Do You Need To “Lawyer up” as a Small Business …

August 19, 2015

Do You Need To “Lawyer up” as a Small Business …

You’re a Small Business & still have no legal adviser???? Here’s why….  lawyer

OK!! Seriously… There is a lot of talk these days about how small business should use law firms as advisors and not crisis managers. The reasoning is obvious: when lawyers are consulted regularly, they are able to spot issues before they become larger problems and minimize financial exposure. Small businesses seek legal guidance every day; failing to paper an agreement, detail their relationship with partners or investors, draft social media guidelines or protect their intellectual property can lead to complex legal problems and financial stress.

However it’s hard to persuade cash-strapped small businesses to assume a certain cost now to avoid an uncertain one down the slippery road.

Read on as we discuss some aspects small business have struggled with on the legal front. Here are 5 areas where small business gets trapped so keep a sharp look out for them, and jump for legal help as soon as you smell trouble, if you haven’t already done so. Keeping a small business friendly law firm close-by is sometimes important.

  1. Protect you IPR: Did you know 60% Indian small businesses suffer from IPR lawsuits

A small business typically invests blood and toil in creating some intellectual property and thus protecting the IP becomes core, as numerous examples of companies like XAOMI show getting into IPR battles with large players is really a lose for most small business.

A retail consulting company had developed proprietary process; and named them as “spaceintel”, “serveintel” etc. These names became very popular in the industry, so popular that “Intel” choose to send a legal notice and long story short they were forced to change the name with the risk of erosion of significant brand equity.

  1. Get your serious documentation done seriously: and put all your agreements down in writing

Put all your important business agreements in writing. Oral agreements are usually difficult to enforce and leave you with no recourse for compensation or legal action. Make sure your contracts are well thought-out, drafted in your favor, and give you flexibility and protection.

The Online legal market has grown by leaps and bounds. There are many companies that are offering free legal documents online to entice the small business owner like one would offer a sample piece of chocolate at a candy shop. Many small businesses are taking the bait because let’s face it, money is tight. If you can incorporate your company, secure early-stage financing, and hire employees and compensate them with stock options by just filling out a few free documents online, why wouldn’t you?

Herein lays the problem: somewhere along the line you are going to need a professional’s legal judgment and advice. No law, no form, and certainly no small business can squeeze into a one-size-fits-all model.  Do-it-yourself in such cases could clearly backfire.

  1. Not clearly documenting partners’ rights and responsibilities: co-founder dispute is perhaps the single largest reason for small business failure

A live case; someone is running a manufacturing business where he has 3 more partners. One of the partners has started a competing business. He barely contributes his time to the business and still continues to take a share in the profits. They do not have a co-founders’ agreement that has a non-compete clause preventing partners from running a competing business. As a result, partners are unhappy. They want to kick out the guy running a competing business, but have no legal way to do it.

It is just a matter of time until they have a showdown and probably most will leave the business.

Do you have a co-founders’ agreement or some such written agreement that covers the rights and duties of the founders/promoters of the business? If not, this you might want to address AS OF YESTERDAY.

  1. Not keeping proper corporate records leading to NON-compliance

This is really irritating because as a small business you are struggling with employees, customer acquisition, the technology going live… mundane record keeping in the last thing on the mind of an entrepreneur. However improper record keeping can cause problems with the revenue guys, hamper your ability to raise equity capital, and result in personal liability. Yet small businesses are notorious for failing to keep the required corporate records. Failure to document meetings of the board of directors and shareholders, failure to record stock issuance, and failure to document stock transfers are common infractions of the guidelines that protect the status of a corporation.

  1. Ignorance of the law, esp. on the regulatory frontSmall business pushing the envelope and governments not up-to speed on fast changing environments could lead to risks on the regulatory front.

Thus online payments are at the mercy of RBI, carpooling websites which may be made illegal by the motor vehicle department of any state or the night food delivery service that can be harassed by the police. If you have not figured out the regulatory issues in your sector, you are probably not prepared for the worst that could happen to your business. Lots of new businesses such as Uber are facing regulatory heat at the moment after an Uber driver allegedly raped a woman in Delhi.

What next

Small business owners tend to think they are running the show in every aspect & that a legal advisory is just a waste of valuable funds; which often sounds right!
But is it actually right? Is your business free from all legal hassles? Can you foresee legal issues your small business might face? Can you handle those issues yourself? Do you seek legal advice after or before your business is in trouble? We therefore arrive at an age-old problem; An apple a day keeps the doctor away, is prevention better or cure?

We can’t answer these questions for you, however to re-iterate watch out for the above 5 areas and keep a small business friendly law firm / legal services provider close.

 

Send us an email at request@smejoinup.com to connect with small business friendly law firms.

August 19, 2015

Connect with Service Provider

Get connected within 24 hours to pre-screened, trustworthy and small business friendly service providers for Services in top Indian cities

Latest Posts

Top 7 Whiteboard Explainer Video Tips That Talks About Your Business

December 01, 2018

Whiteboard animation videos !! The video style has been trending for obvious reasons. The whiteboard animated videos are known for boosting

Read More  
Facebook Ads | Top 6 Reasons Why Your FB Ads Are Not Converting

November 29, 2018

There were only 3 million active users on Facebook 4 years before; and as of 2018 there are more than

Read More  
Top Facebook Boost Post Tips - Get Results and Generate More Leads

November 13, 2018

Majority of the online marketers who wish to advertise on Facebook and get more leads using Facebook boost posts will

Read More  
Why Should Your Business Hire Explainer Video Company Instead Of Freelancers?

November 10, 2018

We all know the benefits that having a website can help you trigger brand awarenes; overhauling your public image virtually

Read More  
Animation Video Maker | Promote Your Brand With Our Corporate Videos

November 03, 2018

Whether you’re a beginner or already an established brand, SME Networks is an expert Animation Video Maker company that

Read More  
Facebook Ads | Top 7 Effective Tips To Write Facebook Ads That Convert

November 01, 2018

I’m constantly on Facebook, scrolling through my company feed reading the news and looking at pics…I’m not

Read More  

Latest Events

CLO Engage Summit

Date: 10 January, 2019 - 10 January, 2019

India Investment Conclave

Date: 11 January, 2019 - 11 January, 2019

11th Global Intellectual Property Convention

Date: 17 January, 2019 - 19 January, 2019

PanIIT Conclave 2019 Artificial Intelligence

Date: 18 January, 2019 - 19 January, 2019

Mobile And Digital Marketing Summit

Date: 27 November, 2018 - 27 November, 2018

Emerging HR Summit

Date: 18 December, 2018 - 19 December, 2018

PITS - Pharma IT Summit

Date: 28 November, 2018 - 28 November, 2018

World AI Show - AI, MI & Robotics

Date: 22 November, 2018 - 22 November, 2018

TEDx IIFT Delhi

Date: 21 October, 2018 - 21 October, 2018

Decathlon India Run

Date: 14 October, 2018 - 14 October, 2018

-->