3 Questions Every Startup Entrepreneur Should Ask (During Business Formation)

Who’s in charge? How are we going to finance this? How can we protect our intellectual property?

Three fundamental questions every entrepreneur should ask during business formation. And, according to the lawyers who hold forth below on the answers: it’s not just a matter asking questions. You’ll need to follow through on answers, act on what you decide.

Here’s the startup scoop:

1. Agreements All Business Owners Should Have In Black And White (by Seth Hinkley):

“You may have planned how to start your new business venture, but have you specifically planned out how to run your business? What happens when it is time for the business to end, for whatever reason, good or bad? You don’t plan a vacation without planning what to do and how to get back home. Thus, you need to plan for all the circumstances that a business can encounter in it’s life cycle, and get that plan agreed to in writing and signed by all of the owners.

It’s necessary to have this agreement so that everyone involved knows, from the start, how things are going to go with the new enterprise. And if someone forgets, all you have to do is look to the agreement, which is a binding legal contract, for the answers. What happens if one owner gets an offer to buy their part of the business? What happens if one of the owners dies? What happens if one of the owners gets divorced? If there are only two of you, what happens when you disagree? These questions, and others, should be answered in these agreements…” Read entire article»

2. Financing Your Business Growth (by Laurel Edgeworth):

“Business owners know that it takes money to make money. One of the first questions a would-be entrepreneur must ask is ‘how will I fund my business before my business is making enough money to fund itself?’ One common solution is to inject capital from personal sources (savings, home equity, etc.), while another is to turn to outside investors. Some businesses are able to obtain funds from the Small Business Administration, through the 7A or other government sponsored programs.

Injecting start-up capital is only the beginning, however. Growing businesses frequently discover that their growth is hampered by lack of cash. Perhaps they wish to purchase a new piece of equipment, invest in a building, or grow receivables. Perhaps they want to take advantage of unique opportunities such as buying out a competitor or purchasing commodities during a market dip. In these situations, obtaining financing for your business can be critical in achieving your goals…”

Inlcudes an overview of trade trade invoices, equity finance, debt finance and other types of business financing. Read entire article»

3. Intellectual Property Basics – Overview of Copyrights, Trademarks, and Patents (by Tyson Snow):

An excellent 12-page primer covering all of the basic plus more. Includes an overview of intellectual property basics:copyrights, trademarks, patents, trade secrets, and other proprietary intellectual capital. Excerpt:

“The most important factor in determining whether injunctive relief or damages will be awarded for the misappropriation of trade secrets is whether the information is truly secret. The business must take steps to actively maintain the secret status of the business’ trade secrets. For example, visitors should not be allowed open access to areas where they can see or learn of trade secrets. Trade secrets contained in documents or embodied in physical materials should be kept locked up when not in use. The business should carefully control access to secret computerized data and use signs or other notices of restrictions on access. The business should also establish guidelines for disposing of materials describing or containing trade secrets, and should label sensitive documents as being secret…” Read entire guide»

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