This is the burning question of all time, .
And….tragically it’s got a terrible answer: IT DEPENDS.
From last week’s edition, we know that expanding really depends on LIABILITY, RISK and your own PLANS for GROWTH.
Here’s 3 simple questions to start you off:
1. Are you creating a duty or obligation to another person or entity (business)?
- Any sale creates a duty and obligation to provide the product/service to the client/customer.
2. Can your product or service harm another person or entity? If you expand any further in your product/service offerings – will it increase your risk?
- How can it harm another person, including an innocent bystander? It doesn’t have to be a client or customer – any third party.
3. What do you plan to do with this business in the next 6 months; 12 months; 3 years?
- Are you happy with your current state of business? Do you want to expand or include new services to new types of clients?
Let’s use 2 separate business owners – Jamie & Louie – as an example.
Jamie is an artsy, marketing manager who has a 9-5 job. She unwinds from her stressful job by making intricate, cloth doilies that she sells on Etsy, the online crafts retailer (www.etsy.com). She makes about 4 doilies a month and sells them all at $10 each. While her friends have urged her to expand into boutiques and other retail fairs, Jamie is quite content keeping this little, side-hustle exactly where it is, and doesn’t want to make this a full-time gig.
Now, meet Louie.
Louie is ALSO into making and selling doilies. But, his doilies are flammable doilies. That’s right – they literally can be set on fire. (My heart just hurt, writing that, y’all). Louie’s business is booming and he’s firing out anywhere from 20-40 doilies a month (at $100 each) from his storefront on Main street. He wants to expand online in the next 3 months and bring on an investor by the end of the year.
Who really should form a company to protect their assets and liability, here?
LOUIE – for ALL the reasons. As in, TODAY.
He’s creating volume and plans to expand further within the next 6 months with online exposure and investments. Of course, let’s not forget that Louie’s doilies are supposed to be SET ON FIRE. Meaning, anyone within the vicinity of said doily is in harm’s way. Regardless of whether they were the initial consumer who bought it.
While Jamie is creating an duty and obligation to provide her doilies upon payment by her Etsy customer, she still pursues this as a hobby and NOT a future, wealth-generating vehicle. Her doilies would generally be considered harmless (if used within the intended use of decoration) and she’s not selling huge quantities of this product. Jamie is a hobby-ist. Now – keep in mind – this can change AT ANY TIME, if she either expands the volume exponentially and/or decides to wander into creating flammable doilies, herself.
So, , are you Jamie or Louie?
Regardless, here’s what you can do with your business, today:
- Protect yourself with basic contracts such as a Client Agreement or Contractor Agreements & disclaimers in the interim**. Your assets are still NOT protected should anything go wrong and you do NOT need a company structure to have contracts in place.
- Obtain business insurance through a commercial insurance provider.
- Decide today if you want to incorporate into a formal company – LLC or Corporation by January 2020***.
- Get your BIZ clique together (Accountant, attorney, banker, insurance agent) before incorporating. Consult with them about your specific liability and risk factors.
- Your Business Plan is still an active tool in your growth. Make Q4 goals (October 1 – December 31) on your timeline for INCORPORATION, sales growth and revenue milestones.
Still unsure of where you’re at? Send us a line at firstname.lastname@example.org
APPLY: Whenever you’re ready, , here is how my team and I can help you grow your business this year:
- Join the private BIZTOCO Facebook group, a curated community exclusively for early-stage entrepreneurs. Learn from and connect with other founders as you grow your business. Click here to join (note: you must answer the questions in order to be considered).
- Apply for our START30 Virtual Accelerator for early stage entrepreneurs. You will create a solid legal and business foundation for your company in 30 days. Get all the details and apply up here.
- Work with me and my team privately. If you’d like to explore options on how my team can assist your business… just use this link to book a call…tell us about your business and what you’d like to improve, and we can get you options.