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5 Legal Tips for Every Business
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
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, Ask
If you need to have a more in-depth conversation, then let’s
set-up a complimentary consultation.
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