Tuesday, February 26, 2008

Steps for Opening a Business with your Spouse/Significant Other

Thinking of going into business with your significant other? Read these tips from Debra Neiman before taking the next step!!!!

Give yourselves a timetable to startup. You might be tempted to give notice tomorrow morning, but it's much wiser to lay out a timetable over the coming months with specific tasks, goals and objectives.

Study the viability of your business model. Talk about worst-case scenarios. Bring in trusted advisors to ask tough questions about what you're planning to do and the viability of your idea. Convincing each other you'll make it work isn't enough. You need to understand the marketplace you're walking into and the roles each of you will fill. Perhaps you will notice gaps in skill sets that will necessitate additional staff.

Draft a business plan. Even if you don't anticipate the need to seek outside financing, it is always a good idea to formalize your ideas with a business plan. Include profit and loss projections, so that you have a benchmark for evaluating your progress at a given point in time. Factor in both best- and worst-case scenarios, which could help with decisions down the road.

Determine which business structure makes sense. Depending on the nature of the business, you may wish to incorporate. However, incorporating is a bit more complicated than running a business as a sole proprietorship. Consult with an accountant and attorney who specialize in business startups to determine which structure makes sense for you. Your financial planner can help here as well.

Understand how your tax situation will change. Depending on which business structure you choose, you may need to plan for income taxes, self-employment taxes and payroll taxes. You want to make sure you have reserves set aside for these liabilities. Again, your tax professional can help you get a handle on this.

Set a spending plan for your business and personal life. A financial planner can help you establish a spending plan for supporting your business as well as your life at home. Since startups have unpredictable cash inflows, you will want to establish adequate emergency funds--both business and personal--to carry you through the startup phase.

Make sure your legal documents are in order. If you haven't had your estate planning documents updated in a while or don't have them at all, this is a great time to have them drafted. Don't forget to tell your attorney about your new business venture, which should be factored into the equation.

Plan for your kids in the business. There may be good opportunities to employ children for work commensurate with their skills.

Get your insurance in order. Before leaving your current employer, figure out the cost of insurance you'll need to incur for the entire family, including health, life, home, business, disability and, if you're over 50, long-term care coverage. These expenses may be enough to encourage one of you to stay at your old job, at least for a while to keep those benefits going while the other devotes more time to the startup.

Have an exit plan if you break up. It may be hard to imagine now, but a breakup of your relationship with no financial plan for the business can be devastating. Whether you're married or living together, a successful business is an important source of wealth. So you should have a contingency plan in the event that one of you potentially wants to buy the business or be bought out. This legal agreement would include provisions to safeguard capital investments and non-cash contributions.

Set boundaries. Couples who live and work together need to assess whether they want to keep their work and personal lives separate. Some people are comfortable discussing their personal lives at work, while others make it clear that during working hours, they are at work and won't discuss personal matters. While there is no right or wrong here, you have to do what's right for you.

Excerpted from Entrepreneur.com.

9 comments:

Uzo said...

On a different take on this...Is it even a good idea to go into business with your spouse / significant other?

James Tubman said...

this very good

i might have to steal some of these ideas for my audiobook about relationships

having mutual interests and working on a project together can really stimulate the comraderie in a relationship

Jessica said...

Two of my best friends did this in the last couple of years. The women keps their full time jobs but are expected to handle all of the paperwork, finance, etc. Both couples are in counseling. I think it could be toxic on a relationship.

Richard Womack said...

Good posts:Finding a great mix is the hinges to making things work.When love and affliction are added,sometimes me,myself,and I,and a true friend.May MAKE A BUSINESS successful.
By the end,Love is the strongest force on the planet!

smileymamaT said...

Good stuff, thanks. I hadn't thought of going into business with my spouse, it never crossed my mind. I'd always imagined doing it alone or with a lifelong friend. but that's probably just because I'm a Leo. :)

capitolagirl said...

Hi KreativeMix, I got blog tagged today, so now I'm tagging you. Hope that is OK :-)

If you chose to play, here's how this game of tag goes:

1. Link to the tagger.

2. Share 7 random or weird facts about yourself.

3. Tag 7 people, post their names and links to their blogs on your blog.

4. Tell the 7 people you tagged by posting “Tag you’re it” on their blogs in their comments box and explain the rules to them.

Please don't feel obligated, just tag if its something you think would be fun!

Jennifer Worick said...

This is great information, KreativeMix. Love the blog. Thanks for posting on my Productive Procrastination blog but be sure to check out my Prairie Tales blog at jenniferworick.blogspot.com.

Brown Girl Gumbo said...

As usual, great post with very helpful information!! :-)

Anonymous said...

Uzo - You raise a good point. I'm not sure I'd go into business with a significant other or spouse. Maybe I'll change my view when the time comes, but for now, nah :-)

James - this is a fabulous idea when you have two spouses who have mutual respect and trust, and who work well together.

Jen - You hit it right on - "Toxic" indeed!!!

Richard - I'm still searching for that love :-)

Smileymamat - you're on the right track.....

capitolgirl---i'm gonna get you!!!!! I'd love to participate. I'm going to repost my previous tagged post since nothing has changed :-)...... This time I won't tag anyone because I've tagged all the culprits within the last few months....

Jennifer - I'll be sure to stop by and read your tales after this post.

Browngirl- you're so welcome :-)

thanks for stopping by everyone!!!

 
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