20 Things You Should and Should Not Do Before Starting Your Small Business
Dane Carlson lists 20 Things Not to Do Before Starting A Business. While I agree with some of his points, I disagree with many others and think that if you follow them, they will either hinder the growth of your business, or get you into trouble. Dane’s point was to help entrepreneurs bootstrap, but it is important for business owners to walk the fine line between saving where possible, and spending where needed.
So let’s go through his list. I will discuss five points at a time, so let’s begin:
- Don’t quit your day job: Disagree
This is advice I see repeated for entrepreneurs, but it’s not necessarily good advice in all situations. If you really believe in your business and want it to grow, this is more than a full time job. Aside from the actual work ordered by clients, you have to spend a lot of time on marketing, networking, administration and more. If you don’t quit your day job, your business might not get anywhere since you won’t be able to give it the time it needs.
- Don’t incorporate: Agree
I think this is good advice in most situations. Unless you are involved in huge amounts of money or have an investor, incorporating is an unecessary cost and uses money which might be used better elsewhere. I recently met two young entrepreneurs who started a film-making company. They had one or two clients and had been working on very small projects. For some reason they had incorporated their business. By incorporating, they had increased their accounting fees and added many additional annual expenses to their budget, such as the need to open a business bank account (see point 3 below), and use the services of an attorney (see point 5 below).
- Donâ€™t get a bank account: Agree
This is true especially in Israel. Israeli banks suck you dry, and every bank account means added fees for every little move you make. This is another reason not to incorporate (see point 2 above), since if you are incorporated you need to open a business account, and in these types of accounts the fees are even higher. In the MATI small business course, the teacher told us that we should open bank accounts for our businesses right from the beginning. I followed his advice, paid the fees for a while, and then decided to save myself some money and close the account.
- Don’t rent an office: Agree
If you can work from home and it doesn’t detract from your business in any way, then this is a great way to save yourself a huge expense.
- Don’t hire an attorney: Agree
You can generally get by with straightforward contracts with clients that you put together yourself or from templates. Unless you are involved in huge deals like mergers and acquisitions or real estate, attorneys are an unnecessary expense. This is yet another reason not to incorporate your business (see point 2 above), since to incorporate you need to hire an attorney.
Stay tuned for an analysis of Dane’s next five points: Don’t hire an accountant, Don’t get a loan, Don’t hire anyone, Don’t get a business license, and Don’t try to patent anything.