Allow The Business To Be Separate From You.
When most entrepreneurs start their businesses, they are usually very small, and even informal. They work hard, usually with the support of family and friends, without any proper salary structures, or regular payments. Sometimes when they borrow money, they are forced to secure such loans using personal assets, like their home.
This is common around the world.
It can also create serious problems for you, if there is a downturn in the economy, or if something goes wrong.
I once went through a very painful experience, when one of my businesses, was forced into bankruptcy. Some of my creditors took me to court, and were given orders to attach the assets of the business, as well as my own personal assets, including our family home, and car. They were all auctioned. It was a bitter, learning experience, which I would not wish on anyone….
So what do you do?
To begin with, do not operate your business informally. Register it properly, as a “limited liability” company, with the assistance of a lawyer. Make sure you purchase a of copy of your country’s company code. Every self respecting business person, should have a copy of their country’s company code.
Under that company code, your business is a “legal personality”, separate from you. Make sure you fully understand what that means. And please don’t bombard me, with questions about it; its your homework.
Since we first talked about it, you should be working with a Book keeper, who helps you with your accounting records. And if you are bigger, hire a full time accountant.
You should have a lawyer that you meet regularly, at least once a month, to talk things over.
Always, always, always…. Know your rights, under the law. And do not be afraid to enforce them, even when dealing with a government department.
Make sure you have a relationship with a professional lawyer, who makes time for you, and enjoys business matters, rather than criminal law.
With your book keeper, sit down and agree how much salary, every person gets. With the assistance of your legal advisor, draw up a simple contract of employment for everyone, including yourself, and your relatives, that are employed in the business.
Be modest in what you pay yourself, and do not exceed it.
…. It does not matter how small your business, or social enterprise is: do it, otherwise you will never grow into a big organisation.
Think of your business, like a it were a “person”, quite separate from you. Starting a business, and growing it, is rather like having a child, and raising it to adulthood. It goes through exactly the same phases:
there is a baby phase, an infant phase, school going phase, adolescent phase, young vibrant adult, and mature phase. The successful entrepreneur, is one who ultimately understands each phase, and helps the business to grow into a healthy, and independent adult, who can also take care of its parents.
Finally, be sure that you meet your obligations as a citizen. Pay your taxes, both corporate and personal. It does not matter, that some of the biggest guys that you know don’t pay taxes: shame on them… You are better than that, because you are a “nation builder”.