4 Critical Systems Every Company Needs to LIFT Their Businesses to Success
Do you treat the structure of your business as well as you treat your home?
Think of it this way. Would you buy a house if it had a cracked foundation? What if the house had structural problems?
Sure, you can make some repairs, like fixing a leaky faucet or replacing some broken tiles, but if the house isn’t built on a strong foundation and with a solid structure, it will fall. The same is true of a business.
For a business to succeed, it needs to be built on a solid foundation, and that foundation needs to be carefully maintained throughout the business’ lifecycle or it will crack and problems will arise.
The reality of business is simple. Without a solid foundation, even the most innovative companies will fail.
Building Your Business LIFT Foundation
At the foundation of every business are four critical systems that must be in place or the business won’t grow. If the business owner gets lucky and the business grows without these systems, then you can bet that big and expensive problems are going to hinder its success (or destroy it).
These four critical systems make up what I call your business LIFT Foundation. They include legal, insurance, finance, and tax, and they require a lot of knowledge and some expert help to set up and support on an ongoing basis.
The first element of your LIFT Foundation is legal and focuses on prevention. When you start and operate a business, there is a very long list of things you should be doing to prevent costly legal mistakes.
From choosing your business name and protecting it with a trademark to ensuring all of the right agreements are in place with your partners, investors, suppliers, clients, and employees, the margin for error is extremely high.
With the introduction of do-it-yourself online legal document services providers, the number of problems has escalated. In fact, a new area of law has become a big moneymaker for many law firms—do-over legal services—but it doesn’t have to exist at all.
This is an area of your LIFT Foundation where you must get help because if you make mistakes, the risks are simply more than most businesses can afford. I’ve seen too many businesses shut their doors because of legal mistakes they could have avoided.
Your LIFT Foundation needs legal prevention as well as insurance protection. Business is volatile and things will change. You need to be prepared by getting adequate insurance before it’s too late.
Depending on your industry, you might need insurance to protect you if a key person leaves the company. You might need property insurance and business interruption insurance as well as general, product, and professional liability insurance.
If you work from home, you should have home-based business insurance, and every business should have data breach insurance. The list goes on and on. The trick is to get the right insurance so you’re protected without overpaying for insurance you don’t need.
Without profits to keep things running, you won’t have a business, so you must prioritize finance as part of your LIFT Foundation. In simplest terms, you need to manage your daily finances and plan for the future so your business remains profitable.
Operating a business isn’t always smooth sailing. What worked yesterday might not work tomorrow, so you need a financial plan.
Every business needs a budget, business credit, and separate business and personal finances. If you’re not managing your business finances correctly, you, your business, and your family could land in serious legal trouble!
At the same time, you need to plan for the future so your business is successful for years to come (even during the worst times) by developing financial projections, cash-flow analyses, and more.
Your LIFT Foundation needs a tax plan so you can minimize the taxes you have to pay while maximizing your after-tax income. Of course, you want to avoid getting in trouble with the IRS, too.
Without a solid tax strategy and ongoing tax planning, you’re likely to make mistakes or miss opportunities to take advantage of tax credits and deductions you legally qualify for that could reduce your tax payments.
Business taxes can be very confusing. Your business might have to pay federal, state, and local taxes, and tax laws change every year! Tax planning should begin on day one when you first start your business because the decisions you make today could have a significant effect on your business in the future.
Building a strong LIFT Foundation for your business should be a requirement. It’s too important to ignore. Set your business up for success by building a solid LIFT Foundation that you can grow on! BW
Kelley Keller, Esq., president of Carlisle, PA’s Circle Legal, is redesigning the legal experience for innovative companies, business owners, and their families, so they get the LIFT they deserve. www.CircleLegal.com