The 3 Most Common Small Business Mistakes
By Lane V. Erickson, Idaho Business Lawyer
For more than 70 years the premier Idaho business law attorneys at the Racine Olson law firm have assisted clients in the creation and operation of their small businesses. We pride ourselves in having the knowledge, experience, and ability needed to answer our client’s questions and give them the direction they need to get their small business on the right path towards being successful.
We find that most small businesses are not successful because the individuals that own them have failed to consider some of the most basic things about their business while in the process of starting their business up. We’ve also found that when the business owners start on the right path, the likelihood of their business succeeding goes up almost exponentially. This is why we enjoy counseling and assisting new business owners in the creation of their small business. We find that when being involved from the beginning, we can often answer questions that help our clients avoid problems later in the operation of their business.
Our team of Idaho business lawyers includes partners Lane Erickson and TJ Budge, and attorneys Nate Palmer and Dave Bagley. Our team of attorneys have the experience, skill, and knowledge, to provide sound legal advice to each of our business clients. Whether it is creating a small business, or working through the intricacies of negotiating contracts, or helping clients when something goes wrong, we have helped numerous business clients make sound business decisions that have helped them and their businesses be successful. We are confident that we can help you too.
The purpose of this article is to give you a list of the three most common mistakes small business owners make that may cause their business to fail. This list isn’t exhaustive but does provide some basic information that should help you in the creation and operation of your small business.Problems with Partners
The first mistake that most small business owners make is that they fail to consider the problems that could come up with their partners. A small business with partners is a lot like a marriage. At the very beginning, everybody is excited and happy about joining together and working together to see their dreams come true. However, after the honeymoon phase is over, and reality sets in, often problems come up between the partners. When these problems become insurmountable, the business may break apart much like a divorce. In most instances, the breaking apart of a business is ugly, difficult, and very emotional for the people involved.
There are many ways that you can avoid having problems with your partners. One of the most basic ones is to have well written corporate documents which for an Idaho LLC would be an operating agreement and for a regular Idaho corporation would be bylaws. These corporate documents provide a way for the business owners to spell out specific things that will happen in the event that problems arise between the partners and one or more of the partners of the business decide that they no longer want to be involved in the business.
To summarize, these corporate documents give the owners the ability to describe the steps that will be taken and exactly what will happen if one or more of the partners decides to pull out of the business. This is done so that the remaining partners or business owners can continue to operate the business without having it broken apart. Additionally, these documents can provide mechanisms that will protect each of the partners by preventing or helping to alleviate any disagreements that could come up between business owners. The bottom line is that these types of corporate documents are important but are often overlooked by new business owners.Failing to Manage Risk
The next most common mistake that most small business owners in Idaho make is failing to manage the risks that could come up in the operation of their businesses. For instance, many small business owners don’t get liability insurance for their business. Failing to properly insure your business could lead to the destruction of your business in the event an unfortunate incident or accident occurs. We always advise our clients to speak with a professional about the insurance options that exist for their specific type of business so that they can understand how this insurance can protect them.
In addition to insurance, we often guide our clients through the creation of their Idaho business entity. This would include either using an Idaho LLC or a regular Idaho corporation to structure their business. By doing this, we are helping our clients protect themselves individually against liabilities that could arise within the operation of the business in the event the insurance they have is inadequate to cover any liabilities that arise.
It is possible to have a complex business structure involving many business entities to provide this type of protection. However, even a simple Idaho LLC is far better in providing liability protection for the individual owners than an assumed business name or a partnership.Trying to do Everything Alone
The final advice that we give to our small business clients is the importance of not trying to do everything alone. In other words, it is far better to spend a little bit of money upfront to hire professionals who can give sound advice and counsel on how to structure your Idaho business and how to operate it than it is to pay lots of money in the end when problems arise. I often tell my small business clients that it’s a lot like going to the dentist. You may not like that regular dentist visit to clean your teeth and make sure everything is okay but it’s far better to do that than it is to wait until you need a root canal before you see the dentist.
The types of professionals that you should consider meeting with include a qualified and skilled Idaho business attorney, an accountant, an insurance agent, and of course any financial advisors or lenders that may be involved with the business as well. My experience is that business owners who utilize the expertise and knowledge of professionals at the beginning end up paying far less and have a greater likelihood of success then business owners who try to avoid doing these things because of the costs associated with them.
We have advised and counseled numerous small business owners in the creation and operation of their Idaho businesses. By doing this, we have helped our clients be successful and avoid costly liabilities that could arise. We are confident that we can help you too.Enlist an Idaho Business Attorney to Help You
Our team of Idaho lawyers can help you with any of your business structure or operation needs. Whether you are seeking to create a new business or review a current business, we are available to discuss your options and answer your questions at an initial free 30-minute consultation. Call us toll free at 877.232.6101 or 208.232.6101 for a free consultation. You can also email us directly at firstname.lastname@example.org or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho business problems.