So You Want to be an Entrepreneur?

Submitted by: Earl Cohen, Attorney

Ten tips to give you a fighting chance to succeed!

Nearly two years into this recession we’re still facing the highest unemployment in almost twenty years. One interesting thing about periods of unemployment is the number of entrepreneurs that emerge and the new businesses launched. Whether it’s an idea for a business, product or service, some of those out of work can’t seem to shake their business ideas or the fact that they can’t find a job on a par with the one they lost. Americans seem to reflect the old saying that “necessity is the mother of invention.” As exciting as it might be to own a piece of the economy, the road to success can just as easily lead to ruin. Here are ten tips which, if followed, won’t necessarily guarantee success, but will give a “would be” entrepreneur a fighting chance to succeed.

1. Entrepreneurs need to do extensive research on their idea, product or service and develop a business plan. There are significant resources available on the internet or the library and, once developed, the business plan needs to be updated periodically.
   
   
2. Entrepreneurs need to learn the basics of their business before they open their doors for business. A new business does not get many opportunities to make a good impression with customers or clients.
   
   
3. Entrepreneurs need to deal with experienced advisors, making certain the advice they receive is contextual. Contextual advice takes into account not only the business opportunity, but financial and other issues. Legal advisors should have a solid network of other advisors in finance, accounting, marketing, product sourcing, and human resources, among others, to help assure their client’s success.
   
   
4. Entrepreneurs need to be financially cautious and remember that no matter how good the prospects of their deal might look, they shouldn’t bet their entire fortune and definitely shouldn’t bet their home without a careful discussion with their advisors! Most financing today, including Small Business Administration (SBA) backed loans will require a pledge of an entrepreneur’s homestead.
   
   
5. Entrepreneurs need to fully understand the level of equity capital necessary for their business. Leverage is not necessarily an entrepreneur’s friend. Businesses large and small have failed during this recession as a direct result of relying on debt without adequate equity.
   
   
6. Entrepreneurs need to pay attention to Murphy’s first two laws: Murphy’s 1^st law- “whatever can go wrong will go wrong” and Murphy’s 2^nd law-“Murphy was an optimist.” Be prepared for problems by soliciting and listening to the advice of your advisors.
   
   
7. Do you really want a partner? Partners providing capital or expertise or both can be invaluable. However, without effective agreements between partners, including full expectations on responsibilities and compensation, such relationships often fail.
   
   
8. Management reporting systems and taxes come first, not later. It’s not enough to merely install “off the shelf” software. The chart of accounts, depreciation schedules and financial reporting system all must be in place at the time of establishment of a new entity.
   
   
9. Remember, it’s profit and not revenue that really counts! It’s the profit that the entrepreneur puts in his or her pocket.
   
   
10. And finally, as the song goes, “You have to know when to hold ‘em and know when to fold ‘em.” Entrepreneurs often have a strong sense of holding on thinking that business will improve or a new investor will appear. If the business concept is not working, changes may be necessary. If the changes don’t work, it may be necessary to close the doors and move on.

Earl Cohen is an attorney with Mansfield Tanick & Cohen, P.A. He focuses his practice in the broad areas of estate, business, asset protection planning, and estate administration, assisting his individual and business clients with the organization, operation and, when necessary, financial reorganization of their business and/or individual interests. Mr. Cohen regularly advises professional business clients on asset protection strategies as part of their estate and business plans and fiduciaries and beneficiaries on their obligations and rights. Earl serves as counsel and special advisor to businesses ranging from food production to high tech computer manufacturing and software.

From 1978-1986 Earl Cohen served as Chairman for Kensington Properties, Inc., a full service real estate development and management company specializing in property rehabilitation and secondary markets with successful developments throughout the Upper Midwest and North Dakota, Minnesota, Illinois and Missouri. Mr. Cohen has served on the Board of Directors of United Systems Technology, Inc., a publicly traded software development firm in Dallas, Texas, since 1995.