The influx of new startups on today’s market is a testament to many creative, ingenious minds devising revolutionary products, services and business models. No matter how many are already out there, there’s always room for one more outstanding startup – and yours can be that one.
But regardless of how brilliant your idea is, it takes much more hard work and dedication in order to be able to thrive off of it in the dog-eat-dog economy. For your startup to gain leverage and become both sustainable and stable, engraving smart actions and legal best practices in the backbone of your business strategy is essential.
So far, we have discussed the most common legal mistakes that you should avoid as a startup owner. But what about the steps you can take, that will enable your business to blow it out of the entrepreneurial park? In today’s post, we cover the brass tacks of the legal best practices for startups:
Hire The Best Lawyers
Contrary to popular belief, lawyers aren’t someone you turn to only when faced with a lawsuit, or when you need to untangle yourself out of an especially convoluted legal mess. As a matter of fact, there is nothing like expert legal guidance to not only prevent major financial losses, but also to free up your time and focus so you can develop other aspects of your startup. It doesn’t have to just be “legal firefighting”: a good lawyer can and will compose your contracts, draft the terms and conditions of your website, protect your intellectual property and much, much more.
Run Tidy Records
Money is often tight for startups. Nonetheless, you should go out of your way to keep proper track of your financial records. For instance, shoddy or messy records of your money transactions can very easily nip your startup’s legal health in the bud. Consider hiring a competent lawyer that will make sure your paperwork is top-notch from a legal perspective and ensures you follow legal best practices.
Use Contracts As Regulating Mechanisms
Handshakes as deal-sealers are not only insufficient in today’s age, they can also do a lot of damage to your professional plans and reputation. On the other hand, detailed and numerous contracts are seen as the go-to tool for the OCD-stricken, severe control freaks and micromanagers – we bet you’ve come across at least one of these characters in your life. While putting everything into written form may at times seem excessive or unnecessarily pedantic, there is an undebatable wisdom to this method.
Let us just mention that a contract is the most efficient way to cope with non-paying customers (and unfortunately, there are always a few of those around). Employment contracts – choosing the most suitable one, that is, can also be a messy business, so we broke it down for you assessing the pros and cons of each. In short, whether you’re regulating terms with your vendors, clients or employees, contracts are the best possible protection you have at your disposal as a startup owner.
This ensures you follow legal best practices for your startup and avoid legal pitfalls down the line.
Make The Most Of Your Waiting
Procuring special licenses or compliances can be a time-consuming undertaking, but don’t let that keep tight rein on your business spirit and enthusiasm! There’s always a lot and more to be done, even while you’re waiting to obtain certain legal permissions.
As Eyal Lifshitz, the founder and CEO of BlueVine, notices in his article for Entrepreneur: “Use your time wisely, investing and building the areas of your business you don’t need legal clearance for. Be ready to flip the switch and resume pushing forward the second your compliance is official.”
Some businesses and industries pose greater risks than others, but in today’s time and age, everybody who has dabbled in entrepreneurial waters is in some kind of professional risk. Your actions or lack thereof, even if unintentional or out ignorance, can cause substantial damage to others. For this reason, it is a wise legal practice to invest in some kind of insurance.
General liability and professional liability insurance are some of the most common choices with business owners, given that they provide coverage in case your employees, products or services impose harm on other parties.
The variety of insurance options can strike you, so this is when the values of an experienced lawyer come into the picture. With top-notch legal guidance, you should be able to distill the type of insurance(s) tailored to your startup’s particular needs.
Final Words: Startup Legal Best Practices
There is a lot to know when starting your own company; after all, we have experienced this firsthand but one area we’ll never flunk on is startup legal best practices. You don’t have to learn (just) from your own mistakes: here is our free e-book in which we cover the most important logistic aspects of a startup.