Everyone wants to be the next great entrepreneur. Startups are all the rage these days. For every startup that makes the news, hundreds more fail because the owners do not start out right. Here are five things to avoid when you’re just setting out in business.
Startups: Don’t use someone else’s idea.
While this might be obvious, it’s sadly been done before. Intellectual property is one of the most valuable assets to a business. Your own branding should not infringe on another company. it can be incredibly costly for your brand ethics as well as your pockets.
Not having a business structure.
Many startups begin as a solo organization, but forget to go through the legal process of opening as a business entity. You need to talk to a lawyer about the corporate structure that fits your organization. It will also keep your business on a much needed organized path.
Not having an exit strategy.
Just as you might want a pre-nub to protect yourself personally, startups their own kind of exit plans. What happens if a partner dies or has to leave? If a partner is in a divorce, will your business be split up in the settlement? There are many other things that could lead to this unfortunate situation but you can’t leave these things to chance. Startups needs to prepare for the worst. This will make the process much easier.
Using legal DIY documents.
In today’s atmosphere of doing things yourself, it is very tempting to let your laptop be your legal advocate. Spend the money to speak to an experienced business attorney, because in the long run, it will be worth the investment.
Undefined roles, responsibilities, and expectations.
Friends who go into business together may begin with the same general goals. As the business expands, these expectations can change and roles get blurred. Talk about who is doing what and who controls what before you find yourself in court. Startups can be successful, but that success rests on communication between those in business.
Instead of being one of the thousands of startups that go belly-up because you didn’t establish the business correctly at the first, take time to get your house in order. It will not only help you as a business owner in tough situations, it will help you run at your best, and it could even help your approval for financing options.