Congratulations on deciding to become a business owner! Are you wondering what you should be doing to ensure business continuity and profitability? Below are five key steps you should consider taking, from a legal standpoint, to protect your small business.
1. Determine what permits you require and whether you need to incorporate
– Determine whether to incorporate your business
Most small businesses start off as unregistered businesses or sole proprietorships. The need to incorporate immediately is country specific, as some countries require immediate incorporation for certain business activities.
But, as your business grows, incorporation may be ideal, as it offers many benefits including separate legal entity status
– Determine what licenses, permits or approvals you need.
In addition, you should find out what permits, approvals or licenses you need to start and run your business legally. You can obtain this information by asking contacts in a similar trade or business. You can also reach out to regulatory bodies or organizations that assist small businesses.
2. Protect your confidential information and intellectual property
– Protect your intellectual property
Consider registering your intellectual property with the regulatory body in your country, as that is the usually the most effective protection.
– Register your domain name
With the increasing importance of social media, if you intend to establish a web presence, you should register and secure your domain name as soon as possible.
– Protect your confidential information
Determine how much information on your business know-how (information peculiar to your business that gives you a competitive advantage) that should be disclosed to third parties.
Before you speak to a lawyer or intellectual property expert, err on the side of caution, by not disclosing or disclosing little, about distinguishing aspects of your business.
– Sign confidentiality agreements
Sign a confidentiality or non-disclosure agreement with potential investors/ business partners. While this may not always be well received, you should still try.
You can conduct an internet search for websites that offer agreement templates that you can tailor to your needs or ask a lawyer to draft an agreement for you.
3. Pay attention to your contracts
– Review it
Before you sign an agreement, review it thoroughly. Some useful questions to ask are: What are my rights and obligations? What are the other party’s rights and obligations?
When do each party’s obligations end? Are there any red flags or issues of concern that should be discussed or resolved before signing?
– Document your understanding
Also, as a best practice, have an agreement for every business relationship. If a dispute arises, an oral agreement would be very difficult to prove. Even if both parties agree on the existence of the contract, they will definitely not agree on the exact details.
But, if a signed contract is not practicable, have a paper or email trail that highlights the important details including your understanding and expectations.
– Address payment concerns
Payment for services rendered is another common concern. You should, therefore, always inform clients of your fees and timelines before you commence work.
More importantly, know your client’s payment reputation, based on past interactions or market research, it will help you decide whether to do business with them or not.
4. Talk to a lawyer
Another way to protect your small business is to seek legal advice on key aspects of your business early on. You can avoid or save on legal fees by asking a skilled lawyer friend for free/discounted legal advice.
If your friend does not practice in that area, they may be able to refer you to another lawyer that can provide premium services at competitive or discounted rates.
5. Monitor your brand
Finally, use the internet to your advantage. Set up Google Alerts. It’s a great way to monitor your brand/business because you get updates any time your brand or business name is mentioned.
I wish you every success in your entrepreneurial journey!
Note: This article is for information purposes only and it should not be used as a substitute for legal advice.