One of the benefits of writing a business column for USA TODAY as I do is that I hear from a lot of small business owners. They make comments, have suggestions, and yes, ask questions. So in this blog and the next, what I would like to do is tackle some of the most common questions I receive. In this installment, we look at common business questions, and in the next, legal ones.
Q: Why do I need a business plan?
A: There are two reasons for writing a business plan:
First, a well written business plan – one that is clear and realistic – is necessary if you anticipate establishing a credit line with a bank or if you are looking for investors. The plan needs to detail how the money will further your business’ goals and how it will be used.
Second, a business plan is an essential small business tool since it will keep you on target; it is basically a blueprint for starting, running, operating, and managing your business.
Q: How can we find investors for our business without giving away our idea?
A: I hear this question often, and basically my answer is always the same: Yes, people do steal ideas sometimes, but not very often. Begin with that premise. And anyway, the fact is, there is no way to fully protect yourself because ideas alone re not really protectable. If you have a prototype product, you can patent it. That is protection. And you can trademark and copyright other intellectual property. But ideas? Not really protected.
That said, what you can do is get people to sign a confidentiality agreement (a nondisclosure agreement, or NDA) before you tell them your idea. That is a measure of protection and also can act in a prophylactic way, as a warning to people that you consider your idea a protected trade secret of sorts.
Q: Do I have what it takes to own my own small business?
A: Not everyone is an entrepreneur. Some people are artists, others are dancers. Some people like to work for themselves and others like to work for others. To see if you might like to own your own business, ask yourself these questions:
- Am I a self-starter?
- Am I a risk-taker?
- Can I live without structure?
- Am I organized?
- Does my family support this idea?
- Can I handle the emotional aspects of being self-employed?
- Can I live without a paycheck and benefits?
- Am I highly motivated to undertake this endeavor?
- Am I willing to put in the necessary hours?
(For more help with self-employment, visit TheSelfEmployed.com.)
Q: How do I go about dissolving a business?
A: A sole proprietor can just shut the business down, pay off the creditors and call it a day. The closing of a partnership is usually done in accordance with the partnership agreement.
Corporations can be dissolved wither through a voluntary or involuntary process. A voluntary proceeding is begun either by the shareholders or by the board of directors. Upon approval, a certificate of dissolution is filed with the state. After that, the directors wind up the corporation’s affairs – selling assets, paying off debts, that sort of thing. In an involuntary dissolution, shareholders can petition a court to dissolve the corporation, and if approved, the company’s affairs are wound down thereafter.