Getting a new business off the ground isn’t just about hustle. It’s also about making the right calls—early and often. And if you’ve ever Googled “How to start a business,” you’re not alone.
Most first-time entrepreneurs wrestle with the same questions. What type of company to form? Where to incorporate? How much capital is enough? Legal expert and investor Richard D. Harroch has heard them all—and answered them, too. Here’s what every would-be founder should know before taking the plunge.
Picking the Right Legal Structure Is Trickier Than You Think
Ask a lawyer about business structures, and they’ll probably say, “It depends.” But Harroch cuts through the fog.
Generally, an S corporation or LLC will do the trick. They’re simpler, offer liability protection, and come with tax benefits. But if you’re planning to issue both common and preferred stock—for example, if you’re eyeing venture capital down the line—start with a C corporation.
Partnerships? Sole proprietorships? Better think twice. The personal liability risks aren’t worth it unless you’re keeping things small and temporary.
Delaware vs. Home State: The Incorporation Debate
Ah, Delaware—the corporate holy land.
It’s no secret that the state boasts some of the most business-friendly laws in the country. That’s why it’s home to more than a million companies, including two-thirds of the Fortune 500. But that doesn’t mean it’s always the smartest move for startups.
Harroch recommends keeping things local, at least to start. Incorporating in your home state saves on fees and paperwork. You can always switch to Delaware later if your company outgrows your state’s legal simplicity.
Initial Capital: You’ll Probably Need More Than You Think
Most new founders underestimate how much runway they need. Six to nine months with no revenue? That’s the bare minimum.
Things go wrong. Software takes longer to build. Customers don’t convert like you hoped. And those “low” fixed costs? They balloon when you’re hiring, testing, shipping, and marketing—simultaneously.
Here’s a good baseline, according to Harroch:
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Raise enough to survive at least 6 months
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Pad it by 25% for surprise expenses
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Know your burn rate from Day One
You don’t want to be pitching investors with two weeks of cash in the bank. That never ends well.
Can You Really Start Without a Cofounder?
Technically? Sure. But emotionally, financially, and practically? It’s hard.
Solo founders face an uphill battle—especially when it comes to fundraising. VCs and angels prefer two to three-person founding teams. They want diversity of thought, workload balance, and backup if one person quits.
And truthfully, going solo gets lonely fast.
Still, if you have a killer idea, resources, and support, going it alone isn’t a dealbreaker. Just be ready to bring on help sooner rather than later.
Do You Need a Business Plan or Just a Pitch Deck?
Business plans used to be gospel. Now? Not so much.
What matters today is your pitch deck. Investors want 10-15 slides that quickly lay out what you do, why it matters, how you’ll make money, and who’s behind it. Save the 40-page plan for later, if ever.
But make no mistake—just because formal plans are out doesn’t mean planning is dead. You still need:
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A clear business model
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Market research and competitor analysis
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A timeline for building and scaling
“Plans evolve,” Harroch says. “But planning never stops.”
Equity Splits: Friendships Get Weird Here
Dividing up equity is like splitting a cake before it’s baked. Everyone thinks they deserve a bigger piece.
The golden rule? Talk about it early. Be honest, be realistic, and consider using a vesting schedule—where shares are earned over time rather than all at once.
Don’t forget legal docs. That handshake deal won’t mean much in court—or to investors.
How to Protect Your Idea Before It’s Built
Ideas can’t be copyrighted or patented. What you can protect are your brand (via trademarks), product designs (via patents), and code (via copyright). Until then, NDAs and trade secret policies offer a bit of coverage.
But here’s the kicker: Most investors won’t sign NDAs.
So don’t get too paranoid. Execution, not secrecy, is what really matters.
Just ask any failed startup founder.
“Someone stole my idea” is code for “We couldn’t execute.”
Startup Mistakes That Come Back to Bite Later
There are a few classic blunders that haunt first-time founders like bad dreams:
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Splitting equity without vesting
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Hiring friends without experience
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Skipping the legal paperwork
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Ignoring taxes and payroll
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Launching too early or too late
These slip-ups may seem minor at the start, but they snowball fast. One bad contract or unvetted hire can tank momentum—or worse, your reputation.
Stay scrappy, sure. But don’t cut corners where it counts.
Getting Funded? That’s Another Maze Entirely
Funding isn’t just about pitching—it’s about matching.
You’ll need to figure out which path suits your business:
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Bootstrapping: Full control, slow growth
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Angel investors: Early-stage, small checks
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Venture capital: High growth, high pressure
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Grants: Free money, heavy paperwork
Each has its own pros and pitfalls. And every investor has their quirks. Some care about the product. Others care more about you.
Timing matters too. Raise too early and you give up too much. Raise too late and you might not get a shot at all.
Starting a business is like building a plane while flying it. You’ll fumble, argue, and probably cry a little. But with the right answers to the right questions, your odds of taking off just got a little better.
