First off, congratulations! Starting a new business is extremely exciting; although, the excitement of starting a new business is often coupled with feelings of fear and instability. Don’t worry, that is completely normal. In most cases, by the time a potential business client contacts our firm they already have a pretty solid idea as to how they want their business to operate and what their goals are for their business. At this juncture, there are many factors, both non-legal and legal, that we discuss with our client to determine the best course of action for them and their new business venture. What are some of those factors?
As described above, when a new business client contacts our office they generally have a pretty firm grip on what their business plan is, but sometimes they need guidance as to how to properly, and effectively, achieve their goals. As many business clients know the first, and often the most important, consideration is financial. How much money will it cost to get the business up and running? Does the business have investors, or are they getting a business loan? Do the owners have enough saved to pay their living expenses in the event the business takes time to generate income?
In my opinion, it is usually better for a business to start with a lean budget. Well, what does that mean? Often times new business think big; which is great in terms of ideas and goals, but not in terms of first-year budgets. New business clients are, usually, excited and want nothing but the best for their new company. I agree that you want the best, but do so within your budget. Remember the more overhead a business has; the more difficult it will be for you to begin generating income from your new business. Please keep in mind that there are just general principles and can vary from client to client.
Basic Legal Considerations
Although the details of the conversation vary depending on the type of business that our client is starting, the most common legal issues that we discuss with new business clients include:
1). How properly form the business and what entity works best for their business; i.e. should they form a LLC, S-Crop, or another entity;
2). If there are several partners involved, what are each of their roles and responsibilities, what percentage of the business does each partner own, etc.;
3). What other legal documents will the business require? For example, do they need employment agreements, non-disclosures or non-competes? Does the business need Service Agreements? and;
4). Will the business have an ongoing need for legal counsel?
Again, the above legal considerations are just a basic overview and legal services should be tailored to the individual client’s situation.
In conclusion, there are a lot of factors to consider when starting a new business, but starting off on the right foot is imperative to your success. Do your homework, work hard, and your business can be successful!