An interesting video in which Partner at Wynn Williams, New Zealand law firm, speaks with the CEO of Unfiltered, a small tech company, about his experiences as an entrepreneur starting out.
He mentions that legal assistance is crucial for entrepreneurs (business owners) particularly to clarify who ‘brings what to table’ in formation of the company, how this is funded, and what roles are played by each party.
Establishing shareholders’ agreements, rather than handshake agreements, need to be drawn up.
Assigning Intellectual Property and other assets to the company through a lawyer or accountant is also crucial, so the company retain ownership if owners (or shareholders) leave the company or die. Capital raising (or paying employers in an equity stake) also requires legal assistance. A company Constitution is also important to guide growth.
Many business owners think it is too expensive to get legal assistance, but most lawyers will be happy to bring on a business owner as a client by reducing their costs in return for an ongoing relationship.
It is often best to deal with a small legal practice, as going to large blue-chip firms is more expensive and their expertise not suitable, because they are used to dealing with $100m + transactions. It is important to build a personal relationship too where personal styles are a fit. Finally, professional advice is often very helpful as legal advice does not contain the emotion that you may have as a result of being in your business.
As a business owner, you often don’t know what you don’t know. Get some legal advice as soon as you can.