Starting and running a small business takes desire, passion, skills, knowledge and talent. It also takes research and planning. While many small or start-up businesses can recover from early mistakes, many cannot.  Every small business makes initial mistakes, but no small business can survive fatal missteps.  So, planning is important. 

Explore and evaluate your business and personal goals.  Using those goals, craft a comprehensive and thoughtful business plan that will help you reach these goals.  The process of creating a plan forces you to think about important issues that you might not think about without planning.

A plan is a valuable tool that can serve multiple purposes.  But like hand tools, a business tool left in the “tool box” and never used is worthless.  Again, the process of planning is most important, rather than detailing the plan in a formal written document.  I recommend that plans be written, but the written document is not more important than the planning process itself.

Let’s Get Started-

List your reasons you want to start a new business. Consider this list to start your thinking:

• Self-management or freedom
• Financial independence
• Creative freedom
• Maximize personal skills and knowledge you’ve developed over the years

Decide what type of business is right for you. Ask yourself:

• What do I enjoy doing?
• What skills have I developed?   What value can I add?
• What am I good at doing?
• How much money do I need to support myself?  My family?
• How much time do I have to run a successful business?

What’s my business niche?

• What business do i want to start?
• What services or products can I sell?
• What need, want or desire can I meet?
• Will buyers pay for it?
• Is there competition?   Competition is not always bad, as it demonstrates a market for your product or service.
• What strategic advantage do I have over the competition?
• Can I deliver a product or service with better quality, cheaper, faster?
• Do i have to create a demand for my business?   How hard will that be?

Finally, consider these tough questions:

• What skills and experience do I lack?
• What legal structure will I use?
• How will I keep business records and data?
• What insurance do I need?
• What equipment or supplies do I need?
• How will I pay myself?
• What are my resources?
• What are my cash or credit needs?
• What facilities do I need?  Is location important?
• What will I name my business?   Is my brand important?

As you can see, these lists are long but still probably not comprehension.  Small business owners must go through this process.  It’s not always fun, and the answers might suggest that starting a small business is a bad idea.  Resist the urge to accept any answer that furthers your dream but is not supported by facts.  In other words, as you answer these question, be honest with yourself.  Not every business should be started.

If your honest answers suggest that starting a new business is a good idea, use your answers to create a focused, well-researched business plan.  A good plan is a blueprint for business operations, management, and capitalization.  Review your business with your business lawyer, your CPA, friends and business associates.  Schedule a monthly review of your plan, and be prepared to change the plan frequently.  A good business plan is a flexible one that should change as you encounter obstacles and your business grows.

Matthew A. Griffith is an attorney, business performance coach,mentor and entrepreneur.  He coaches, advises and guides business owners, entrepreneurs, inventors, property managers, investors and real estate professionals.  Matt has nearly two decades of experience starting small businesses and helping businesses grow.

Shareholder disputes are time-consuming, expensive and counter-productive. Shareholders disputes are easy to avoid, if you agree on basic principles before shareholders come together as business partners. The basic principles include-

1. Who does what jobs.
2. Who gets paid what and when. (I include a provision to cover taxes.)
3. What happens if someone stops working or completing their job duties.
4. What happens if there is a buy-sell “triggering event” such as death, divorce, dissolution of the entity, disability, etc.
5. How elections are held to select company leaders.

The key to solving shareholder disputes is to AVOID them in the first place through buy-sell agreements, operating agreement and similar documents. Do NOT form your business partnership without addressing these issues IN WRITING AT THE START.

One final thought. . . pick your partners well. I have myself had to endure difficult and unreasonable business partners. So, trust me when I urge you to be cautious in selecting your partners. Assume each partner will be unreasonable at some point.

And get it in writing at the start!

You only offer ONE COMPANY EXPERIENCE for your clients and customers.

There is no shipping department.  There is no sales team.  There is no service department.  There is only a store!  From the customer’s perspective, there is ONE and ONLY ONE store.

If a restaurant patron has a problem with the table or the silverware or the food, it is up to every restaurant employee to make sure that patron is satisfied.

Are you thinking about how your employees are treating your customers?  Your better be thinking about it!

Have you trained, either directly or indirectly, your employees to “pass the buck?”  Are there financial incentives in place that encourage the wrong employee behaviors?  In other words, do your employees make more money in their paychecks by “passing the buck” on to other employees?

Remember that what we tolerate, we teach.  Even worse, your employee compensation structure may be encouraging employee behaviors that harm your customers’ buying experiences.  If your customer is not 100% satisfied, there is an opportunity for your competitor to take business away from you.  Your competitor does not have to be perfect.  Your competitor just has to be better than you are.

So, in summary, your customer needs to have a satisfying experience when dealing with your employees.  If your employees are projecting your internal operational shortcomings onto your customers, then the buying experience is less than 100% satisfactory.  And that is all the opportunity your competitors require to make your customers their customers.

Check out Part I and II of this topic.

I’ve written before on attitudes.  I truly believe that we are incredibly lucky in the USA, even while Congress steals our hard earned-money to pay for these bailouts.

Yet, there remains a high level of negativity and doubt and self-pity.  I don’t get it.  Check this out-

http://www.cyrilhuzeblog.com/2009/04/09/watch-this-video-and-stop-bitching-about-everything/

These are amazing times.

There are opportunities to do good work and get rich.  The question remains-  What are you choosing to do today?  Complain or get busy?  Can you work a little harder today?  Just a little?  Can you work a little smarter?  Or more efficiently?

Can you meet two new people this week and see if you can help each other? 

Can you give more?  Because giving generates opportunities.

What did you decide to do today- get better or complain?

A Question from one of Matt’s readers:

“Matt, should I buy some life insurance so my wife can pay off the bank loan I took out to buy my business?  I don’t want my wife to have to deal with the bank, if I die first.”

Matt’s Answer-

Probably, yes.  I’m glad to see my readers listening to my advice about the importance of insurance to business owners.

I’m not licensed to sell life insurance, but I am a big fan of insurance under the right circumstance.  Life insurance can be a great way to aid your widow to retire the business’ debt.  That would enable her to sell the business after your death and realize the full value of your company.  You might need some additional life insurance coverage to retire your home mortgage debt, car loans or other debt, and provide cash to support your family after they lose your income.

What about disability insurance?

You didn’t ask about disability insurance, but it might be even more important, given your circumstances.  You’re a young and physically active person.  And, your business is relatively small and cannot operate for long without you.  You’re more likely to suffer a disability in the next 20 to 30 years than to die.  So, I’d encourage you to discuss disability insurance with your agent.

Before you meet with your agent, please review this post-  Is Your Insurance Agent Reassuring.  In that post, teach you how to communicate with your agent in order to make the most of insurance purchase.

Remember this-  Your insurance agent is NOT YOUR agent.  Your agent actually represents the insurance company.  So, keep in mind that you always have the right to seek a second opinion from any professional advisor.  If you’re not comfortable with the advice you’re getting, seek a second opinion.  You might return to the original advisor, but you’ll have more information and possibly a higher level of faith and trust in the advice you’re getting.

Here are several classes being taught by Matthew A. Griffith, Esq. this summer-fall.  For more details click here or go to Rainmakers University.

 Essential Real Estate Investing & Management

Friday, June 26 and Friday, July 31
Sponsored by National Tenant Network

“What Your Lawyer Never Told You”- A Series of Practical Business Classes

Sponsored by Rainmakers University-

Legal Landmines.  Grow Your Business Without Stepping In It.

August 28, 2009, at 9:30 a.m.

 Making the Money Engine- How to Build Systems That Build Business & Avoid Lawsuits.

Co-Instructor, Nicole Bickett, Owner of Organize To Optimize

September 28, 2009, at 3:30 a.m.

Critical Contracts That Drive Critical Relationships With Customers and Clients

October 28, 2009, at 12:30 pm

Rainmakers University has announced that Matthew A. Griffith, Esq. has joined as an Educator-Facilitator and will teach a series of Legal & Business classes this Summer and Fall.  For details or to register for any of the three classes visit the Rainmakers University website.

“What Your Lawyer Never Told You” – A Series of Practical Business Classes

Legal Landmines.  Grow Your Business Without Stepping In It.

August 28, 2009, at 9:30 a.m.

Bar Louie’s- Carmel, Indiana

100% of new business owners make critical mistakes in starting a new venture. The lucky ones survive their mistakes. The rest fail quickly, eventually go bust, get sued or struggle for months or years without ever realizing the full potential of the business concept or talent in the company.

In this class, we will outline the key steps to forming a new business. We’ll outline legal liability threats and practical solutions. We’ll also discuss how to minimize income taxes. And, we will outline the advantages, dangers and opportunities of having partners.

Even if you’ve already started and are operating your business, you’ll benefit from the lessons offered in this class.

Making the Money Engine- How to Build Systems That Build Business & Avoid Lawsuits.

Co-Instructor, Nicole Bickett, Owner of Organize To Optimize

September 28, 2009, at 3:30 a.m.

Market Square Conference Center- 7^th Floor, 151 N. Delaware Street, Indianapolis

Ever been involved in a business lawsuit? If not, you’re one of the lucky few.

There are three keys to protecting your business from liability risks:

1. Use a corporation or LLC;

2. Formulate and implement a proper insurance plan; AND

3. Develop and implement good business practices.

The only smart way to operate your business is by systematizing those operations. It’s the key to increasing profits, reducing inefficiencies and reducing liability risks. If you don’t understand this concept, you’re running the risk of business failure. We’ll help in this class.

Critical Contracts That Drive Critical Relationships With Customers and Clients

October 28, 2009, at 12:30 pm

Fishers Office Suites- Fishers, Indiana

What’s the best way to increase gross revenue and avoid losses and waste?

Have lots of happy customers, vendors and strategic partners.

Like all relationships, business relationships are based on good communication and setting expectations. Contracts, forms and customer service are critical to setting these expectations and managing business relationships. In this class, we will discuss how to use contracts and customer relations programs to avoid lawsuits, make happy customers return and turn angry customers less angry. . . and may be even happy with your product, service or company. Contracts are key!

This is a true story.  I got fired by a client yesterday.  I don’t get fired by clients often.  In fact, I can only remember a handful of times, when I have been fired as a lawyer over the past 18 years of my law career.

Getting fired yesterday was a blessing.

Here is why.  In a nutshell, I was never going to please this client.  He wanted me to tell him that the law is something different than what it actually is. 

I don’t tell my clients what they WANT to hear.  I tell them what they NEED to hear.

Lesson #1-  You are not going to please every client or customer.  So, don’t try.

Long story short, my client did not like the bad news that I delivered.  This client came to me for legal documents to complete transactions that  are generally prohibited by Indiana law.  When I explained to him that he could not do what he wanted to do, he became very frustrated.  He was disappointed that his lawyer, which was me until yesterday, would not sanction and approve his business model.  He never expected that his lawyer would discourage him from a business model that he had already spent thousands and thousands of dollars creating.  In fact, after I first met him and delivered the bad news a few months ago, he spent hours and hours on the Internet trying to prove me wrong.  He found several websites of other companies offering to do the same unlawful business that he wants to do.  So, he found it very hard to accept my advice.  Even after I printed and gave him sections of the Indiana Code that clearly prohibit his business model, he remained in disbelief.

If you are a professional services provider, your clients must have faith in you.  If they do not trust or have faith in you, they will ignore your advice or not follow it religiously.  If they do not follow your advice, they are, in essence, paying you for the privilege of ignoring your advice.  They can ignore your advice, all on their own.  If they are not accepting your advice and counsel, they are paying you for nothing.  There is no good reason for them to pay you for nothing.  That is simply a waste of their money.  So, you either need to establish a higher level of trust or terminate the relationship.

Lesson#2-  If you can’t please a client or customer, end the relationship on good terms- early.

If you do have a client or customer whom you cannot please, end the relationship on good terms now.  Don’t struggle to try to fix a broken business relationship.  There are plenty of customers and clients who need good advice, other services and products.  This is a variation of the old 80-20 rule.  80% of your problems come from 20% of your “bottom” customers.  While 80% of your profits come from 20% of your “top” customers.  Spend your time and energy on the top 20% of your customer-base.  If you spend your time and energy on the customers whom you will never please, you are doing a disservice to your best customers, that difficult customer, your employees, your business partners, and yourself.  Let the bad customers go, and add to the number and quality of your top 20% customers.

Let that difficult customer go to your competition.  You will be happier and more profitable, and your customers will be happier.

To finish my story about getting fired, I met with the client and ended the relationship on good terms.  I got paid in full for my time, and returned my client’s file to him.  I wished him the best of luck and encouraged him to reevaluate his position.  Had he asked, I would’ve helped him find another lawyer.  In fact, I spent 15 – 20 minutes with him, explaining once again that the law does not support his position.  I gave him specific examples of other cases for other clients, and even suggested that he go talk to some other lawyer-experts in this field.  I even offered to arrange a phone call with local experts, who were the chief governmental officers in charge of this area of the law.  They happen to be personal friends of mine, and I was willing to arrange private meetings with these lawyer-experts to help the client.  All to no avail, because the client is 100% committed to pursuing a plan and business model that poses significant risks to him and his business.  He is a client who cannot be pleased, and he would not remember all the efforts I made to keep him out of trouble.  The minute he gets in legal trouble, he will develop selective memory, and blame me for his refusal to follow my good legal advise.   Who needs that?

It was a blessing to be fired by that client yesterday.  I feel bad that the client is making a bad decision, but I did the right thing.  The client should have more, not less, confidence in me, but he doesn’t care about that.  He is not searching for good advice or a trustworthy advisor.  He is searching for legal confirmation that he can do whatever he wants to do.  That’s not the type of client I want to serve.  So, it is best that the relationship ended.

Can you apply these lessons to your business?  Do any of you have customers or clients whom you need to fire?  Let me hear about it.  Add a comment to this post and tell us your story.