Foundational Decisions When Starting a New Business

This podcast episode of "CEO Bros - After Hours" delves into foundational decisions that new business owners often underestimate, but which can significantly impact their success or failure.

The hosts (Brian Balduf, Brad Balduf, and Matt Croke) identify and discuss key considerations that go beyond the initial excitement of an idea and before basic start-up tasks such as naming a business.

These foundational decisions include determining the business structure (sole proprietorship, partnership, family business), securing funding, defining the ultimate goal of the business (lifestyle vs. investment/exit), and most importantly, understanding and securing customers.

Key Themes and Ideas:

Beyond the Initial Idea: The podcast emphasizes moving past the excitement of a new business idea and focusing on crucial strategic decisions.

Choosing the Right Business Structure:

Sole Proprietorship: The key consideration is whether you have the expertise, resources, and resilience to manage everything alone.

Partnership: Partners can provide support, expertise, and a sounding board for ideas. However, choosing the wrong partner (e.g., a friend who lacks the necessary skills or commitment) is a significant risk. Equity splits and decision-making authority need to be determined upfront. Partnerships can also bring in capital and specialized knowledge:

Family Business: Family businesses can be easy to start due to built-in support, but they are prone to conflicts stemming from family dynamics. Establishing clear boundaries between business and personal matters is crucial. 

Securing Funding: Funding is described as another foundational decision. How much money you need is crucial, and also considering where the money comes from (personal savings, loans, investors), and the trade-offs associated with each option (e.g., giving up equity).

Defining the Business Goal (Lifestyle vs. Investment): The ultimate goal for the business impacts numerous decisions, including funding, long-term strategy, and exit plans. It is important not to be "wishy-washy" with this decision. If you are thinking long-term, communicate that clearly to investors:

Identifying and Securing Customers: This is considered the single biggest factor that can make or break a business. It's not enough to have a great product or service; businesses need to know who their customers are, where to find them, and how to attract them. Revenue Heals All Wounds: Brad stresses the importance of revenue, stating, "I strictly subscribe to the rule of Revenue is the salve that heals all wounds." Securing clients, so that revenue is being generated is extremely critical.

Actionable Insights: Before Starting a Business: Founders should dedicate time to thoughtfully consider these foundational decisions before getting caught up in the day-to-day logistics. Partnership Considerations: Clearly define roles, responsibilities, equity splits, and decision-making processes with partners before launching the business. Funding Strategy: Understand the funding needs of the business and explore all available options, weighing the pros and cons of each. Customer Acquisition: Develop a clear plan for identifying, reaching, and acquiring customers. Don't assume that customers will automatically flock to a new business, even with a great product. This plan can evolve over time as the business grows. Self-Awareness: Identify your weaknesses and seek out partners who can help the business grow.