Starting a new business? Feeling overwhelmed? Below, we’ve put together a checklist for starting a new business in SC that may help…
Most new businesses fail within the first year of opening, especially small businesses. Why? The reasons vary from business to business, but one thing you can do to maximize your chances of success is to plan – don’t leave anything to chance, do your research, and have your ducks in a row before you open your doors.
Details that may seem trivial, like choosing a name for your business or the physical location that you choose, can make the difference in whether your business succeeds or fails. Insufficient funding, failure to secure the right licenses and permits, or unexpected lawsuits can also end a new business before it has a chance to succeed.
What can you do to maximize your business’s odds of success? How can a Myrtle Beach business law attorney help?
Checklist for Starting a New Business in SC
Careful planning is the key to a small business’s success – leave nothing to chance. Below, I’ve compiled a short, non-exclusive checklist for starting a new business in SC that will help you to get started.
What are you selling and who is going to be buying?
Whether you are selling a product or a service, you need to know:
- Is there a demand for your product or service?
- Where are your potential customers?
- What do they pay for similar products or services already?
- Where are your potential customers and how will you reach them?
- Who are your competitors and how will you set yourself apart from them?
For more information, including methods for conducting market research, take a look at the Small Business Administration’s website.
Why do you need a formalized business plan?
If you want to maximize your new business’s chance of success, you need to lock down every possible detail and have a plan in place before you open your doors. A detailed business plan will help to keep you focused and ensure that you leave nothing to chance.
Furthermore, if you need to obtain funding for your new business venture, you will need to show the bank or potential investors that you know what you are doing and that your business will succeed – no one is going to sink money into a half-baked plan that you can’t show them on paper…
According to the SBA, your business plan should include:
- An executive summary;
- A detailed company description;
- Your market analysis;
- How your company will be organized and managed;
- Detailed information on your product or service;
- Your marketing strategy;
- Financial projections and a request for funding; and
- An appendix containing all relevant documentation.
The SBA’s website has some sample business plans you can look at.
Choose a Name for Your Business
What’s in a name?
A lot… your company’s name needs to reflect your brand, identify your product or service, and appeal to potential customers – take some time to reflect on what word or phrase best describes what you do and the product or service you provide.
Branding is an important component of every successful marketing strategy, and your company name is the most visible, effective component of your brand. Your company name will appear on your marketing material, your signs, and your website or blog, and you will need to ensure that it is not already trademarked.
Fund Your New Business
Determine how much capital you will need to get your new business up and running and to pay the bills as your business grows. How can you obtain funding for your new business?
- Self-funding – if the resources are available, you can fund your business with your own capital, savings account, 401k, or contributions from friends and family;
- Venture capital – investors may agree to fund your new business, although you may have to give up partial ownership and control of your company in exchange;
- Partnerships – you may find partners who are willing to invest in your business;
- Small business loans – you may qualify for a small business loan from a bank or credit union, or you may qualify for assistance from the SBA; or
- Crowd-funding – various crowdfunding platforms may help to get your business up and running.
Location, Location, Location
If you are opening a physical location for your business, it must be located in an area populated by potential customers who are looking for your product or service – make sure that the type of people and the volume of people who will see your building and sign match the product or service and volume of business that you intend to do at the location.
Open a Business Bank Account
Regardless of the type of business structure, open a separate business bank account and do not commingle funds. Business income goes into the business account, and personal expenditures come out of your personal account.
How Your Myrtle Beach Business Law Attorney Can Help
One major item on your checklist for starting a new business in SC should be consulting with a local business law attorney who can help you to set up and register your business, ensure all necessary licenses and permits are in place, negotiate and draft contracts for your business, and help you to avoid unnecessary litigation.
Choose Your Business Structure
You will need to choose a type of business entity that is best suited to your new business. Will you have partners? Is your business a professional association? Do you need to limit your liability? How much income do you anticipate and how should your taxes be structured?
The answers to these and more questions will determine whether you should default to a sole proprietorship or create a business entity like a:
- C-Corporation – a “normal” corporation where corporate profits and shareholder distributions are taxed;
- S-Corporation – a “closely held,” usually smaller corporation that allows you to pay taxes once on your personal tax return only;
- Professional corporation – for “professionals” like attorneys, doctors, or accountants, a professional corporation allows you to limit liability for malpractice claims against each individual member;
- Partnerships – including general partnerships, limited partnerships, or limited liability partnerships;
- Limited Liability Company (LLC) – protects its owners from liability and allows you to choose whether you are taxed at the corporate level or the individual level; or
- Non-Profit Corporation – if you qualify as a non-profit, you do not pay taxes.
Although you can change the type of business entity later, you will avoid problems with taxes and potential litigation if you coordinate with your business law attorney to create the appropriate form of business entity before you open your doors.
Register Your New Business
Once you have decided on the type of business entity that is appropriate for your new business, your attorney will help you to prepare and file the documents that will give life to your business and make it legal.
You may want to change your type of business entity or make amendments to your original filings, and your attorney can also help with this by filing articles of amendment, articles of dissolution, or the appropriate documents with the Secretary of State.
In some cases, your business law attorney will also help you to apply for a patent or register a trademark for your new business or an existing business.
Apply for Licenses and Permits
You can’t do business until you have obtained the necessary licenses and permits – what type of licenses do you need?
At a minimum, you will most likely need to apply for a business license with the city or county. Depending on your type of business, there may be additional licenses or permits that you need – for example, if you are starting a new business growing and processing hemp in SC, you will need to go through a lengthy approval process to obtain a permit from the SC Department of Agriculture.
Negotiate and Draft Contracts
A handshake and verbal agreement is not good enough in today’s world – if you want to 1) get the most value for your money; 2) avoid unnecessary litigation; and 3) successfully prosecute and defend lawsuits or collection actions when they are unavoidable, then you must negotiate and draft detailed contracts including contracts for:
- Products or components;
- Real estate or improvements to land;
- Marketing companies;
- Supplies needed to run your business;
- Security companies;
- Transportation or delivery;
- Employees or contract labor; or
- Any service or product that your company requires to operate.
Why do you need to negotiate and draft detailed, specific contracts?
When your agreement with another company or individual is reduced to writing in an enforceable contract, that company or individual is more likely to deliver what they agreed to – there is no question as to what was agreed to and no room for differing recollections.
The goal is to avoid litigation whenever possible, and nothing avoids litigation like a signed, written document that spells out each party’s rights and responsibilities and that is enforceable in court.
Sometimes, vendors or suppliers will breach their contract and there is nothing you can do to prevent it. When this happens, a detailed contract can avoid protracted litigation, resulting in a settlement or judgment early in a lawsuit or before filing a lawsuit at all.
Avoid and Resolve Litigation
Not to beat a dead horse, but successful businesses avoid litigation whenever possible.
Some business owners don’t consult with a business law attorney until after a lawsuit has been filed against them or they need to collect a large, unpaid debt, not realizing that they may have avoided the lawsuit or the unpaid debt if they had consulted with an attorney sooner…
When it is not possible to avoid a lawsuit, businesses need to resolve litigation quickly, recovering money owed or shutting down frivolous lawsuits against the company as quickly as possible and hopefully without unnecessary court appearances or publicity.
Apart from retaining counsel to negotiate and draft your contracts and to resolve litigation when it arises, how do you keep your company out of the courts and protect your assets?
- Set up the appropriate type of business entity and comply with all filing requirements;
- Do not commingle your personal funds with business funds;
- Research potential vendors or service providers that your company will use – read reviews online, check with the Better Business Bureau, look for lawsuits filed by or against the company on the SC public index, and talk to current and former customers;
- Meet with your business law attorney to review your business plan and identify potential problems before opening the doors or entering contracts;
- Purchase and maintain any appropriate forms of insurance, including liability insurance and professional malpractice liability insurance if appropriate; and
- Carefully choose your business partners and employees – if you are going into business with someone who has a history of litigation, you can expect your company will be involved in future litigation…
What else can you do?
Make a checklist – the above items are a good starting point for a checklist for starting a new business in SC, but there may be additional items that need to be added based on your business’ unique situation. Consult with your business law attorney to make sure that you are not missing anything as you launch your new business.
SC Business Law Attorneys in Myrtle Beach
At Coastal Law, our Myrtle Beach business law attorneys help our clients to set up new businesses and manage existing businesses, including choosing and filing the right type of business entity, prosecuting and defending lawsuits, and, most importantly, helping our clients to avoid litigation whenever possible.
Call Coastal Law now at (843) 488-5000 or contact us through our website for a free consultation about how to protect your business and your assets.