Possibly the most important piece of a business that is done precisely is the operating agreement. It is the rulebook of the company regarding operations. The document outlines who owns what, who has what responsibilities, what happens if someone dies, what happens if someone quits or gets fired, what happens if the company is bought or goes bankrupt, etc. A document of this magnitude can’t be done in one hour. It takes time and thought to truly do it right. Mike knew all too well what happens when a worthy operating agreement wasn’t in place. He had been part of a company before and was eventually kicked out and sued and went through a great deal of BS for nothing. Like I said, it’s an important document.
We would work on this document over the next few weeks.
While we were working on it, we needed to open a bank account to be able to have a company credit card and make company purchases. I did some research on banks and visited a couple, but none really stood out for what we needed. We didn’t need a bank with all the bells and whistles. My personal bank is BECU (a bank in the PNW). Ever since I have been with them, I have received nothing but great service and support. With that said, I filed the paperwork to start a business account with them as well. It was much easier than I thought so that took a bunch of stress from my plate. The account I chose wasn’t going to gain interest unfortunately, but we would also not have any fees so it balanced out.
Cam and I filled out the paperwork to get our first company debit card. It felt like gold to me! To make it simple, I wanted all of us to put in 10% of our total investments so we had money in the bank to purchase some products to use for research and development. Both my brother and I did just that. Mike wanted to wait until the operating agreement was ironed out which was totally understandable.
While we were still slowly working on finalizing the operating agreement, I found an event that I thought would be fun to participate in as a vendor. We had perfected about 5 flavors since that time and it was a great way to get a feeling for what our business could do. The event was called Round the Rock. It’s a paddle boarding race around the water and drew about a thousand people every year. It sounded like it was perfect so I paid the vendor fee which was about $150 and signed us up.
A couple days later, I found out from the health department that there were still some permits and more paperwork to file to make our company legal in food service. This process would cost a couple hundred dollars because of rush and late fees. We decided to not go through with the event because of the circumstances. We didn’t want to start out on the wrong foot with the health department or the public. I still took care of the health department paperwork without the fees to make sure we were ready for the next event.
The operating agreement was close to being done, so next we decided to tackle a business plan. I’ve created a few of these over the years, but never really executed one so that was going to be the new challenge. Obviously plans change. But the main importance to a business plan is that you have some kind of idea of what you want from the business. You need to understand your target market, your costs (both fixed and variable), you need to devise a marketing plan, you need financial projections and breakeven analysis, etc. There are a lot of different aspects in the business plan. Mike had a template for the plan that was part of some really cool software. So we knocked that out within a couple days.
But we were still waiting to complete the operating agreement. It turns out, Mike was a busy man. Maybe a little too busy, so we had to sit down and talk.