business ideas

CHAPTER 2

Business Ideas and Plans

 

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You’ve got a great idea for a new business and you’re ready to think about the legal side of things – so what should you do now?

When you’re starting a business, you want to get your legals done properly. But when you’re first getting off the ground, it can seem like too much to think about right now. Or maybe you’re still too early in the ideas phase. We get it – starting a business is a huge step!

If you’re not 100% ready to commit to locking in your legal arrangements, you should at least start documenting everything in writing. This is especially important for co-founders going into business together, although it’s a good exercise for solo entrepreneurs too.

Start documenting

So you’ve got an idea or a business plan and you’re ready to start thinking about your legals. The best place to start is by writing things down.

If you haven’t already, you should put together some form of a business plan or simple outline of what you do. You should also make detailed notes of your most innovative or unique ideas. There’s a few reasons to do this:

Firstly, if you’re going to see a lawyer, accountant or other business professional, it will save you lots of time (and probably money too) if you can provide some simple documentation that helps quickly explain your business.

Secondly, the process of documenting will help you flesh out the details you may not have considered and identify risks and weaknesses in your business model. In this regard, it may be useful to have a look at the map we set out in the previous chapter and turn your mind to each of the key business areas we raised.

Thirdly, you may gain automatic copyright protection simply by documenting some of your ideas, as Australian copyright law automatically protects original ideas recorded in material form.

Get into the details

Work together, and brainstorm. Identify the risks you’re facing and possible strategies to deal with those risks.

You should also list the types of risks over which you have little to no control. It can be painful, but thinking about a worst-case scenario can get you thinking more creatively about problem-solving – there might be some things you can do to avoid such a scenario becoming reality. For things you can’t avoid, it doesn’t hurt to at least be aware of those risks so that there are no surprises down the line.

Business partnerships

If you’ve got a co-founder or business partner, it’s time to start talking about the details of your relationship and documenting it. This is really important , as many businesses have failed simply because the founders didn’t have the right conversations up front and were not on the same page about their roles and vision.

Here’s a couple of tips for these conversations.

Get into the details

Work together, and brainstorm various situations that may arise in the future and how you each want to deal with them. Some things to discuss include:

  • What will your roles and responsibilities be?
  • What are your business goals?
  • How do you want to structure the business?
  • How are you going to resolve conflicts?
  • What happens if a co-founder wants to leave?
  • How are you going to fund the start-up costs?
  • How are you going to make money?
  • Who are your customers?
  • What are you going to name the business?
  • How are you going to market the business?

Write it down

Once you have some of this stuff agreed on, it’s a good idea to get it in writing. Getting a lawyer to draft a co-founders term sheet or memorandum of understanding means that you’ll have these things in a clear, coherent format. A good lawyer can also help you work through the key things to consider and advise on what’s “normal” if you’re unsure about what options are available.

When you’re ready for your next step, you can use this document as a reference point for creating a more formal agreement such as a Shareholders Agreement or Partnership Agreement.

making a term sheet

In conclusion…

When you’re first starting out – maybe just with an idea – it can feel too early to think about legal issues. Talking through your plans with your co-founders is the best place to start. Then getting your ideas down in writing will provide you with a reference point for when the time is right to take the next step. If you need help with this whole process, feel free to get in contact with us and we can talk it through!

Interested in working with us?

Tell us about your legal issue and we’ll put together a fixed fee quote for you.

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