Start-ups are often organized on the back of a recycled paper napkin from a spanking new kava bar, and many times this level of organization works out. Start-ups are often made up of friends, and rely on mutual trust to keep going. However, sometimes businesses go bad, and a little investment up front can save a lot of angst and money down the road.
The Business Agreement
This can be a very simple document, often only a few pages long. It sets out the goal of the business, who's part of it, and what everyone is probably going to do. A good firm, like ours, will also add in provisions for easy changes, since startups are fluid. We make sure everyone agrees, and our goal is always that everyone stays friends.
The advantages of this document are multiple. First, it makes sure everyone's on the same page. Second, in the event of an argument, it can settle things without any litigation. This, and most importantly, it can provide a quick and easy way to split profits, or debts.
To see the importance of this, imagine that your company gets $50 million in VC funds, and then a buy-out offer for $1 billion. Who can accept or reject that offer? How much would the guy who quit last month get? These problems can choose you hundreds of thousands of dollars if you don't have an agreement in place.
The Business Entity
Simple but important. What's an S-Corp? Which city do you want to get your business license in? How are investors protected? Most importantly, why are founder's shares important?
A good firm will help you give the right business entity, and give you counseling on business structure. A great firm will make sure their advice fits the dynamic of your business. Verbeck Law will do all that for jess than the process if a decent used car.
The Good Plan and the Bad Plan
The simplest and most important. Basically, what happens if you do really well? What happens if you go down in flames? More than anything else, creating these plans is a great exercise in making sure your team has considered the business aspects of their company. We serve as guides, experienced folk who've seen the lifestyle and can help you choose good paths.
For help on any of these starting business documents, give us a ring or shoot us an email. A starting document from a firm that gets start-ups is both cheaper and better than a pile of documents from a firm that doesn't.