There are many unforeseen legal issues that can pop up during the start-up phase and when you first begin to scale your fledgling business up. Of course, no matter how much you prepare, starting a business will always bring lots of surprises and lessons but legal problems can be kept to a minimum with the help of the following tips:
Do you have the right insurance?
There are many different specialist insurance options that you may need to be aware of. These will vary widely from business to business but examples include Director’s insurance, import/export insurance, employer’s liability insurance and many more. Some of these are essential and some are sensible to consider. Regardless, it is important to know who is liable and what the possible repercussions are within your businesses operating space.
Get protection from non-paying clients and customers
A lot of start-ups can suffer, often fatally, when one or more customers fail to pay either on time or at all. Cash flow is your life-blood and it drying up can spell disaster. Avoid this by working with a legal advisor to draw up a contract which will protect both you and your customers and outline what is expected from each party. If the worst comes to the worst, you’ll be in a strong position legally and even be able to reclaim any associated legal costs if your action is successful.
Establish a Shareholder’s agreement
When a business has more than 1 shareholder it is smart to establish an agreement that protects everyone. This is done by answering questions about certain scenarios ahead of time and setting down the agreed solutions on a legally binding document. What if someone wants to resign, is imprisoned or even dies? In the latter case - does their ownership go to a family member, and if so, does that person then have influence on your business activity? Address these up front and if any of these difficult situations arises everyone will already be in agreement as to the rights of those involved.
Establish a watertight documentation system
As your business grows, good documentation and filing is essential. If all of your legal documents, offer letters, shareholder agreements, confidentially agreements, customer contracts and more are correctly pulled together you’re business will run smoothly and scale with more fluidity and security.
Protect yourself with trademarks and patents
Don’t get a few months or years down the line before realising your name, products or activities infringe on or violate the rights of another business. Avoid being sued and all of the additional disruption this situation can cause to your business. IPO UK is a great site to visit for information and tools.
Protect yourself with correct terms of service
Always read the fine print
It’s an old cliché but isn’t that always the case? Whether it’s restrictions on a company’s API that’ll throttle the growth of your business or a potentially damaging sub-clause in a contract – take the time to read everything thoroughly and consider the impact both in the present and the long-term.
Work with a good lawyer
Working with anyone other than a well recommended and professional lawyer is a false economy. Remember though; expensive doesn’t guarantee excellent performance - so make your decisions based on other factors such as clients, testimonials, word of mouth and them understanding your business.