Increase Small Business Success by Leveraging Legal Advice
To be an entrepreneur means to be someone who takes on challenges. It also means you are a problem solver. Knowing what is ahead is half the battle.
Lots of people are drawn to entrepreneurship. After all, you get to ditch the corporate life and call all your own shots. There’s a lot of potential “upside” running your own small business. But being an entrepreneur is not always easy.
You’ll need to do a lot of legwork before you even start your small business. Once you’re established, being an entrepreneur is fraught with obstacles almost every single day. How you deal with them has a great deal to do with how successful your business can be.
Having access to legal advice is a very effective way for you to avoid pitfalls and deal with the challenges when they do come along. Despite this fact, may small business owners do not have an attorney on their team. Why is that?
The simple reason is that many entrepreneurs do not think of their business problems and challenges in legal terms. Some problems make the need for legal services obvious – like being sued. If you think the only time you need an attorney is when you’re being sued, we’re suggesting that you’re not thinking broadly enough about where you can find help to make your small business more successful.
For many small business challenges, seeking advice from an attorney is never considered. Entrepreneurs certainly want assistance with their problems, but they simply do not connect that desire with legal services.
The list below is compiled from the challenges that I have recognized from working with successful entrepreneurs over my nearly 30-year career. I’ve also provided a few examples of how these problems have legal aspects to them and how seeking advice from an attorney can really help your business.
Taking the Leap
The biggest struggle for most would-be entrepreneurs is taking that first leap. Should you start your own small business? Is it the right time or the right business? Attorneys who concentrate on helping businesses have seen many, many businesses and have a wealth of advice to share with someone thinking about taking the big leap.
Attorneys can also help navigate the many forms and requirements of business entities, state licensure and other legal hurdles to ensure that the fledgling business gets started off on the right foot. On-line form providers do not always to this right. Businesses are not one-size-fits-all so blanket form documents very frequently do not work.
Many businesses have two or more owners. Entering a business partnership can be a great way to combine the talents and skills needed to build a successful company. But if the partners can’t effectively work together or have different ideas about how to run the business, it can lead to damaged relationships or a failed business. An attorney can help multi-owner businesses identify the issues and avoid the pitfalls that are particular to partnerships.
Funding for Your Business
Funding is a key need for businesses at all stages of their lifecycle. Start-ups might engage in fundraising from investors or conventional lenders. There’s a lot more work to startup fundraising than most new entrepreneurs realize. Mature businesses need capitol to acquire assets or equipment to sustain and grow their businesses. They may need funding to purchase businesses to expand their territory. Not having a full understanding of the process and what it takes to get funding can lead to a lot of frustration, if not failure, or at least miserable loan terms.
Planning for Success
I cannot overstate the importance of having a business plan. I am constantly surprised by how few business owners have written business plans. You’ve got to know where you’re going to even begin to understand how to achieve success. It is human nature to only see what is right in front of us. Most business owners have their hands full focusing on the day-to-day aspects of their business, working hard to provide the best product or service they can, while also managing employees, a budget and everything else that is part and parcel of running a business.
Attorneys can help provide that objective overview and plan for your business. Without a business plan or goals, your company will lack direction. You’ll find that energy is expended in areas that never pan out; projects are suggested or even begun but are never finished. You may also find that you are stagnated, doing the same work for the same list of customers. You stagger along, never getting bigger, never advancing. Setting realistic goals, on the other hand, allows you to enjoy growth and progress. An attorney can connect you with planning resources and help you understand the types of issues that you’ll need to think about and incorporate into your business plan. They can be a great sounding board for your plans as well.
Time Management and Delegating
We all want more time. Why can’t there be 48 hours in a day, and 10 days in a week? Entrepreneurs have a lot to juggle when building and managing a company. They wear many hats and handle many tasks that are necessary but do not help the business grow and succeed. I call that working “in your business” and not “on your business”.
If you’re always working in your business – answering the phone, finding form documents, trying to figure out local government licensure rules, responding to letters from vendors or governmental agencies (like the IRS), dealing with employee issues that you’re not sure how to handle, etc. – you will not have time to work on your business. Many of these tasks can be delegated to a legal advisor. Let them figure that stuff out. What’s unfamiliar or new to you, they’ve probably handled many times over for other businesses. They’ll help you understand it faster, better and get it done sooner.
Cash flow shortages are one of the most common reasons for new business failures is cash flow management. An attorney can help a business owner structure contracts and payment policies to make it easier for a business to collect what its due from its customers. When an extra “umph” is needed to collect on an account receivable, a letter from an attorney can get you results.
Every business has inherent risks and when I say that I’m talking about more than the risk that an idea or initiative will fail. Running the small business race has its risks. Accidents that happen on the business property or because of operating the business can lead to lawsuits. Defaults in payment of contracts and leases. Failure to comply with governmental rules and regulations. Any one of these risks can ruin the chances of success for even the best business idea.
Ben Franklin coined the timeless phrase “An ounce of prevention is worth a pound of cure.” Franklin was a great entrepreneur, and his advice is especially applicable to business owners facing legal issues.
I have seen many clients over the years try to handle legal matters themselves to save on legal fees. Instead of making the problem better, the problem snowballs and, by the time, the client comes to a lawyer, the cost to “cure” the problem is many times what they would have spent for “prevention.”
Business owners simply should recognize that legal issues will arise and plan for them accordingly. Developing a relationship with your lawyer will help with that. The more your lawyer knows about you and your small business, the more efficiently he or she can advise you.
Finding Trusted Advisors
Business attorneys help lots of companies and have many contacts in your community. They can be very helpful in connecting you with other trusted service providers (e.g., CPAs, financial advisors, insurance brokers and bankers) that can provide professional guidance in their areas of specialization. In our experience, bringing together this team of collaborative advisors early is critical to the success of any new business.
For entrepreneurs (or any human), working with an attorney may not be the most exciting aspect of business. But instead of viewing working with your attorney as a waste of resources or time, the best entrepreneurs view an attorney’s guidance as an opportunity to enhance their security and improve their chances of achieving long-term growth in an inherently volatile business climate.
An experienced small business attorney can offer a wide range of benefits to entrepreneurs in all stages of the business cycle. From helping to select the best entity type to effectively allocating equity and stock options, to advising entrepreneurs through the sale and turnover of their business, attorneys have valuable skills to offer all types of entrepreneurs.
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