Startup Dox

Lawyer Created | Peer Reviewed | Business Tested

How to:Know if you have a Hobby, Idea or Business

  1. Why this matters: Knowing your current “status” can help you determine your next steps and liability. It will also help you figure out your strategy for your company journey.
  2. What you need: Contracts to protect your current liability
  3. Who you need: Attorney to review any contracts
  4. What to explore next:
    1. Audio Course: How to Pick your Profitable Idea
    2. Masterclass: LLCs
    3. Masterclass: Corporations
    4. Masterclass: Non-Profit
    5. Masterclass: CINC
    6. Masterclass: Goals for Profit (Leveraged)
    7. Contracts: Unilateral NDA; Independent Contractor; Client Services Agreement
One of the top questions I get as a startup lawyer and advisor is:
“SHOULD I start a business with my product/service?”.
Now, here’s the truth, no one can tell you exactly what you “SHOULD” be doing with your idea – everything is truly within your decision-making control. What you can glean for your own information, are the facts needed before you proceed. Here’s an informal test for starting a business from an idea, or a hobby.
It really all comes down to LIABILITY, RISK and YOUR PLANS for GROWTH.
IDEA: You have an idea for a product/service that you think can go big (or really just help people). You’ve seen a gap in the market or you’ve been personally affected by that gap. You think others would benefit from your idea. What you do with an idea, today:
Cold facts: Your idea doesn’t have real merit until someone actually spends MONEY or invests into it.
HOBBY: You have an idea that actually has fans (fans = PAYING CUSTOMERS). You make 1 or 2 sales a month and are happy with this pace. OR you may be getting increased sales every month, and may be getting concerned about increased liability. You may or may not be sure of the momentum or the end possibility but enjoying the side-hustle lifestyle. You definitely want to grow it but are not pressed about the future (at least for the next 6 months). What you do with a hobby, today: No judgment if you don’t want a business. Some of the best services out there are actually run by hobby-ists that just enjoy the ACT of providing the service, without goals of expansion or profit. BUSINESS (not Company): You’re banging out sales and increasing month by month. You definitely are concerned about liability and how to protect yourself. You’ve got plans to expand and take this big and affect more people than you are today. What you do with a for-profit 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 but you do NOT need a company structure to have contracts in place.
  • Decide today if you want to incorporate into a formal company – LLC or Corporation within the next 3 months.
  • Get your BIZ clique together (Accountant, attorney, banker, insurance agent) before incorporating. Consult with them about your specific liability and risk factors.
  • Get QuickBooks or another accounting software to keep track of your expenses, profit & revenue (Excel still works, too!)
  • Your Business Plan is still an active tool in your growth. Make Quarter goals (90 day goals) on your timeline for INCORPORATION, sales growth and revenue milestones.
ACTION STEPS TO APPLY TODAY:

1. Identify your current LIABILITY, RISK and YOUR PLANS for GROWTH in the next 12 months.

2. Define if you have an idea, hobby or business.

--     Follow us    --
--     MUST-READ ARTICLES    --
0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments