Legal Issues That Could Ruin your Startup
Entrepreneurs tend to have a lot on their mind, but turning a blind eye on legal issues can prove to be a business-sinking mistake. It increases business risks and increases costs. After all, the startups exist within an ecosystem of regulations and policies. So, even though they are preoccupied with their bottom line, but they cannot afford to lose sight of the legal landscape. It’s clear that the entrepreneurs are better off planning well ahead of time than fixing a mistake after a mistake.
Rules of the game
Some laws are
faulty and outdated, but they still serve an important purpose. Each and every
organization has to comply with rules that protect consumers - especially their
safety and health. Therefore, it has to find a way to work within the legal
framework and minimize friction with the regulating bodies. This may already
seem like a daunting task, but it is only a first step: Startups are also
expected to go an extra mile and contribute to the community.
highly valued and represents a guiding light when approaching legal problems
and challenges. On the other hand, facing harsh scrutiny of state, local or
federal authorities is something that can tarnish their image. Bad news can
spread like wildfire across social media channels, giving rise to a
reputation-shattering hassle. Thus, getting entangled in the legal jungle is
not a good idea.
like Airbnb and Uber might have gotten away with asking for forgiveness instead
of permission, but this is a treacherous path to follow. After all, not every
enterprise is able to harness “people power” and prompt regulators to back off.
Likewise, many startups are not in a position to hire top-notch teams to engage
policy makers and find a common language with them.
There are some
pitfalls to avoid in the early stages. For example, one of the most common
legal mistakes is picking a logo or brand name that’s already in use. Such a
lack of due diligence checks eventually leads to infringement of copyright and
trademark laws. Similarly, startups often fail to safeguard their intellectual
property or check the availability of a domain name.
mistake is overlooking the importance of contracts and
are not just some formality: They should accompany every business decision and
regulate all relationships with outside parties and individuals. For better or
worse, a handshake is not a real guarantee in the business world. Also, generic
documentation and templates from the internet do not provide valid protection
in the wake of a dispute.
organizations have gone under or endured serious blows due to poor legal counsel
or not taking one at all. This is severe negligence, since lawyers, who are
becoming increasingly specialized, should be present to give assistance every
step of the way, be it a liability, lawsuit, zoning compliance, etc. Indeed, there’s
a range of professional legal services that startups require: Real
estate, contracts, trademark, incorporation, litigation, patents, bankruptcy, and
reputable consumer fraud lawyers.
professionals should be contacted as soon as the problem arises. Even better,
startups would be wise to act proactively and employ professionals while taking
baby steps. On the other hand, hesitation to add staff and support from the
start is another pitfall. It may be hard to secure the funds, but the benefits
are too great to be missed. So, consider increasing internal capacities and you
should be able to navigate legal the waters with strong winds in your sails.
Do not fight, be right
A legal aspect of
running a business is the bedrock of success, yet it often doesn’t receive the
attention it deserves. Wrestling with the law is
certainly something that drains the resources and undermines public image. One
must establish a comprehensive legal system from day one and use well-drafted
documents and contracts to limit the legal exposure of a business. And those
who ignore law do so at their own peril and discover that legal mistakes can
and do come back to haunt them: It costs much less to get things right than to
put up a legal fight.