act of Congress to get a small business loan these days. But a good bank partner is a priceless asset. Build a good relationship with a local bank. Once you get your business going – take out a small loan that you know will be easy for you to repay. This will build a foundation for future loan applications. Also, build good credit for your business by leasing small office equipment and paying on time; same with credit card purchases. After a few years, it will be easy to go and get working capital from your bank partner.

You will have to fire someone

This will have your stomach in knots for days, or even weeks. But not everyone is a good fit for your business. You have to do what’s best for your business. You’ll feel much better after you do.

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Posted in General Business
Vela Wood
Vela Wood is a boutique corporate law firm with a local feel and a global impact. We focus our practice in the areas of M&A, Private Equity, Fund Representation, and Venture Transactions.