Step 1 to Build a Better Business – Get Good on Paper

Posted on Jun 11th, 2009 in 30 Steps to Build a Better Business, strategy and planning | no comments

Have you ever heard someone use the term ‘good on paper’? As in, “Well, he looks good on paper, but how is he in real life”?

It’s a term that’s often used to describe the credentials of a person – usually a potential hire or business partner – based on the official records that represent them, like a resume, a job application, or a credit report.

So how does this term relate to a small business?

Consider this. In the eyes of most official bodies, a small business is an entity, just like a person. And just as individuals have certain documents and paperwork that legitimizes them in the eyes of governmental and regulatory agencies, so does a business. Having these documents are basic prerequisites for initiating many types of transactions with other individuals and businesses. If you didn’t have a Social Security Number, a government-issued ID, or an established credit history, you wouldn’t be able to open a bank account, board a plane, or get a loan for a house or a car. While it’s not impossible to function in everyday society without these basics, any individual who doesn’t have his / her personal documentation in order will find it exceedingly difficult. The same goes for your business. Without the foundational paperwork that legitimizes your company, your company really doesn’t even exist.

So why are there so many businesses that aren’t ‘good on paper’? In my totally unscientific opinion, I think its boils down to two primaryreasons. The first is lack of knowledge, and the second is intimidation. A lot of small business owners simply don’t know what kind of paperwork they should have in place, or they think that their business is too small for such formal documentation. Others are intimidated or overwhelmed by the process of setting everything up, so they postpone it until it’s long overdue, or they never get around to it at all.

The following chart is something I’ve found to be helpful in combatting both the lack of knowledge and intimidation factors. It compares the basic business documentation with similar documents that are used for individuals. When I show this to business owners, I ask them to imagine how difficult it would be for them to go about their daily lives if they didn’t have the person-specific documents in place for themselves.

One crucial difference to note between personal and business documentation, is that business documentation generally needs to be updated more regularly, e.g., via annual renewal of state / local registrations, or recording major decisions and transactions in corporate records. Lack of maintenance is probably the third reason why many small businesses are not good on paper. The easiest way to prevent that from happening is to set reminders for yourself to review and update any documentation quarterly or every six months.

Getting good on paper is one of the simplest, most basic things a small business owner can do for his / her company to build a solid foundation for future growth. If you don’t have all of these basic documents in place, don’t wait until you’re getting ready to make a big transaction and then have to scurry about to get it all together. Take the time to do it now.

If you’re a Georgia business that needs help with getting this done, you may want to consider the Good on Paper package offered through Sage Small Business Solutions.

Related Posts

1. Step 27 to Build a Better Business – Build and Monitor Your Business Credit
2. Step 25 to Build a Better Business – Join an Association
3. Step 26 to Build a Better Business – Take Your Spouse to Work
4. Step 18 to Build a Better Business – Document the Basics

Sage Small Business Solutions provides inexpensive infrastructure solutions for small and microbusinesses. If you're interested in improving your small business, or implementing techniques discussed in this article, find out how Sage can help.

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