Category: business finance

Legal Requirements for Starting a Small Business: 10 Things New Entrepreneurs Should Know

If you’re a new entrepreneur, an important task is ensuring that your business is compliant with all local, state and federal regulations.

Some legal matters require immediate consideration, and you will want to address those issues as soon as possible. To help,
Young Entrepreneur Council members share 10 essential tasks to handle right away when starting a business.

When first starting your business, it’s important to get all the legal matters in order as soon as possible. In your experience, what’s one legal consideration new entrepreneurs should be sure to handle right away and why?

1. Set up a company mailing address

It’s important to set up a company mailing address, especially if you are a remote business and don’t have a physical location. This address will be used in all of your email correspondence, legal documents, and more. You can set this up through a registered agent or through a company that handles mailboxes for businesses. Be aware you can’t use a P.O. Box to receive certain government forms and you may need a physical mailing address. —Nathalie Lussier, AccessAlly

2. Check for preexisting trademarks

One legal matter that needs to be addressed when starting a business is trademark issues. When creating your brand or developing a product, always check to see if someone has trademarked the name. If they have, you’ll need to go back to the drawing board. The last thing you want to do is infringe on a registered trademark and end up in legal trouble before you get your business off the ground. —John Brackett, Smash Balloon LLC

3. Find a good, experienced lawyer

Get a good lawyer who understands corporate law, finance, and mergers and acquisitions. It’s impossible to know what future legal matters you will face at incorporation, but good lawyers will know what’s ahead, even if you don’t. A good law firm can modify existing documents and help with negotiations. Having a good lawyer who understands how to structure legal matters is important. —Sean Adler, GZI

4. Establish the business as an LLC or corporation

When first starting out, one of the most important legal considerations to handle is establishing the business as a limited liability company (LLC) or corporation. That’s because every other step of the business-opening process will demand the legal name of the business. It’s what makes it possible to get a federal tax ID, which is also required for key financial elements like bank accounts and insurance policies. —
Richard Fong, Trustable Tech


5. Put financial agreements in writing

Always put financial agreements in writing. Money can easily break friendships and kinships, and you don’t want any misunderstandings to arise in the future. The agreement should include the nature of the return on investment. This is a serious expression of your commitment to the business and your intent to make money from it. —Bryce Welker, Crush The GRE Test

6. Publicize your company legally if necessary

One of the first things you should do before starting your business is determine if you need to publicize your company legally. Some cities and states require business owners to publicly announce that they created a company before they’re recognized. Failure to follow this step could result in hefty fines, confusion, and legal issues. —John Turner, SeedProd LLC

7. Understand your estimated tax payments

Talk to a CPA about your estimated tax payments, especially if you offer professional services. It would be unfortunate if you lost your license because of the back taxes you owe. In the first few years of business, you don’t want to underestimate your dues to the IRS or find yourself in a financial bind. Estimated tax payments per quarter are ideal. —Givelle Lamano, Lamano Law Office

8. Ensure you’re following the right payment rules

Make sure that you’re compliant with payment issues. There are many regulations that govern how you can accept payments from your clients. This is especially important if you work with clients who live in other countries, as you’ll need to consider currency exchange rates and taxes. By working with a legal professional, you can ensure that your business is following all the right rules. —Syed Balkhi, WPBeginner

9. Register your business name

Choosing the name of your company is one of the more difficult things to do when getting started. In most cases, the name you settle on will have already been taken, so this may take a few tries. But, when you’ve finally made up your mind and come up with a name that’s not taken by someone else, it’s best that you get it registered as soon as possible. —Stephanie Wells, Formidable Forms

10. Obtain any necessary licenses

In many countries, you need a license to start a business. So if you’re residing in such a country, obtaining that license is one of the first things you should do. This will prevent you from landing in any legal trouble. —Thomas Griffin, OptinMonster


How to Build a Unicorn Startup—And What to Do Afterward


By Sagi Gidali

Sitting in a dinky little diner in San Francisco’s Union Square, about to take a bite of a greasy cheeseburger, I scrolled through my phone. A press release had just gone live announcing that our company, Perimeter 81, had secured $100 million in funding to bump our valuation to $1 billion.

What I dreamt about for several years was finally true: I built a unicorn.

I saw all the media coverage we had received, all the kind, congratulatory messages hitting my inbox, and the life-changing moment I was waiting for never came. This is a major milestone I had worked for since I became an entrepreneur. Don’t get me wrong, it was exciting, but I realized that the achievement wasn’t an end goal that made me a different person. The hard work was only beginning.

You might expect the founder of a unicorn to be throwing a lavish party or having brunch in the lobby restaurant of a five-star hotel. I was sitting at a booth in a hole-in-the-wall diner feeling pressure and responsibility to lead us to the next milestone. The perception of a unicorn is that the growth doesn’t stop, so I had to make sure we kept our collective foot on the gas pedal.

With each milestone you pass, there’s increased expectations from the board and investors to continue innovating and scaling your company. Employees are also looking for increased leadership, and to understand what the company’s growth means for their own careers and futures. You need to lead by example and reward their efforts so your company can maintain its growth plan.

Our next goal isn’t directly monetary—it’s to disrupt the cybersecurity industry. We are on a mission to simplify the way we consume cybersecurity and are well-positioned to do so since the world has changed drastically in the last couple of years. Getting to this point was a nine-year journey. That journey is far from over, but I’ve learned enough that I can share some helpful tips that may make your entrepreneurial journey that much easier.

How to build a unicorn startup

Take risks and be bold

In 2013, my cofounder and I
started our first company. We certainly weren’t perfect, but we learned from each other and from what didn’t work. We found that you need to assess a combination of things, from the landscape of the market you’re looking to enter, to your own hunch about what you’re looking to bring to the table, to customer needs, and many data points.

With that first company, SaferVPN, we compiled tons of data points by talking with customers, collecting and analyzing feedback, showing insights, talking with industry analysts, and seeing what competitors were doing. When you combine all those data points, you can make better tactical and strategic decisions.

In 2019, we took the biggest risk and stopped the company. We used our infrastructure and intellectual property as inspiration for Perimeter 81. We had a B2C solution and started building a B2B tool in parallel, but the resources began cannibalizing each other and we were starting to lose focus. It was a big struggle at the time, but we decided we couldn’t keep them both.

The B2C was profitable, but we didn’t see a sustainable future. Perimeter 81 was nothing more than our assumption of trends. We foresaw the shift to the cloud, and that remote work would be the way of the future (of course, we had no way of knowing that a global pandemic would accelerate adoption). We sold SaferVPN because we saw a huge opportunity. It was also a huge risk. Our bet paid off.

Build strong management

I have a great relationship with my cofounder, Amit Bareket—after all, I started two companies with him. But it’s more than just maintaining that one relationship. You should surround yourself with strong people who are experts in their field, and let them help you.

Learn to delegate and understand that you can’t do everything, which is tempting when you’re building your own company from scratch. Just lead the way, be the sherpa for the people in your company, and trust them to do what you
hired your employees to do.

That manpower may not always be the same. Economic conditions may determine who is right for your company at any given point. People that you really like, who were very good from the beginning, might not be able to match expectations and deliver what’s required at a certain point of growth for your company. It’s a painful change, but a sign of strong management if you can make the right decisions.

Stay humble

I’m proud that Perimeter 81 didn’t change when it became a unicorn. If I were driven by ego instead of my genuine desire to see our company change the cybersecurity landscape, perhaps things would be different. The way I see it, our success hasn’t changed our culture. I’m not secluded in a corner office, shut off from the rest of the team. I sit with our valued employees during my workday and initiate conversations with them.

If Perimeter 81 were the kind of company to blow millions on a celebration, it would affect the talent, employee retention, and create a different
company culture than the values we’ve prided ourselves on. Humble leadership is required for growth. You’ll need to develop other skill sets along the way, of course, but remaining steadfast in how you behave sets the course for your future growth and keeps your focus on the task at hand.

Until, that is, you enjoy a quick cheeseburger before attending a major conference. Then you find a new goal and keep grinding.

About the Author

Post by: Sagi Gidali

Sagi Gidali is a serial entrepreneur who creates, scales, and optimizes new SaaS solutions. As a UX/UI leader and expert designer with over 15 years of experience in the field, he has also worked for Siemens as a UX consultant. Perimeter 81 is Sagi’s second venture after transforming SaferVPN, sold in 2019 to J2 Global, from a bootstrap startup to a self-sustained business. At SaferVPN, Sagi led all the product, marketing, and design aspects of the service. Sagi served in the IDF’s elite visual intelligence unit (Unit 9900) and worked as a software developer for Imperva. He holds a B.Sc. in Computer Science and Economics from Tel Aviv University.

Company: Perimeter 81

Website:
www.perimeter81.com

Connect with me on
Twitter and LinkedIn

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Small Business Trends in 2023: What Entrepreneurs Can Expect in the New Year

Many small business owners expected 2022 to be a year of recovery after two years of struggling to survive a global pandemic. But inflation, fears of a recession, a still unreliable supply chain, and a nation at nearly full employment resulting in a tight job market all loomed large, dampening many of our goals.

As we enter 2023, the outlook seems somewhat brighter for small business owners. I talked to several small business experts to get their advice, insights, and predictions for small businesses in the new year.

Small business outlook for 2023

Impact of a recession on SMBs

“Nobody knows whether a recession will occur, but it’s certainly fair to say that small businesses are dealing with several economic obstacles right now. Fortunately, small businesses are resilient. Even if a recession does develop, our 2022 Small Business Now report shows that 90% are confident that they will still be in business a year from now. We also often see lots of small businesses get started during recessions.

“However, some sectors would likely be impacted more than others. The consumers we polled said that, during a recession, they would cut back on spending at “convenience,” “lifestyle,” and “entertainment” businesses first. I strongly encourage those business leaders to begin their recession planning now to be safe.”

—Dave Charest, Director of Small Business Success, Constant Contact

What the small business environment will look like in 2023

“2023 will be a year of small business owners betting on themselves and focusing on the elements of business ownership within their control. Between the pandemic, inflation, supply chain issues, and labor shortages, running a business over the past few years has been incredibly challenging.

“Still, through research and conversations with our clients, it’s clear that most business owners are resolute and optimistic heading into 2023. While business owners anticipate a recession may force them to raise prices and reduce spending, entrepreneurs are focusing their efforts on marketing and promoting their businesses, investing in new technology, and boosting head count.”

—Sharon Miller, President of Small Business/Head of Specialty Banking and Lending, Bank of America

“Of course, inflation is the biggest [concern] I’ve heard from small business owners. They are concerned that higher prices will drive away customers. But consumers are very willing to support the businesses in their communities as long as the value is clear and the company cultivates a relationship with them.

“The bigger challenge I see extending into 2023 is staffing. According to our research, about 40% of small businesses are struggling to attract new employees, and another 21% are concerned about retaining current staff. I expect small businesses to get creative about what incentives they offer employees to keep them engaged and invested in the business.”

—Dave Charest, Director of Small Business Success, Constant Contact

Outlook for startups

“Whether or not there’s a recession, startups will continue to flourish. More and more individuals will take control of their own destinies rather than be at the mercy of large corporations.”

—Nellie Akalp, CEO, CorpNet

Overall outlook for small businesses

“Though a recession is uncertain, the warning signs are there, and small businesses should begin preparing for whatever new economic challenges may come. There are a few ways they can do this. One is to improve the way they communicate with customers. It’s never been more critical to build an email or text list, which are still cost-effective ways to deliver helpful information to customers.

“They should also lean into their strengths—their connection to their communities and the great experiences they can provide customers. Bigger brands may have bigger budgets and more exposure, but they can’t offer the same inventory, customer service, or experience that a small business can. Despite what you might read in the headlines, small businesses are tough and will get through whatever 2023 has to throw at them.”

—Dave Charest, Director of Small Business Success, Constant Contact

“Small business owners have proved that they’re resilient and nimble enough to handle any challenge the economy throws at them. A recent Hello Alice survey found that 73% of owners predict their businesses will grow in 2023. [They] are buckled in to continue their fight against inflation—their top challenge predicted for 2023. Surveyed owners identified price hikes and adjustments to product offerings as two effective strategies that helped them combat inflation in 2022.

“However, these tactics contribute to two of the owners’ biggest fears for 2023: losing customers due to price increases and the inability to acquire customers. In response, small business owners must learn best practices and explore software solutions to optimize their marketing efforts for the coming year.”

—Elizabeth Gore, Cofounder/CEO, Hello Alice

Small business finances in 2023

“In 2023, small businesses will be even more focused on managing costs to manage an increasingly challenging economic environment. Small businesses already leveraging fintech offerings will be prone to scrutinizing whether those they have are exactly what they need to run their business. We expect many to look at consolidating services, which will increase demand for cohesive financial platforms that help small businesses manage their money end to end.

“When financial services like payments, business banking, and lending are integrated and embedded intelligently to meet the money needs of a small business owner, it can unlock unparalleled cost and efficiency benefits. Faster access to money provides more opportunities to invest in growth; real-time insights aid with more informed strategic planning; and seamless integration across money-management tools removes complexity to enable streamlined business operations. Arming small businesses with the technology that fuels these capabilities will be especially critical in the new year as small businesses navigate an uncertain macroeconomic environment.”

—Rob Daniel, Director of Product Management, Intuit QuickBooks

Buying and selling businesses in 2023

“Based on how we’ve seen the small business market react to rising interest rates, I expect the theme of 2023 will be seller financing. The Federal Reserve is staying firm on its mission to fight inflation and has indicated that multiple rate hikes may be in store this year.

“Time will tell if that truly is the case. However, I expect these conditions to motivate more buyers to ask for, and sellers to accommodate, at least some percentage of seller financing in order to close deals. In terms of transactions, with so many buyers in the market and baby boomers on the brink of retirement, I expect transactions to continue at the same accelerated pace we’ve seen over the past two years, with financing being the core hurdle for entrepreneurs to overcome.”

—Bob House, President, CoStar Group (BizBuySell)

Trends and challenges that will impact women entrepreneurs

“Women’s business ownership has rapidly grown over the past decade, and I expect that trend to continue in 2023. Equal access to capital will always be essential in accelerating growth—and there’s still much work to be done, but access to education is similarly critical. The
2022 Women & Minority Business Owner Spotlight found that 75% of women business owners wish they were more knowledgeable about small business finances. I believe the number of educational resources available to women entrepreneurs will continue to grow in 2023 and beyond.”

—Sharon Miller, President of Small Business/Head of Specialty Banking and Lending, Bank of America

“2023 will be pivotal for women and access to capital. Nearly 70% of small business owners told us they plan to apply for funding to combat inflation this year. Yet, we know that women face barriers that limit their access to loans, credit, and other vital business capital. We should focus on ways to ensure every woman has the financial tools to respond to unexpected challenges and grow their business.”

—Elizabeth Gore, Cofounder/CEO, Hello Alice

Trends in cybersecurity

“Attacks on small businesses will increase in 2023. SMBs already make up over 41% of data breaches, but as large enterprises spend more on cybersecurity and adopt more robust frameworks, attackers will increasingly turn their attention to small businesses. Cybersecurity will also be a major differentiating factor in sales and partnerships for SMBs. Organizations increasingly want to work with vendors that have mature security and compliance programs.”

Why businesses should implement a BYOD (Bring Your Own Device) policy

“Even if you prohibit your employees from using their own devices, some employees will choose to use them anyway. The key advantage of establishing a BYOD policy is ensuring that any device that could potentially be connected to your company is properly secured.

“The top place where BYOD policies fail is an ineffective onboarding stage. Sending employees a list of instructions may be challenging to follow but can be remedied with a live onboarding plan for every device. At a minimum, your BOYD policy should include mobile device management and remote monitoring, endpoint and network security, and personal data breach monitoring.”

—Amir Tarighat, Cofounder/CEO,
Agency