Staying on the right side of the law can be difficult for small businesses with limited time. Lawyer Jeremy Streten runs through the key points to pay attention to
Are you running a business and confused about what you need to do in your business from a legal perspective? Are you confused by the seemingly never-ending list of legal considerations? Do you recognise that you need help but don’t know where to start? Paying attention to all aspects of your business is important for every business owner to ensure that you are legally compliant. The traditional answer to the question of when do you need to pay attention to the legal aspects of your business is: all the time. That advice is not wrong, however business owners are often so busy doing the work in their business that they don’t have the time to work on their business.
The law is complicated and since you often don’t know what you don’t know, we developed the Business Legal Lifecycle. This Lifecycle is a practical and easy-to-use system for when business owners should take certain legal steps in their business. In this article I will go through five of the key inflection points in a business and why you need legal advice at those stages of your business.
Starting your business properly will save you thousands of dollars in the long run. This is Phase 2 of the Business Legal Lifecycle. It comes right after the conception phase, where you have the idea to start your business. The advice that you receive and the decisions that you make in Phase 2 will set you up for a successful business. It is critical at this point to make sure that you have a team of consultants advising you (as a team) on the best way forward. The most important aspect here is the question of the entity that you will operate your business through. It is tempting to see what your friends or colleagues have done in their businesses. No two businesses or business owners’ circumstances are the same, and slight differences may require different considerations of entities. What is right for you as a start-up business may not be right for another business.
“You need to determine what your current business looks like at peak capacity and then work out how you are going to get there”
Bringing on employees
This is Phase 4 of the Business Legal Lifecycle. This is the stage of your business when you have too much work for you to do on your own while still operating the business. There is no one-size-fits-all formula for when a business is in Phase 4 – different business owners have different points at which they will bring on employees. A key point is when you say “I don’t have enough time to do all of this work”. At this point you need to ensure that you obtain advice from a qualified professional (whether that is a lawyer or employment consultant) to ensure that you bring in your employees correctly. Ensuring that you have the right type of employment contract, workplace policies and that you comply with the National Employment Standards are all important aspects that you need to consider at this point. The law in this area changes regularly so make sure that you keep up to date with news for any changes and obtain regular advice to ensure that you remain compliant.
Protecting intellectual property
Phase 5 of the Business Legal Lifecycle is the point at which you need to protect your intellectual property. We have placed this after bringing on employees in Phase 4 as we acknowledge that in modern times start-up business owners often don’t want or don’t have the money to pay to apply for trademarks etc until they know that they have a viable business. Once you have customers/clients, and have a business that has employees, then you are in Phase 5. It is important at this stage that you look at your intellectual property to ensure that it is properly protected. Proper legal advice in this area will cover registering the trademark for your business and setting up different structures to protect your intellectual property.
Maximising your business/ bringing on investors
After you have built a business, brought on employees and protected your intellectual
property, you now need to maximise the business. Many business owners miss this step and move straight to expansion, and this is why we have placed this in Phase 6 of the Business Legal Lifecycle. What maximising your business looks like for your business really depends on your business. It does not necessarily mean that you and your staff are working every second of every day. You need to determine what your current business looks like at peak capacity and then work out how you are going to get there. When you bring on an investor you are bringing in another owner to your business. You need to make sure that you are comfortable bringing them in and that you work out the rules and obligations of each party.
A lot of business owners have goals of expanding their business into multiple locations, or franchising their business. This is Phase 7 of the Business Legal Lifecycle. If you are looking at expanding your business, there are many different legal pitfalls and issues that you may encounter. These issues and pitfalls are unique to every business and it is critical at this stage that you obtain advice particular to your business to make sure that you are set up correctly. The right legal advice will help you ensure that your business is set up correctly and that you avoid the problems commonly associated with the expansion of your business.
In this article I have looked at five of the 13 phases of the Business Legal Lifecycle. Understanding the Lifecycle and its different inflection points will help you build a successful business.
Jeremy Streten is a lawyer and the author of the Amazon best seller The Business Legal Lifecycle (www.businesslegallifecycle.com, www.facebook.com/bizlegallifecycle), which is designed to help business owners understand what they are doing in their business from a legal perspective and give them a plan for the future