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Innovative Legal Strategies

Howard County MD Business Law Blog

How to start a business plan

Many new Maryland business owners have trouble knowing how to write or even start writing a business plan for their new venture. Some then decide to just dive in without a plan. Business plans help owners and others to understand the direction in which the company should go. Trying to start a business without a plan may make it more likely to fail in the long run.

New business owners may want to start by using a tool called a business model canvas. This tool includes suggestions on inventing, designing and strategic planning for new companies. It can thus help owners to get started by putting their main thoughts down on paper. After using the canvas, the owner should then have a better idea of areas that need to be fleshed out and should subsequently list these using bullet points or another simple format.

Business models and planning

Maryland entrepreneurs who are thinking about starting a new company need to begin by writing a business plan. One of the most important parts of writing such a plan is establishing a business model.

A business model identifies a number of key components of the company, including the business strategy and what processes and information should be kept confidential. The business model also addresses how viable the concept for the venture is. It examines the demand for the product or service, the competition, how the product or service will be marketed, and what competitive advantages the business might have. A business model considers aspects like pricing and customer base and comprises about one-third of the total business plan.

Employee lawsuits spurred by broad worker protection laws

Entrepreneurs in Maryland often worry about being sued by customers or members of the public, but an October 2015 report from a leading specialty insurance provider indicates that they should also be concerned about lawsuits filed by their employees. The study, which was prepared by Hiscox, found that small and medium sized companies had about a 12 percent chance of facing such a lawsuit in 2014, and the likelihood was even higher for businesses in states with employee protections that go beyond those provided by federal law.

The study reveals that companies located in the 10 states with comprehensive fair employment or anti-discrimination regulations were sued far more often by their employees. New Mexico topped the list of states for employee lawsuits with businesses in the state facing such litigation at a rate 66 percent higher than the national average. Laws requiring employers to screen all job applicants for work eligibility and make allowances for pregnant employees were also associated with an increased rate of employee lawsuits.

Succession planning for family businesses

Family-owned businesses in Maryland often fail after they are passed from one generation to another. To ensure the continued success of a family business over multiple generations, the current owners should give careful thought to business succession planning. About five to 10 years before family business owners plan to retire, they can begin a gradual transition of business ownership to ensure that the next owners will be successful.

One of the reasons it can be difficult to achieve prolonged success with a family business is that families and businesses have very different characteristics. While family members accept each other's shortcomings and poor performances, businesses must be run productively and logically. Although siblings in a family business may want everything to be fair, the reality may be that one sibling is more capable of running the business than the others.

Importance of protection by company branding

As Maryland entrepreneurs know, branding is an important part of business since certain concepts of a company help identify it with customers. Recognition is a big part of planning whether in a new or established business or with a new product being produced by a company.

The association of an identity with a company may be expressed in different ways such as the design of a logo, a unique name or a company slogan. Companies build reputations by using these identifiers so that consumers and other businesses have a way to associate a company and its products in a particular way, such as the identification of a particular brand with reliable products for the home or for electronic devices.

Appropriate succession planning without violating the ADEA

Succession planning is an important part of the continued success of Maryland businesses. Planning how knowledge will be transferred when people leave the company is a vital part of such a plan, because a good plan can help minimize future costs during the transition period.

The Age Discrimination and Employment Act of 1967 proscribes discriminatory employment actions based on age for employees who are aged 40 or older. Businesses should thus take this act into account when they are conducting succession planning to make certain they do not run afoul of its provisions. If they violate it, they may open themselves up to litigation.

Business planning for success

There are a number of mistakes Maryland entrepreneurs sometimes make that can lead to the demise of their startup companies. Understanding these errors and then consciously avoiding them can help a business have a greater chance of ultimate success.

One of the major errors made by many small businesses is not having a business plan or having one that is inadequate. A good business plan may help the company by providing a blueprint so the owners can see where they need to work. Other problems occur when the business acts in a manner that is contrary to the plan due to a short-term concern. Instead, businesses can help themselves by having a good plan in place to start with and making modifications as needed on an ongoing basis.

Identifying potential pitfalls for start-up businesses

People who are planning to open a new small business in Maryland need to think about the potential pitfalls that may occur and then plan for them. There are several common types of problems that can arise with new businesses, and if they are not planned for, they have the potential to make the start-up fail.

One big problem that can negatively impact a business is when the owner hires family and friends as company employees. This can pose problems if the family members fail to pull their weight. Business owners need to be prepared to take care of problems early and quickly. Using the services of a professional recruiter to identify talent may be a better approach to staffing.

Business disaster planning

An unforeseen disaster could cause a Maryland business to temporarily shut down and lose profits. For some businesses, unpredictable closures can be so financially devastating that they are never able to reopen. When a company stops operating, contracts that it had with suppliers, customers and business partners could end up being breached.

Preparing for unforeseen disasters is an important part of business planning. A legal concept called 'force majeure" is often worked into business contracts as a clause that excuses parties for lack of performance during widespread and unpredictable events like wars, nationwide strikes and hurricanes. However, ensuring that force majeure clauses are included in contracts is only a small part of business disaster planning.

The importance of writing a business plan

All Maryland business owners can benefit from a strategic business plan. If a business is seasonal or earns a majority of its profit during one part of the year, it can be even more important to develop a written plan. When a strategic business plan is put in writing, an owner can be assured that others will be able to take over operations if and when they need to. A business plan can also help associates to understand how they can contribute to the realization of the owner's goals.

Business owners usually have many ideas and goals for the future of their company in their mind. By writing down these visions, a business owner will be forced to contemplate each idea and develop an actual plan. During the process of writing a business plan, a company owner can consult professionals, identify challenges and opportunities and come up with a business strategy.