Scratching the aging itch of entrepreneurship

A benefit of age is that you often know what you don’t know but are wise enough to find out. A recent article from Bloomberg News indicated that in 2012, nearly 25 percent of new companies were started by people between the ages of 55 and 64. These are folks who often have acquired both experience and resources to get a new enterprise off the ground. If you’re starting a business, you need to minimize your risk to protect your personal assets.

Most new business start-ups are likely to be service-oriented such as consulting, designing or delivering of hands-on work such as being a care-giver or gardener. Providing services, as opposed to products, tends to have a low financial threshold for starting a business. You commonly need a name, a phone and a computer. However, talking to a lawyer, an accountant and a business insurance agent are essential. Why? Though the cost of a start-up may be negligible, you are placing your assets on the line if you mess up or have someone claim you messed up.

“I wouldn’t be paranoid of they weren’t out to get me…” is a favorite punch line of mine but it speaks to the well-founded fear of the liability you assume when you go into business. That’s where these professionals earn their keep. The lawyer can legally protect you. The accountant will help you fulfill your financial reporting and your insurance agent will help minimize or transfer your risk to others.

• Ask your lawyer about creating a limited liability partnership (LLP) or corporation (LLC), to isolate the activities of your new business from law suits.
• Have your lawyer draft a clear and well crafted standard contract before hanging out your shingle. The contract has four essential elements: an offer, consideration, acceptance and mutuality.

The offer explains what you promise to do (or not do). Consideration refers to the value that is attached to the offer. Acceptance is when the customer agrees to the terms of the offer. And, mutuality means both parties understood and agreed to the substance and terms of the contract.

When it comes to insuring a new business, we look at contracts because you are hoping to transfer your risk to an insurance company. As your agent, we’ll also want to know your experience, and the nature of the work or products to be sold.

Should a customer ask you to sign a contract, don’t hesitate to call your agent to review what, if any, risk or obligations are being transferred to you within their contract language.

Should you need to hire additional help to complete your work, you should have legal agreements that reflect the status of subcontractors or employees; accounting that reflects those expenses; and insurance that protects both you and the workers. Most state governments provide clear guidance that defines the difference between a subcontractor and an employee. If your part-time worker is injured while working for you and is deemed an employee rather than a “sub”, you could be held responsible for both their medical costs and their lost wages. A workers’ compensation policy, however, will protect you and the employee.

Hopefully, as aging residents of Maine and New Hampshire scratch the itch of starting their own business, it will lead to more employment, financial security, innovation and satisfaction. Gratefully, the aging residents and future entrepreneurs of Maine and New Hampshire will have the wisdom to ask for advice as they start their second or third careers.