In both dating and business, the early stages are filled with excitement, optimism and infatuation. Partners convince themselves that nothing can go wrong, but if it does, they will weather it together and work it out. However, ideas change and things can get messy if life throws a curve ball—which almost always happens.
A critical error made by many new businesses is failing to have documents and agreements in place from the beginning. New business partners put off this critical step in the early stages, when everyone is in on a new-business high and all is in sync. Unfortunately, this can eventually cause the demise of the business.
Companies that empower attorneys to create documentation and solidify agreements are more likely to succeed than ones that try to power through without legal assistance. In addition to specifying everyone’s roles within the company, these documents specify a play for what will happen if there are changes within the company. Talking about these issues early on and developing a clear plan will save time, money, and hurt feelings later.
Meeting with a legal representative should happen as early as possibly in the formation of the company, preferably before the business gets started. Establishing responsibilities, company ownership percentages, share of sales and how value is divided among members is less emotional when completed before the company has any value.
Many small businesses forgo this process because founders don’t wish to spend their resources on legal fees, choosing instead to focus on sales, marketing and product development. However, this mistake can be costly long-term. Legal work is a task that is easy to outsource and important enough to justify the time and expense.
At LexLaunch, we provide services to help you create and execute specific agreements to decrease risk to your small business. Thinking about starting a small business, or need to put agreements in place with your current business? Give the attorneys at LexLaunch a call today!