Budding Iowa Entrepreneur? Review 100 Ways to Improve
I read with great interest this recent article entitled, 100 Ways to Become a Better Entrepreneur. In general the article gives pretty solid advice. But it always concerns me when articles automatically assume the entrepreneur is unable to afford paying a lawyer to draft a business contract. (See No. 74).
I understand that many entrepreneurs must watch their dollars very closely. Hiring a lawyer to write a business contract may seem like a luxury the struggling entrepreneur cannot afford. The problem is that I have seen business contracts written by the entrepreneur come back to haunt them many times. Trust me, litigation is a whole lot more expensive than having a lawyer review or write a contract. At least go talk with a business lawyer to find out how much it will cost. Don't automatically assume it is something you cannot afford.
Exactly Rush. Here's my take.
What most entrepreneurs don't take into consideration that a good, clean, legal foundation is of course desirable if things don't go so well...but extremely important when things go INCREDIBLY WELL. When a founder is not performing and needs to be removed, would you like him to continue holding say 20% of your company's shares so you can make him rich as your business prospers because you didn't pay for a proper buy/sell agreement? Or, say an investor comes knocking on your door. If you've got rogue employment agreements hanging or don't have the proper protection from angry employees, you may be skipped over due to unknown risk factors. The amount of money you spend on sound legal advice and contractual review is worth its weight in gold. I think there's actually a formula for this.
Every dollar invested in good legal counsel as a budding entrepreneur = 100X returns when your business flourishes and 10X returns if it fails. Either way, you win. Do it from the start and pay for what MATTERS first!
In the immortal words of the Lone Ranger, "I know you speak the truth Kemosoby" but really for the very small start up of one...is there a painless way to have legal help? Legal issues are like having insurance and a trip to the dentist. I know they are necessary because of all the fearful possibilities but so easy to procrastinate, especially if you don't have the cash.
Doug, you are so right. It is amazing how many partnerships and businesses falls apart when they become successful. During the struggles everyone is seemingly on the same team but something happens when the money begins to pour in.
Sherry, I hear what you are saying. As a entrepreneur in real estate I have had occasions to hire lawyers myself. (I play by the adage that he who represents himself has a fool for a client). I truly believe it is in the best interest of any business to budget a certain amount for legal expenses. My advice is to visit with a business lawyer to find out how much the project will cost. For example, a review of a contract may not cost as much as people think, particularly if it is a relatively routine matter for the lawyer. Make sure the lawyer is experienced in the matter in which you seek advice. This may often cut down the costs even though the hourly rate for the lawyer may be higher. Don't ask for the hourly rate - ask how much the project is going to cost. Look for a lawyer that will charge on a flat fee basis for the project.