Startups have big questions to answer

Startups appear to be starting up again. Sybil Ege, who heads the Small Business Development Center at Elgin Community College, reports startup interest "feels better than in the past. There still are a lot of tire-kickers, but the past six months have been pretty active," Ege says.

There's enough activity that Lavelle Law Ltd., a Palatine law firm with a Chicago office, has developed an entrepreneurial law practice group with a startup concentration. The focus includes basics such as your planned business' corporate structure; funding possibilities; and intellectual property.

Whether you're ready to go or still kicking tires, starting up requires some extensive, often introspective, work. Begin by answering some questions:

• Who's going to buy the product, or service, you plan to sell? Who are your competitors? Why should someone buy from you? What are your advantages?

If you have good answers to those questions, the next one becomes equally important: How will you reach prospective buyers with a sales message that brings them to your business or website?

• You'll need money right off the bat. Where are the dollars that will cover your salary for, say, the first six months? What about health insurance costs? Where will the funds come from for supplies, equipment, furniture and rent?

Those questions will prompt others, but they're good for starters. There's more to do, however.

Talk with an attorney who understands startups. Small businesses are something of a legal specialty, which means the attorney who handled your real estate closing probably isn't the best bet. Neither is the lawyer who drew up your estate plan.

There may not be many firms with an entrepreneurial team such as Lavelle Law has put together, but there are attorneys who specialize in small business issues.

Discuss corporate structure; transitions if you, or your business partner, become incapacitated (or worse); a contract that will protect your firm's interest if a customer doesn't pay; and intellectual property, which includes a startlingly broad array of possibilities.

Chat with an accountant, too. Taxes likely will be the primary topic, mostly because your personal taxes will be impacted by business profits and losses. Your business ownership structure will be important in determining how profits, and losses, are handled.

Learn which expenses can, and cannot, be written off. Early employees? Look out for Social Security payments, unemployment insurance and similar issues.

Call a family meeting to discuss your startup idea. Cover the exciting potential but also broach the possibility of failure. If your kids are old enough, include them in the conversation.

Small Business Development Centers generally have constructive counseling, though many SBDCs face closure after June 30 depending on some type of state budget resolution. SCORE chapter members can be helpful.

Truth is, your starting up thinking has just begun. For example, we haven't broached information technology, the web or social media. That's next week's column.

• © 2016 Kendall Communications Inc. Follow Jim Kendall on LinkedIn and Twitter. Write him at Jim@kendallcom.com. Listen to Jim's Business Owners' Pod Talk at www.kendallcom.com/podcast.