The economy today is moving faster than ever. Given the ubiquity of cloud-based solutions in the market, relatively low barriers to entry and a surplus of capital available to aspiring entrepreneurs, full speed ahead is your only choice. Anything slower, and someone else will pass you.
Yet even with these market conditions, potential roadblocks remain, and every business owner needs to tackle them. From the beginning, your business strategy should satisfy the legal requirements of your industry. After all, no matter how great your business strategy, it can’t be executed if you’re operating outside legal bounds. The very well-being of your business depends on giving this building block the time, attention and investment it deserves – and at the early stages.
Here are five tips for crafting a legal strategy in your fledgling organization:
1. Budget more for legal spend than you think you need.
Don’t underestimate your legal expenses. Legal fees could end up being a large upfront investment when you start your business. In my experience, these fees always end up being more than anticipated due to the constant back and forth, legal complexity and other factors. For this reason I recommend giving yourself enough of a buffer in your budgeting for these services. Also, make sure you consult with your attorney to estimate the total legal fees at the onset.
On top of that, you also need to pay for license fees, license filing fees, bonds and more. It can be very helpful to speak with other entrepreneurs who deal with similar legal challenges, to determine a better estimate of those costs. At the end of the day, budget wisely so you don’t have to dip into funds that could have been put toward other business objectives.
2. Assume you need twice as much time as you anticipate.
When the idea for your business comes to you and you see a market need that is not being fulfilled, you want to get cracking right away. But getting your legal ducks in a row can take time, so plan ahead. When we started BlueVine, it took us a full year to obtain our lender license. During that time, we had to work on a modified basis to operate within our legal bounds. Make sure you know which licenses you need, to begin operating, and take into account the time needed to acquire those permits.
3. Make sure you have the right attorney for each task.
Specialization matters. An attorney not versed in the specific field can be costly. For instance, if you need to obtain a patent, or worse, go toe-to-toe with a patent troll, work with a patent attorney. This specialist’s years of experience in intellectual property, and in-depth knowledge of the ins and outs of patent and trademark litigation, will serve you well. Opting for a general practice lawyer who covers a broad range of areas but specializes in none of them may save you money upfront, but this individual’s lack of expertise in a specific field could cost you down the road. It’s worth getting the right person for the job – you’ll spend more in the long run if you don’t.
4. Make sure you are covered and not breaking the law.
The consequences for not having your legal house in order can be expensive. Square, the mobile commerce startup, was recently fined more than half a million dollars in Florida for operating without a money transmission license. Worse than fines, however, is the damage you suffer by squandering your reputation with customers. The need to keep up with competitors and expand into new markets can seem pressing, but no corner is worth cutting if it ends up ruining your brand or putting you behind bars. Work with a trusted legal advisor early on to ensure you’re operating within the letter of the law.
5. It’s not all or nothing; run legal processes in parallel.
If part of your model requires licenses/compliance, do what you can legally until you’re compliant. While obtaining legal permissions to run your business is vital to starting your business, don’t sit around waiting for progress on the legal front. Use your time wisely, investing and building the areas of your business you don’t need legal clearance for. For instance, you can launch in states where the regulations don’t hold you back while applying for the proper permits in states that require them; or you can go to market with a solution narrower than what you intended. Be ready to flip the switch and resume pushing forward the second your compliance is official.
By its nature, business moves fast. Following these basic steps can go a long way in building your business as quickly – and wisely – as possible.
But remember, just because something may be legal doesn’t always mean it’s right. With each decision, make sure you’re not just following the letter of the law, you’re also abiding by the intent. Your business should be built on your values and operate with positive intent: Keep that in mind regardless of what legal parameters your venture faces.