6 Mistakes You Can Avoid Early on in Your New Business
No one launches a business with all the answers, and for the more inexperienced entrepreneur, there are plenty of potential pitfalls early on that can potentially derail what would otherwise be a promising venture. Mistakes are inevitable in any business; the key is limiting those mistakes to small ones that do little substantive damage. And while it’s impossible to know everything that might come your way, it’s good to go in knowing some of the most common problems.
1. Have a business entity
Many businesses start out as small side projects, where your personal time and effort, and resources are the entirety of the business itself. However, turning that project into something more requires approaching it as an actual business that requires an entity to protect you and your family.
Without an entity, your business is by default a sole proprietorship, and any liability that the business takes on is borne personally. Any contracts signed, any debt accrued, any lawsuits — if your business cannot pay, those obligations can fall on your personal financial assets.
Creating an entity with a lawyer allows you to shield your personal assets from your business assets. Having an entity may also ease your tax burden, but choosing the right entity should be done with a professional.
2. Do a business name search
Landing upon the perfect name for your business is great, but without doing your homework, you may not be able to move forward with that name, without infringing on others’ rights.
A business name search ensures that your name of choice isn’t already registered with another business in your state, or registered as a trademark on the federal level. There’s also the possibility of common law trademarks in your area, where businesses can claim a limited trademark based upon regular use. Before you start plastering your name on a website and merchandise, be sure that you’re able to use that name without the possibility of infringing upon someone else’s registered name or intellectual property (IP). Working with a lawyer can help you to avoid any business name mistakes
3. Have contracts, and understand the contracts you’ve signed
If you’re to be a full-fledged business, you need to operate as one, and that means having contracts in place between your company entity and other businesses or individuals. While it would be nice to assure that a verbal agreement or handshake would be as binding as anything put to writing, it’s simply not good business. Having contracts assures that there are no disagreements, no misunderstanding, and no way for the other party to back out on what was agreed to without breaching that contract.
It’s also important to understand what you’ve signed for your business and personally. Your business will be held to the letter of a contract, and contracts may have stipulations as to what you can or cannot do. Be sure you understand what you’re signing on to by having a lawyer review your contracts.
Contracts may even short-circuit your new business. If you’re working a full-time job while operating your new business, your employment contract may restrict or even prohibit you from conducting that outside work, or may even dictate that your employer owns any idea you come up with, even if it’s done off the clock. Check your employment agreement before you start your business.
4. Protect your intellectual property
Your intellectual property (IP) is what makes your company. It’s your ideas and your creativity that you need to safeguard. Failing to do so leaves you open to the possibility that someone else might take your IP for their own use, and without the proper protection, you’ll have a difficult time getting them to stop.
Patents, trademarks, and copyright aren’t just about protecting your work; they also show potential investors that your company is worth further consideration. If you want both investors and customers to take your business seriously, talk to your attorney about filing for the right protection for your IP.
Any good IP plan also includes avoiding infringing upon the IP of others. There are plenty of cases where well-intentioned people have accidentally infringed upon another’s work, and while no malice may have been involved, it’s an infringement nonetheless and opens your company up to potential legal action. A little research before creating products or logos or using photos on your website can save you a headache later.
5. Take customer feedback seriously
We’ve all been guilty of falling too in love with our own ideas, failing to remember that while following a path and goals, we’re also trying to appeal to a wider public as well. Testing and feedback are crucial parts of the creative process, and although too many voices may make the creative process more complex and time-consuming, those varying opinions can help you understand where your products or services may improve.
Feedback can also help avoid an embarrassing problem come launch day. There’s nothing worse than putting out a faulty product, as there are no second chances for first impressions. Have people test repeatedly, trying to break the product in every conceivable manner, in order to be prepared for anything a real user may throw at it.
6. Seek legal help
There are plenty of other hurdles to be overcome as you’re guiding your company towards long-term viability. But getting the basics right, right from the start, is crucial to getting your business off on the right foot. After you launch, a LegalShield lawyer can help you with all of the challenges.
Launch by LegalShield can help you get your business started right, with support and expertise for your most pressing challenges as you grow your business. Learn more about Launch and the SMB plan today.
LegalShield provides access to legal services offered by a network of provider law firms to LegalShield Members through member-based participation. Neither LegalShield nor its officers, employees or sales associates directly or indirectly provide legal services, representation or advice. See a plan contract at legalshield.com for specific state of residence for complete terms, coverage, amounts, and conditions. This is not intended to be legal or medical advice. Please contact a medical professional for medical advice or assistance and an attorney for legal advice or assistance.