Business law is a complex topic, and when you're starting your first small business, it can seem like a daunting one. Starting a new business of any kind comes with some inherent risks, and if you fail to account for those risks, you may find yourself in a bit of a legal bind. Making the right decisions in the early stages is key to protecting your company's future and your own legal security. Here are a few tips to help you avoid some of the most common legal issues encountered as a new business owner.
Don't Underestimate Long-Term Planning
When you're focusing all of your efforts on getting your product out there and making your brand known, it's easy to get lost in the small details and lose your perspective on the big picture. Don't let yourself fall into this short-sighted trap. Instead, make sure that every decision you're making has the company's long-term objectives in mind.
To do this, you need to start by painting a clear picture of where you want the business to go over the next couple of years. Build a projection of your estimated revenue and expense growth for those few years so that you have a financial plan to work with. To do this, you'll need to research the cost of doing business and identify the volatility and accessibility of your target market.
This research will help you develop a solid understanding of not only where your business is, but also where the industry is heading based on the current trends. Use that information to develop long-term choices and show potential investors that you are serious about your venture and its success.
Don't Dismiss Your Equity Shares
One of the biggest mistakes that many small business owners make is undervaluing their company's overall worth. The early stages of business development are often cash-strapped, leaving you to negotiate other options to get some of the services that you need. Don't fall into the trap that many budding entrepreneurs do by offering equity shares in exchange for services.
While this may seem like a great deal for you right now since you don't have to spend anything out of pocket initially, a deal like this could cost you significantly more in the long run. For example, if you work with a graphic designer to develop a brand logo in exchange for a certain amount of equity share, that designer will have claim on that equity share for the life of your business. If your company starts turning out millions of dollars in profits every year, that logo you had designed will become very expensive. If you're not prepared to pay several thousand dollars every year for the service you're negotiating, don't offer a share of your business as its payment.
Don't Skip the Legal Support
Many business owners mistakenly believe that they can handle all of the paperwork and legal requirements of forming a new business. Unfortunately, it only takes a single mistake on a form or application to potentially cost you thousands of dollars in fines and leave you facing other legal issues.
The best way to avoid this danger is to hire a business law attorney to help you deal with the startup paperwork and familiarize yourself with the applicable laws. By keeping an attorney on retainer, you'll have a legal professional you can turn to when you need it most.
When building a new business, these core decisions can have a significant effect on the way that your company is perceived and how successful it will be. Make sure that you're taking the necessary steps to protect yourself and your new venture by working with an attorney, like those at Caldwell Kennedy & Porter, through the early stages.Share
11 May 2015
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