Listen to the Introduction Here:
- m4a Audio
I think a lot about vision. A lot about what can be done in your business, if you only take the time to step back and look at your path moving forward. Working with small businesses I see a lot of businesses that try to sell first and plan later.
Though this works early on, when the owners are wearing all the hats and you can be scrappy, it does not scale well.
Of course, the opposite of this is to focus only on vision and not spend enough time on implementing the vision. I see this a lot in the requests business owners have for legal services. We have talked before about the different pillars of legal protection. The problem I see is that many business owners want to spend all of their money on investment and equity and don’t want to spend any money on creating legal infrastructure.
Don’t get me wrong. Limiting the liability of the owners is a good thing. It is one of the most important elements of getting started. Making sure you are properly structured for your future plans is all part of creating a legal entity that can grow.
But, it shouldn’t stop there.
Limiting the liability of the entity is essential to making sure that there is something worth protecting. Making sure the entity can collect its fees, charge attorneys’ fees and collection costs, and get out of lawsuits that shouldn’t have been filed in the first place takes regular and tailored focus on legal. That is why you should have legal in your corner. That is why you want to make sure you have a lawyer who can answer your questions. Who understands your business. Who understands your process. Who knows your limits and your tolerance for liability.
Protecting your business from liability should be a top priority. In fact, many investors want to know that you have focused on legal. They want to know that limiting the liability of the entity is important to you. They want to know you are protecting your intellectual property. You are ensuring you own the intellectual property of your employees and contractors. They want to know that your contracts are enforceable and add value to your business.
External protection is protection of your business from clients, customers, prospects, and any other threat that does not involve the ownership or those working in the business. This is essential for the liability protection of any business. Most liabilities come from outside. Most protections need to act as a shield around the business. These protections can be anything from ensuring payment from your customers to making sure there is no intellectual property infringement on your website. Most of the legal needs of a business (after the foundation is set right) are external.
That means, you should spend a good deal of time making sure your external protections are secure. As I have discussed in many other places, the key to strong legal protection is to ensure you document every relationship you have in your business.
In some cases (e.g. Retail transactions), you are not going to get a signature every time someone buys something from you. So, how do you document the relationship? How do you let your customers know what happens if checks are returned or if they need to return something? These are elements of your agreement with your customer. As you think through the systems in your business, think about how to reduce those relationships to writing.
In some cases, you may want to creatively document your terms and relationships with your customers, vendors, and others who pay you. As you think through all of your business relationships, think about whether you have reduced that relationship to writing. If you have documented the relationship, you should always review your agreements to make sure they still outline the relationship you need. If you have not yet documented the relationship, that should be top priority.
In this module, we will cover:
- Lesson 1: Common Contracts for External Relationships
- Lesson 2: How to Make Your Contract Terms Enforceable
- Lesson 3: How to Get Your Contract Signed
- Lesson 4: Who Owns User Generated Content
- Lesson 5: Protect Your Rights. Preserve Your Relationships
- Lesson 6: How to Create Service Systems in Your Business
- Lesson 7: Growing Your Business with Better Legal Planning