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Start-ups best served by regulatory strategies

There are two recent books on startups (“The Fixer” and “Regulatory Hacking”) that each addresses the frequently overlooked importance of integrating regulatory strategies into the plan for starting a business. While each has a different perspective, the New York Times Business Section sees real merit in anticipating regulation.

Despite businesses complaining about regulations that governing bodies impose, those same entities often benefit from access to exclusive government contracts the average company does not even know about. Another example is access lucrative licenses in areas where few licenses are offered. Below are some other important takeaways.

Regulatory capture

Regulatory capture goes one step further when instead of favoring the establishment businesses; these entities are able to hold sway over government agencies who are supposed to regulate them. This happens all the time in government and business.

Disruption is followed by a response

Start-ups and small companies may take pride in disrupting things by providing new ideas, business strategies and even strong customer loyalty, and they may work under the radar for a time. However, as their success is recognized, more established and slower companies as well as regulators with a vested interest in whatever the new company is disrupting are going to hit back.

The upstarts need to predict that regulatory loopholes will be closed and oversight will be amended. An attorney who regularly works with businesses and entrepreneurs can help them anticipate local, state and federal regulation changes and thus be prepared.

Success breeds imitators

Not only that, they can help young companies look behind them – your success will be quickly noted by the next wave companies. By understanding the rules now in place (or soon to be), the role of upstart might even change to that of your company becoming the new establishment. The trick is having the legal and business guidance to make that pivot when it is necessary.

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Robert Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the May issue of The American Lawyer & Corporate Counsel magazine.Alex Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the December issue of The American Lawyer & Corporate Counsel magazine.

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