Just as in construction, when building a business, one’s success depends on the time and energy spent establishing a solid foundation.
Those who know me are familiar with my love of international travel. In particular, I am fascinated in understanding why certain structures have survived the tests of time whereas others are but a pile of rocks and rubble.
Recently a friend and I visited Machu Picchu, most famous of the Incan temples. We were both amazed by how well preserved the buildings are, despite the fact the ancient city sits on a mountain top that has nearly 100 inches of annual rainfall in one of the most seismically active regions on earth.
Without question, Machu Picchu is an “engineering marvel.” The ancient builders invested as much effort into creating a stable infrastructure for Machu Picchu—underpinned by layers of topsoil, sandy gravel, and granite waste rock—as on the visible buildings. More than 700 terraces retained and channeled moisture and preserved soil, reducing erosion while providing space for agriculture.
I use this particularly vivid analogy to illustrate an important lesson: the more thought, time and planning one spends in constructing the foundation for a business, the more successful that business will be in weathering the storms and quakes of an uncertain and often volatile economic climate.
Over the 30+ years I have counseled business owners, the more passionate I have become in advocating these concepts. Without exception, the businesses I have seen fail are those whose owners were so eager to “get out of the blocks” that they overlooked the key building blocks necessary to ensure their long-term viability and success.
When starting a business, it is essential to ask:
(1) Have we identified and evaluated all the potential risks involved in our particular type of business?
(2) Have we determined what type of business entity is best suited for our particular enterprise, and which will provide us the most legal protection and financial benefit?
(3) Do we understand clearly the legal requirements and procedures we must follow in order to retain the financial benefits and legal protections the business entity can provide?
(4) Do we have a plan to protect the company and its owners in the event of a catastrophic event?
Certainly, there are a many other issues that must be considered. If you’d like a list other questions you should be asking, email me at email@example.com.