Avoiding the most common business formation mistakes can be easy if you work with people that know what to look out for, such as an experienced Business Formation Lawyer like me. In fact, by hiring an experienced lawyer to help you form your new business, you will avoid the biggest business formation mistake there is: not asking for help.
For most people, creating a new business can be one of the most exciting times; however, the process can quickly turn into a nightmare. Making mistakes during the business formation process is unbelievably easy, and the consequences of those mistakes can be disastrous. Read on to learn what the most common business formation mistakes are and what you can do to avoid them.
The Most Common Business Formation Mistakes
One of the most important stages in the process of creating a new business is the planning stage. This is the part of the process where you determine how your business will operate, what type of business structure you will choose, who will manage the business, what types of products and/or services you will be offering, how you will market them, and of course, how much all of the above will cost, among several other vital aspects.
Many first-time business owners rush this process because they are eager to start their businesses and they do not know how harmful rushing this process can be. Not taking your time during this stage is the best way to set yourself up for failure.
- Not Having Enough Contracts
One of the most important lessons you will learn as a business owner is that contracts are everything. If something related to your business is not in a contract, it does not exist. The easiest way to cause your business to fail is to not have everything in writing. Every deal you make should be in writing, no matter how small it might seem. In every business relationship, the obligations of the parties – and the consequences of failing to meet those obligations – should be clear from the start.
However, not having enough contracts in place is only one of the mistakes inexperienced business owners make when making deals; the other one is not hiring an attorney to review/draft their contracts. Entering into poorly drafted contracts can be far worse than not having contracts at all, as you can end up having to visit a place no one wants to visit: a courtroom.
Regardless of the size of your business and how much capital you have invested in it, it is vital for you to set realistic expectations. Sure, you can shoot for the moon; however, you should first learn how to land on it. Biting off more than you can chew can have catastrophic consequences. Even big corporations make this mistake sometimes. When it comes to scaling up, the ratio between ambition and reasonability is a key factor.
- Not Having IP Protection Strategies
Protecting your creations is one of the most crucial steps you need to take when you run a business in the United States. Before you form your new business, you should conduct research on your trademarks and other IP to make sure it actually belongs to you. In the corporate world, no matter how original you think an idea is, someone else might have thought of it first.
Once you make sure your intellectual property does indeed belong to you, you need to take steps to protect it. The best way to do this is to hire an experienced Intellectual Property Lawyer to create a solid IP protection strategy for your business. I can be that lawyer.
- Working Alone
As mentioned above, the biggest mistake you can make when creating a new business is trying to do it on your own, without the help of experienced professionals. This nearly always leads to a disaster. Why? Because drafting contracts, protecting your intellectual property, and forming your new business entity is not all you need to do when starting a new business.
You also need to take steps now to ensure you do not end up in legal trouble in the future. In other words, you need to make sure you meet every single legal requirement associated with the process of starting your new business. That is where an experienced lawyer like me comes in. I can help you make sure you and your business stay out of legal trouble.