A startup business is one that expects to grow quickly. That means they have something that they expect to be able to see to a lot of people. The market for their product is large. Startups are common in the tech industry for this reason. Online businesses are available to everyone all the time and access to them is not constrained by things like geography or time zones.
Startups are often smaller and less structured than traditional small business models. They are typically innovative and able to adapt quickly to changes in technology or the market. Startups also tend to be more efficient and have less overhead. This allows them to be competitive in their pricing.
Startups often have more of a “team” feel. The employees might be more close-knit, which contributes to a culture of collaboration, shared ideas, and working together for the benefit of the group. Many startups emphasize providing a personalized experience for their customers. The ability of startups to personalize their services and adapt to the unique needs of their customers means startups often enjoy a degree of loyalty many other businesses do not.
Despite many advantages, there are disadvantages to startups as well. One of the biggest is the level of risk. Many startups fail within the first year. Getting a startup off the ground means working a lot of hours. It takes time to be profitable, so the compensation might be low in the beginning.
The cost of a startup is high. One thing that contributes to the cost is working to acquire customers and a share of the market. If the startup does not have the capital to do the necessary market research and to hire competent employees who share the same vision and dedication to the company, the startup is less likely to be successful. Less financial resources also means the startup is vulnerable to competitors even as it starts gaining customers. Bigger businesses will use their larger budgets to push the startup out of the market.
How are Business Startups Financed?
Financing can take many forms. A person interested in starting a business might apply for a loan from a bank, use their savings, ask friends or family to loan them money, seek seed funding from investors, acquire funding from a venture capitalist, or even crowd fund the money needed to get started from both acquaintances and strangers online.
A startup is risky and also requires a significant initial investment to make the idea a reality. For many startups the biggest hurdle is getting started so that the business is seen as a good investment for other investors. Money from outside investors is helpful, but might come with having to give up some control of how the business is run. You have to have a solid business plan and know how much you are willing to give up in exchange for outside financing.
It is a good idea to consult with other entrepreneurs and a business startup attorney for advice and assistance with obtaining financing. Other entrepreneurs might be able to introduce you to investors. An attorney with startup experience can also help you find “seed funding” to get your startup going.
An investor who contributes seed funding does so in exchange for equity in the new company. The seed funding gets the startup off the ground, and when it starts making money the initial investors can sell their interest in the company for a profit. Once the startup is up and running venture capitalists often invest to help an already profitable business expand
A business startup attorney can draft the contracts that will outline the exact terms of the agreement with any investors. Those terms include how much is being invested in exchange for some percentage of profits or ownership interest in the company itself. A solid contract will protect you and the investors.
What are Important Things to Consider when Creating a Business Startup?
When creating a business startup it is very important to be prepared. Some things you should do and keep in mind include:
- Research: There are many things to research when you start thinking about moving forward with a startup. You should research how you obtain financing, the market for your particular idea, what kind of customer base you might have, the competition for your product, where you will get any materials you might need, and the laws regarding starting a business.
- Legal Issues: You need to research the possible legal issue that might surround a business startup. For example, licenses or permits you might need to operate. You might need to register your business. Failing to properly register or obtain the appropriate license might lead to costly fines and penalties or a revocation of your right to operate your business at all. You should find out whether you need to lease office space to conduct operations. That might require reviewing the local zoning ordinances.
- Formation: You will need to consider what form your business will take. An LLC or “Limited Liability Company” is the most common, but you should consult with an attorney to determine which type of formation is best for your situation. What state you are in will also dictate which form is best in terms of tax incentives and liability issues.
- Your team/employees: Who you will work with is very important. You need to identify the people who can help you get the business started and what their roles will be. You need to decide if you will have partners and how everyone involved will share in the profits or be compensated.
- Marketing: You need to consider how you will market your business so that it has the best chance to grow and expand. Your marketing plan should be included in your business plan.
There is a lot to consider when creating a business startup. Lawyers for startups have unique knowledge and experience that can help you be thorough with your business plan. They can advise you on tax law, employment law, real estate/property law, and business law, all of which must be considered when launching a startup.
What are Some Legal Issues that may Come Up when Forming and Operating a Startup?
Various challenges and legal issues can arise when forming a startup. Consulting a lawyer for business startups can help you navigate the law as it applies to the following:
- Deciding whether the startup will be a Limited Liability Company (LLC), Partnership, or other form that will protect your personal liability risk.
- Tax implications and tax incentives for startups.
- Handling the paperwork and financing agreements.
- Ensuring that your intellectual property is protected.
- Negotiating real estate contracts.
- Drafting employment contracts.
An experienced lawyer for business startups will know the steps you need to take and the possible legal challenges that might arise. They can help you prepare for them and take the necessary steps to avoid legal problems that might put your startup at risk.
Do I Need a Lawyer for Setting Up My Business Startup?
Creating a business startup can be an exciting and potentially lucrative opportunity. It should not be done without the guidance of an experienced start up business lawyer. They can help you structure the business, draft contracts and agreements, review all licensing and regulatory guidelines and make sure you are in compliance, and handle any disputes or legal challenges. They can also help protect your ideas and intellectual property with patents, trademarks, and copyrights. If the startup does not succeed an attorney can also help with its dissolution.
No matter what kind of idea you have, a business lawyer can help make it a reality while also protecting you from some of the inherent risks to a business startup.