Start Up Right

Below are three essential but overlooked legal considerations for a successful start for any new business:

1. Founders Agreement. The Ultimate BFF Pact! Thinking of teaming up with a buddy? Time to bust out the Friendship Contract! This bad boy needs to be signed before or during the birth of your business baby. It's like setting ground rules for a sleepover, but with money involved. Who's doing what? How are we splitting the chores (I mean tasks)? Money talks, tax talks, and more spicy topics are on the table. How do we divide the cookie jar (ownership shares)? Will sharing the load mean sharing the loot? Are we in this full-time or just for the snacks? And what happens if someone wants out, kicks the bucket, or goes broke? Can you trade your Barbie for my G.I. Joe (transfer equity)? Get these things sorted early to avoid a playground brawl later on!

2. "General Counsel" Audit. So, you know, audits are like the broccoli of the business world - not exactly a party, but hey, they're good for you! This particular audit is your business's way of getting a check-up from the legal doctor. The attorney in charge will be poking around in your business's Governance Foundation, legal and compliance stuff (yawn), ownership and control (making sure your cap table isn't a pirate's treasure map), protecting your intellectual property like a bodyguard, checking if you're financially fit, and sniffing out any drama with your business buddies. Think of it as a legal scavenger hunt to find and fix any cracks in your business armor. Time to lawyer up and get this legal shindig started!

3. The Magical Mystery Virtual Data Room! Once upon a time, in a land not so far away, I toiled in a kingdom with a splendid e-filing system. It was like finding treasure every time you needed a document! So, be a wizard and sort everything out from the start, making it so foolproof that even a clumsy ogre couldn't mess it up. Organize your policies & procedures (SOPs), documents, data, and all the elements/tools you use to create whatever you're creating. That way, when a noble suitor - be it a dragon-slaying buyer, a treasure-hunting investor, or a jester-like partner - knocks on your digital door in three, five, or ten years, all the secrets of your kingdom will be at their fingertips for a royal due diligence quest!

Commencing a business is rigorous, difficult, and tiring, yet it is also thrilling, motivating, and fulfilling. Establishing a strong and sturdy foundation from the start is essential for building a stable structure. Neglecting the foundation may result in cracks appearing in the walls later on!

Thanks to my colleague, Paul Swegle, Esq, who inspired these thoughts in a business workshop I attended a few years ago. He is an exceptional teacher and legal mind.

https://www.linkedin.com/in/paulswegle/