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As we enter the final month of the year and the excitement for the holiday season is ramping up, many people may not know that December holds a special designation for business owners and aspiring entrepreneurs. it is Write a national business plan month. And while the holidays often serve as a time to reflect on the past year, creating a business plan forces business owners to anticipate and think of constructive ideas for the coming years.
No matter what stage a business is at, it is always important to develop and strengthen a strategic plan. A well-designed business plan serves as a solid foundation for a successful business. The plan is like a road map that guides the business on what it will do, how it will grow, the market it will serve, the market it will serve, its operations, the struggles it will face and the goals it will achieve. Similar to the road map, your business may encounter roadblocks and detours that require you to rethink the path of the plan, but ultimately an effective business plan forces the owner to think clearly about the future of the business and should constantly serve as a compass. The company will move forward.
Along with dealing with general business issues, the preparation of the business plan provides a great opportunity to address some legal issues that may seem simple today but can prevent serious stress down the road.
One of the biggest decisions a business faces in the beginning is deciding how to structure it. The chosen structure has long-term implications related to business operations, liability protections, and tax strategies. The most common business structures are limited liability companies, corporations, and partnerships. Your chosen entity may require a state filing and may need to obtain a tax identification number from the IRS and state Department of Revenue.
In addition to determining the type of business entity, an effective business plan must consider all federal, state, and local laws that may apply to the business for each location in which it intends to do business. These considerations will keep the business ahead of the curve when seeking necessary licenses or permits. The business must consider zoning laws for each physical location to ensure that the business location is appropriate for the business. Effective planning in these areas can help avoid future obstacles that could delay expansion into new markets and hinder growth.
Finally, the business needs to consider the terms and legal agreements that are necessary in its operation. Although many of these documents develop over time and do not need to appear separately in the business plan, the business should consider some of them in advance. Specific contracts that may require special attention in the business plan are confidentiality and non-disclosure agreements. These documents are not absolutely necessary in every business, but in the right circumstances they can be critical to the growth or development of a business. By entering into confidentiality and non-disclosure agreements, the business owner can freely talk about business ideas and skills without worrying about the information being stolen or disclosed. The more sensitive the information, the more likely the business will require strong confidentiality and nondisclosure agreements.
Finally, these are just a few of the things a business owner needs to consider and there are many other things to consider when developing a strategic plan. A business owner should not prepare the plan alone. They can consult with tax, legal and business experts as well as trusted individuals who have invested emotionally or financially for their success. While the business plan may not address all the details that may affect the company, it should plan the path the business will follow. Effective business planning paves the way to success on the road.
About the author
Tom Lonan is an attorney in our Banking & Finance and Commercial Law groups. Tom regularly works with both individual and commercial clients in business formation and business development. They can be reached at 651-439-2878 or tloonan@eckberglammers.com.
