[Podcast] 4 Essentials to Protecting Your Business for Future Success
It takes more than a good idea for a business to succeed. You also need great sales, marketing, and products. But perhaps the biggest need ignored is a legal framework that protects your ideas and protects you from mistakes as you grow.
To successfully develop the legal side of your business, you need to consider:
- What are key things you have to take care of from day one?
- What are different kinds of IP you need to protect?
- What are common mistakes your business needs to look out for?
- How often do you need to re-evaluate your legal work?
We’ll help you answer these questions, so you can take the right legal steps that put your business in a great place to succeed both today and years down the road.
1. What are key legal things you need to take care of from day one?
Complicated legal strategies can keep you from focusing on what's important in the early days. Keep it simple by first:
1. Doing a search on your business’s name to make sure it's clear for a trademark or any other use
2. Creating essential contracts
We’ll go into each more in depth below.
The legal protections you first put into place should be proportional to your eventual risks. For example, a software business has a low risk at the beginning of infringing on intellectual property, while a skydiving business has a high risk of physically hurting someone.
You’ll also want to plan around your level of investment. So the more money you’re putting into the venture, the more you’ll want to protect the business.
Your main goal at the start will be to ensure you’re set up to protect your branding.
Trademark your business name.
The first thing your business should do is make sure your name isn’t already trademarked.
There’s a first-come-first-serve system where the first person to use a trademark wins all the rights, so other companies can hold your name hostage if they already trademarked it.
Trademarking your business name ensures that it’s original and other companies can’t use it as their own.
Write essential contracts.
Most of the early problems you’ll run into will likely be in customer relationships or contractor work. Disputes often happen because of miscommunications between people, and can be avoided by having the relationship defined in writing.
Contracts essentially help you set expectations and give you a place to return to when roles or terms get confused. That’s why a good contract will always include things like:
- Payment terms
- Termination terms
- Roles and objectives
- Intellectual property terms (who owns the work being done)
Even if it’s too early for you to afford a lawyer, it’s always better to have these kinds of things somewhere in writing than it is to have nothing at all. People will often forget or remember things differently, and showing them documentation of what was originally expected can help de-escalate the situation when that happens.
2. What are the different kinds of intellectual property (IP) you need to protect?
How do you protect your ideas? It all comes down to execution and locking down your process.
Intellectual property (IP) protection can get expensive and time consuming, so it’s only recommended you look into it if you’re well backed, have an idea that’s truly unique, or are creating something new (like a product or process). You want to get IP for things you’re willing to sue or fight for.
There are three different kinds of IP you can protect in a business:
Copyright: Protects creative works, like a manual, podcast, video, coding, or training system
Trademark: Protects brand names, tagline, domain, URL
Trade secrets: Recipes or information no once outside the company can know
Protected IP can also cause your business to be more valuable, if you’re interested in selling.
You only have one year from the first day you start selling to patent IP. But it can take up to nine months to go through the process and get your certificate, so don’t wait around to get started!
3. What are common mistakes your business needs to look out for?
The more people you add to your business, the more complicated things tend to get.
Typically at 15 employees a lot of federal laws start to kick in, and you’ll want to have a dedicated lawyer to help you make sure you’re staying compliant in your hiring.
For instance, if you have any freelancers from California, they have to be treated as employees if they’re doing work that is critical to your business. There can be enormous penalties otherwise.
PC: Privacy Policies
There will be individual date regulations you may need to follow depending on which states you have people you’re collecting data from. For example, if so many people from California are in your database, you’re required to have a dedicated 1800 number to respond to their questions.
Aside from just employees and customers, the partners within your business can also complicate things.
A good example of this can be when friends go into business with each other without first figuring out:
1. Figuring out roles or what happens when one partner is no longer available
2. How to keep partners from injecting their other projects or side hustles into the current business
3. Having contracts that layout how the business will operate
Sometimes partners can realize they’re not the right fit for each other when they hone out these details (which is a much better scenario than them staying together).
Keeping each of these common mistakes in mind early on can save you trouble later.
4. How often do you need to re-evaluate your legal work?
Creating a legal framework for your business is less of a one-and-done and more of an ongoing process.
Check in on your strategies once a year to quarterly, depending on the amount of risk your company takes on, like:
- Opening an office space
- Hiring a new employee or several
- Hosting live events
- Releasing a new product
- Working in or selling to new states or countries
Meeting regularly also helps you establish a relationship with your lawyer and legal firm, so when things do pop up (like contract rewrites) you’re prepared. In those situations you don’t want to be without a lawyer, because it can take time to find one you like and then get the proper paperwork done.
Once you have a steady amount of revenue coming into your business there’s no reason to hold out on hiring a dedicated lawyer for your business that you can regularly check in with.
Make time to protect your business.
Anytime you’re planning a project with new potential risks, remember to check in with your legal counsel.
All it typically takes is a 30 to 40 minute call to give you peace of mind that you’re on the right track—which is always better than hoping for the best and winding up with expensive cleanups that set your business back.
Having a solid legal framework ensures your company can thrive long-term and do more than just fumble through potholes.