Starts-ups have been popping up in many different fields and industries. To the outside world, it may appear that once a great idea has been developed, a business is than born overnight. Nothing could be further from the truth. The following 5 tips aim to help and inspire anyone contemplating creating a new company or becoming involved in one.
The start-up world is filled with bumpy roads. Of course, the ultimate goal is to move beyond having the status of being a ‘start-up’ and into a strong and confident mode where the name of your business carries a stellar reputation. But what are the steps that must be taken and how can you protect yourself?
1. Intellectual Property: Get your ideas recognised and remain in control
Make sure that anyone involved with or connected to your company not only understands that they cannot release any information about your company, your ideas, and how you run your business, but also that they actually sign a document prohibiting them from sharing this information. Spend the time to do this rather than merely relying on trust – no one wants to see their hard work be in vain. As always, our staff lawyers are happy to assist you in preparing such agreements or explaining the intricacies of IP rights further.
You might also be interested in registering your company trademark, logo, or catch phrase to prevent potential competitors from using your bright ideas.
2. Structure: Working alone or as a partnership, consider your responsibilities
How the business will operate is a key concern for a start-up business. What kind of business are you going to be running? For example, are you a consultant and will be working alone or are you getting into a serious and complicated venture which will require the involvement of several partners, investors, and potentially, shareholders? Keep in mind the structure of a company or partnership can affect the level of responsibility expected of each involved individual. This may also affect day-to-day operations. This is possibly one of the most important parts of a start-up that must be considered prior to any other steps being taken. Also remember that as your business develops and changes, the structure might need to be amended. Therefore, you should also attempt to keep the structure flexible enough so it can be changed in the future, if necessary.
If you are considering working with someone else, consider the roles that each party will play. Even if you are going into business with friends, it is best to err on the side of caution and have a written agreement to prevent confusion and disagreements in the future. Consider the following:
- Are there decisions that need to be taken collectively?
- Will the profits be shared amongst all the investors and who will be responsible for making daily decisions about operations of the company?
- What will the roles and responsibilities of shareholders, investors, and directors, if any?
- What contributions are required from each shareholder?
- What will happen if a shareholder wants to leave?
- What will happen if you decide to sell the business?
4. Terms and Conditions
If your start-up will be selling products or providing services, it is crucial to have terms and conditions in place in order to protect yourself from potential claims. Consider which terms are right for you. These might include the scope of the agreements, the amount and frequency of payments you would be comfortable with, ability to rescind or get out of the agreement, non-performance from either yourself or the client and protection of your intellectual property rights.
5. Employee Agreements
Often start-ups do not begin with much capital. In the early stages of the business, it is common for a lot of work to be done in exchange for favours, free advertising, and similarly intangible currency. However, this does not mean that an agreement should not be in place. While it may sound daunting, a written agreement, however simple and short, could aid all the involved parties in better understanding the expectations and common goals of the project. You want to be sure everyone is clear on what needs to be done, when, and how. Also, what might happen if an employee wants to move from the company? There might be a need for non-disclosure or non-compete agreements.
What Should I Do Next?
On this note, we will be signing off until the New Year. We wish all our readers a joyful and prosperous New Year! Please watch this space for more exciting blogs and contact us for all your legal needs.
* This blog is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.