Small businesses are feeling optimistic about 2014, with the majority projecting growth despite some uncertainty about the economy, reports Rocket Lawyer’s latest Small Business Survey. In order to promote that growth, small business owners are focusing on marketing and branding. More than 40 percent of respondents say that’s their top priority for this year, far ahead of developing new products or services (13 percent), hiring (6 percent) or international expansion (2 percent).
But if your marketing efforts pay off and your business grows, one area you may wish you had focused on as well is legal protection.
In 2013, more than half of small business owners in Rocket Lawyer’s survey say they consulted with an attorney. What prompts small business owners to get legal help? The top concern is complying with government regulations (cited by 26 percent), but debt collection, lawsuits, incorporation, trademark or patent issues and theft or fraud were also named as key legal worries that small business owners have sought help with.
You don’t have to be a bigger business to face these legal issues. My company is tiny and we’ve dealt with every one of those issues except for theft and fraud. What legal lessons can you take away?
- Educate yourself. The law intimidates many of us, but it doesn’t have to. There are many online legal sites that can help you get a handle on legal issues, offering resources, articles, templates, legal forms and other tools to help you tackle simple legal matters such as filing for trademark protection on your own.
- Always use a contract. I’ve learned the hard way that no matter how well you think you know someone, you need a contract to protect yourself and your business. Of course, simply having a contract isn’t a panacea—nearly 40 percent of small businesses in the survey reported having legal problems with contracts in 2013. Make sure your contract is clearly written, outlines the scope of work and payment, and covers all the possibilities that could go wrong. Consider using online templates to draft contracts for the basic business situations you’re likely to encounter, then having an attorney review and fine-tune them to make sure they’re complete. It’s worth the money.
- Incorporate? Maybe. For many small business owners, incorporation is worth it for the legal protection it offers your personal and business assets. Some say incorporation isn’t necessarily right for every business. (I think it is.) Talk to a trusted advisor as well as your business’s accountant to discuss the options for choosing a form of business.
- Know what to expect. The key to staying out of legal trouble is to think ahead at every stage of your business. From naming your company and designing a logo to negotiating a lease for your new business and hiring your first employee, entrepreneurship is ripe with legal traps that can trip up the uninformed. It’s crucial to know what your legal rights and responsibilities are at each stage of business development. Working with a trusted business advisor such as your SCORE mentor can alert you what to expect and what steps you must take to protect yourself, your business and your assets.
Don’t have a SCORE mentor? Visit www.score.org to get one today and get free business advice 24/7.