A lawyer’s perspective is an interesting one – we are often intricately involved in our client’s business affairs, however, we have no equitable interest in their success.
It’s this combination that allows lawyers to do valuable work. We can offer advice and discuss decisions with real insight without having a bias towards an outcome. Obviously, we want our clients to succeed, but their success can’t get in the way of us giving good legal advice.
Legal work has offered me a certain perspective on startup growth and success. This may not be the article you’d expect from a lawyer, and it’s certainly not the advice you’d hear at our offices. But it’s insight I’ve noticed from hundreds of cups of coffee, boxes of chewed pens, a pile of phone bills and the incredible vantage point of a career as a lawyer working with entrepreneurs.
Have the hard conversations
Starting a business is exciting. You get to conceptualise wild ideas, strategise expansions and create branding. But there are parts of your business that you may not want to think about – what happens if it needs more money, how do you resolve potential disputes with your partners, and who is in charge of the mundane tasks like buying printer paper?
Many of the issues we see with startups don’t arise from the areas where founders agree (or disagree) but from the areas that they didn’t consider or discuss. The founders could do well to spend some time having the hard conversations – think of the things you haven’t thought of or that make you a bit uncomfortable.
It’s a tough ask, but the road to entrepreneurial success only gets harder, and the unknowns become bigger. Start practising this useful skill.
Be open to fluidity
Unfortunately, things don’t always work out exactly as planned. Visions develop, people change, circumstances vary and priorities shift. While having written agreements in your early stages is important, don’t let them hinder your potential trajectory – you have to give some room for things to be fluid. The actual commitment to a business must be stronger than the commitment on paper.
When starting a business, it’s important to give some time for the ground to settle and everything to fall into a set position to understand the practical operation of the business, beyond the big idea. It’s at this point that partners need to make the big commitments. While you can certainly put things on paper too late, you can also do it too early. If you think this is confusing – you’d be right. Welcome to starting a business.
Don’t give anyone money without the full details
This may sound obvious, but it happens a lot. Most startups are either self-funded or funded by the growing trend of angel investors in our ecosystem. If you’re investing in a startup – even if you’re involved hands-on – it’s important to know the details of what’s going to happen to your money. It’s fine if you don’t have clarity on these topics, but understand that the investment is riskier. If you are throwing all your money behind your business, make sure your fellow shareholders understand what you expect in return.
This probably won’t be exactly like in the movies
Just like Hollywood gave us unrealistic expectations of romance and the consequences of jumping out of moving cars, the current startup trend on TV is no different. While it’s great to get educated on investment vehicles and international company structures, just be aware that TV entrepreneurship is not the same as a textbook. Not everything you see or learn is applicable to an early-stage company.
Startups should keep things as simple as possible. Play the hand that’s in front of you and plan maybe one or two steps ahead. If you are not making profits, your tax efficient multinational operations can sit on ice. Focus on the job at hand – starting up.
Figure out your legal road map
While you don’t need to plan all your steps in advance, it’s not a bad idea to start to interact and understand what’s coming up, legally. It’s a good idea to draw out the legal road map for all aspects of your business. There are regulatory issues, client relations, labour laws and intellectual property that need protection. Each of these challenges fit into a different stage of your journey. I recommend sitting with a lawyer and drawing up a road map of your legal needs so you can plan accordingly.
Eitan Stern is the Director of Legalese – a legal practice geared specifically for startups and creative companies, making professional legal services accessible and affordable.
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