Starting a business involves much more than coming up with a brilliant idea. To turn your vision into a reality, you have to address legal and practical concerns with a realistic mindset. Overlook these important issues, and even the most promising of ventures may never get off the ground. By avoiding these common mistakes, however, you’ll have that much more of an edge on your competition.
1. Not consulting with legal counsel
Nearly every aspect of a successful business involves legal considerations, from protecting your brand and intellectual property to drafting effective employment contracts to negotiating a commercial lease agreement. Businesses in certain industries may also need to navigate a complex web of regulatory hurdles. For example, getting a liquor license, a food sales license or other permits may require careful forethought and planning.
A business lawyer can help you identify all these legal issues – including those you may not otherwise have known about. By working with a reputable lawyer early on, you can build a valuable relationship that will serve your business well in the years to come. That attorney will understand the ins and outs of your business. They’ll be on board with your vision, and they’ll help you lay the legal groundwork for attaining your goals.
2. Not forming the right business entity
Choosing a business organization is just as important as choosing a name for your business: It will define your enterprise, for better or worse, on the long road ahead. Forming an LLC, partnership, corporation or other business entity is not a decision to be taken lightly. In consultation with an attorney, you should weigh the pros and cons of each option in light of your long-term business goals.
How do you plan to scale your business? What types of capital structuring will you pursue down the road? Do you plan to do business abroad? The answers to these and other questions will set the stage for your business’s growth, investment opportunities, ownership structure, tax ramifications and more.
3. Not taking proactive steps to avoid costly disputes
Few things can derail the success of your business as quickly as a protracted legal dispute. Yet costly disagreements can easily arise between any number of parties – business partners, employees, shareholders and vendors, to name a few.
The best time to address problems isn’t when you’re facing the threat of a lawsuit. It’s when the problem is still just a possibility. Through strategies such as drafting solid contracts, ensuring legal compliance in all areas and establishing a framework for conflict resolution, you can get ahead of potential litigation, putting your business on the offense rather than defense.