Winsor Law Group Blog

Matthew K Palfreyman

Free enterprise is guiding principle of our constitutional republic.  Freedom comes with responsibility.  Freedom also comes with risk, and risk creates fear.   Entrepreneurs are often courageous personalities unbothered by fears; but courage alone is not an answer to fear and risk.  Some fears are perfectly reasonable.  Our firms help businesses and start-ups and we often provide important perspective on the following fears.

Fear of Rejection or Failure:  Mostly Irrational.  Most new businesses fail, but success is in the eye of the beholder.  What is the objective of the business?  Is the objective to provide a source of income for the owner or to build an empire?   A business can end for many reasons other than market failure.   A perfectly successful enterprise can end due to a large and unexpected liability from operations.  A market for a product or service can be underdeveloped, ignorant, or missing important components.  There were functional tablet computers before the Ipad or Surface, but the market and technology for those devices was not ready.  In our experience, the success or failure of an enterprise most often depends on the persons executing the tasks rather than on the business concept or the product.  Rejection or Failure is not really the issue.  The true fear is the fear of loss.

Fear of Loss:  Rational.  Fear over the success or failure of a business enterprise affects every entrepreneur. Loss from business failure affects the business owner, their family, their employees, and their employee’s families directly through loss of income.  Business owners should care deeply about potential loss, and maintaining their businesses bottom line and efficiency for that reason alone. Proper planning, like life insurance planning, business planning, and estate planning, can deal with unexpected losses properly so that an enterprise can continue operate and even thrive.  Consulting with a trusted professional on these issues is critical. Here is a great principle: if the transaction involves more money that you can stand to lose, get professional assistance. The ripple effect that came from the failure of investment banks during the last great recession is a perfect example of why society in general needs small business to succeed, plan correctly, and make sound business decisions.

 Fear of Competency:  Completely Rational.   Liability follows error, and the source of most error is human.  Insurance coverage is critical to protect every business enterprise; while many types of insurance coverage are designed to absorb losses from human error, an enterprise cannot tolerate multiple or on-going losses from competency failures. If a business struggles to deliver a product or service competently, the days of that enterprise are numbered.  While there are exceptions to this principle like dumb-luck or undiscovered incompetence, advances in technology are providing a much quicker mechanism to reveal incompetence to the market place.  Taking ownership of the competency factor is critical to long term viability.

Entrepreneurship is not for the faint of heart.  Nearly everyone has been or will be an entrepreneur because legally it takes very little to be an entrepreneur.  If a person or group of people sells a product or service for their exclusive personal gain, they are in business.  Whether it is lemonade stand on the street or if it is an international consulting firm, to the law it makes no difference.  Similarly, whether it is a side hustle or a full time operation, to the law there is no difference.  Pretty much all business activities have risk, and risk is usually necessary to obtain the reward.  Nevertheless, with professional assistance business risk can be controlled, mitigated, and, in some cases, completely eliminated.   More than just writing up documents, a business attorney and planner can help guide an enterprise away from unnecessary risk, help eliminate stupid risk, and defend the business from uncontrollable risk.

*The information provided in this article is of a general nature and reflects only the opinion of the author at the time it was drafted. It is not intended as definitive legal advice, does not create an attorney-client relationship, and you should not act upon it without seeking independent legal counsel.