In most cases, starting up a new business venture is an attractive proposition for passionate entrepreneurs. However, every startup needs legal protection against challenges that come with running a business.
The fact is that there are legal issues to consider when starting a business. If you ask any founder who is still in the early stages of setup about their priorities, they will list growth, funding, and product development on the top.
Usually, legal matters come somewhere at the bottom of the priority list. However, they can be far more critical than you think. Further, entrepreneurs seldom think that they may be doing something that could call for legal troubles.
Also, the cost of legal counsel is another that dissuades them from getting it. Such slack thinking may get you into deeper trouble than you may imagine.
Despite the expenses involved, legal protection is something that no startup founder should ignore at any cost. Here are some reasons why you must go the extra mile to ensure it.
#1]. Startup contracts and compliances are complex
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Improper documentation for contracts can be detrimental for businesses at any point in time, more so if you are just starting up. More often than not, they end up shifting your focus from growth-critical matters to ones that aren’t worthwhile.
Apart from contracts, you may also get into trouble if you fail to comply with certain regulations meant for businesses operating in specific domains. Typically, entrepreneurs lack awareness about the complex details of contracts and compliances and may face issues due to unintentional actions.
However, having a lawyer looking after these aspects can help protect your new business from subsequent issues and implications.
#2]. Intellectual property requires protection
As an entrepreneur, it is easy to be caught up in the sheer excitement of having a unique product idea that no one else in the market had. But when you have something so amazing, there is always a risk of the idea of getting copied.
It is best to have legal protection for innovative ideas with appropriate trademarks, patents, and copyright registrations. Failing to do so is extremely dangerous and could hamper your business growth and expansion.
It exposes your business to the risk of having it copied, which means that you will have to face unwanted competition in the market. The risk is just compounded by the fact that your venture may not be able to achieve as much as you expected at the start.
#3]. Lawsuits can cost a fortune
Another reason why startup founders need to take legal protection very seriously is that lawsuits can be extremely expensive. To make things worse, you even may be liable for things that didn’t happen due to your fault.
Companies that operate cars as a part of their fleet or even simple business errands are at high risk. In most cases, they can face vicarious liability for an accident caused by the negligence of any one of their employees.
If someone on the road gets hurt, they can claim compensation, and car accident attorneys who care about their clients make sure that the business owning the car has to pay. The claim value may run in thousands of dollars, an expense that can topple your startup finances and land you in a fix.
#4]. Startup reputation is at stake
Apart from the financial concerns of lawsuits, there is also a threat to the reputation of your startup. Whether a lawsuit happens due to a dispute between founders, problems with our employees, or complaints by customers, they can tarnish your credibility for good.
Product liability lawsuits are particularly dangerous for any business because they present your brand and products in a negative light. Similarly, employee disputes can present you as a negative employer that no one would want to work with.
Reputational damage is the last thing that any new business would want to face because you may never be able to recover and get back on your feet at this stage.
#5]. Legal problems are more common than you imagine
You may justify not getting legal protection by simply citing that your startup is at low risk. But the mindset itself is an invitation to trouble because legal issues with businesses are more common than you think.
Moreover, if you look around, you will realize that startups often fail due to the legal complications that face at the early stages. Lawsuits and other complications can slow down growth or even kill your business venture.
So it makes sense to invest in protection rather than live in fear of an upcoming problem. Being proactive about legal protection is essential for every business, even more, if you are just starting up. Having professional advice and guidance from the day you take the plunge can put you in a safe place.