As a business attorney, I talk to all kinds of entrepreneurs about both their passions and their struggles. Going out on your own to pursue your passion is scary stuff. (Spoiler alert: The fear never goes away; you just get better at working through it.) So here are five legal tips that that will help every entrepreneur spend more time pursuing their passion and less time worrying.
1. Surround yourself with the right people. I tell every prospective client that a business owner must have a relationship with certain key advisors: your business banker, your accountant, and your business attorney. But you should also surround yourself with like-minded people who have achieved what you’re trying to achieve—other business owners that you respect and trust. These are the people you will most likely turn to for advice and referrals.
Often, business owners hesitate to call their attorney because they fear what the bill might be for that 15 minute phone call. If that describes you, then you probably have the wrong business attorney. Click here for tips on saving money on legal fees. (Hint: Hire an experienced business attorney that works on a flat fee basis.)
2. A business plan isn’t optional. “If you fail to plan, you are planning to fail.” Running a business is just too complicated to keep it all in your head. How will you market your goods or services? What is your target market? What is your operating budget? How long will it take to break even? A business plan isn’t just about convincing a bank to loan your business money or convincing investors to invest in your dream. It’s your roadmap—how will you go from passionate idea to wild success?
Speaking of planning…
3. Always plan ahead. Running a business requires you to not only deal with today’s pressing concerns, but also to look ahead and plan for whatever is headed your way. All too often, business owners are so busy dealing with today’s problems that they can’t find the time to think and plan ahead.
When it comes to legal matters, entrepreneurs often wait until the last minute to get their business attorney involved. Contrary to popular belief, this won’t save you money in the end. For example, it will cost you more to hire an attorney to fix a poorly written online form contract than to simply draft it correctly in the first place. Or, say you’re trying to negotiate the terms of a business deal. By keeping your business attorney informed, they can point out potential red flags and spot concerning issues before you get too far down the wrong path.
4. Verbal or handshake agreements are costly disputes waiting to happen. A funny thing happens when an agreement is reduced to writing. It never fails that the parties realize there was a miscommunication somewhere along the way. If words are powerful, the written word is especially so. Every time I deal with a dispute over a client’s verbal or even poorly written agreement, the two sides each have a completely different view of what the terms were that they thought they had agreed to or what was meant by those terms. These misunderstandings can be avoided by simply putting the agreement in writing in a way that is clear and unambiguous.
And be especially careful about mixing friends and family with your business. The very nature of these relationships seems to create a greater potential for business disputes and misunderstandings. If you want to preserve your relationships, put the business agreement in writing.
5. Pick your battles. An unfortunate fact about our justice system—it is very expensive to have your day in court. It is always cheaper to avoid a dispute in the first place, than to fight and win later in court. And even if you “win,” sometimes there is still a difference between winning and collecting a judgment.
If a business dispute cannot be resolved short of litigation, then make sure to keep the end-goal in mind. Winning for winning’s sake is just a hollow, emotional victory. Worse, it takes time and energy away from running your business, and nothing will rack up legal fees faster than simply wanting to prove how right you were and how wrong the other guy was. What are you really trying to recover and how will each aspect of litigation get your business there?
If you have questions about your business’s legal needs, then let’s set-up a complimentary consultation.