Starting a business: Things to think about and mistakes to avoid

Starting a business Things to think about and mistakes to avoid

Want to go in business? You have drafted your business plan and started to obtain a loan from your financial institution? Do you have lots of ideas and be very excited to get started on this great project?

First congratulations! Not everyone has the courage to become their own boss. Being an entrepreneur myself I understand this need and this feeling that drives us to create our company!

Many believe it is not necessary to contact your legal counsel when planning your business. In fact, many believe that a lawyer is only useful when dealing with a conflict or a violation of a law. However, the famous maxim “prevention is better than cure” applies perfectly to business law and even more to the stage of starting a business.

Here’s an overview of some of the key legal elements to consider when starting a business project. Neglecting these different aspects can have significant financial consequences for your business.

  •  The choice of the legal structure

There are several things to consider when it comes to choosing the legal form of your business. Is it better to proceed with the creation of a joint stock company or to have a sole proprietorship? Should I proceed with the creation of a cooperative?

The choice of legal structure will depend on a multitude of factors, such as leaving alone or with other partners, expectation of income in the first years, financial risks and risks related to the area of ​​activity.

Many entrepreneurs lost everything when their business was sued or the company could not afford to meet its financial commitments. Others had the unpleasant surprise of seeing the price that the bond of solidarity could really have. It is therefore important to choose the legal vehicle of your company.

We refer you to our article published here.

Once this choice has been made, it is also necessary to subscribe to a sufficient liability insurance cover.

  • The choice of the name of his company

It can be difficult to find a name for your business. We are usually looking for a name that is easy to remember and pronounce, which describes our products and services in an original way.

The challenge is also to ensure that the name is not confusing with the name of another existing business that operates in a similar or similar business line or with a trademark.

Once the name is found, the company usually acquires a domain name and proceeds with the creation of its logo, which should be on company letterhead, envelopes, business cards, site internet and promotional items.

However, if the name or your branding is confusing to a similar company, the latter may, properly, require that you stop using that name and / or branding and destroy all your promotional material. in connection with this name and / or this brand image. All will obviously be very expensive for the company which will have to question again on the choice of the name and its corporate image. The whole thing could also affect the notoriety that your company would have managed to acquire over time, under its old image.

Therefore, it is a good idea to consult a lawyer before starting this process to ensure that you can continue to operate your business under this name. There may also be a need to file a trademark to protect your name and image.

  • Establish the financial structure and shareholding of the company

It is more and more common for our clients to obtain financing from individuals, business partners or “financial angels”. It is important to establish with investors whether they want to invest in your business in the form of loans, convertible debentures or shares in your business. The whole obviously varied according to the chosen legal structure.

Some entrepreneurs make the mistake of wanting to accept too quickly all the conditions required by the future investor. It is important to check the possible alternatives and the form of investment that will be most appropriate for the company in the short and long term.

If the investment is to be issued in the form of shares in the capital stock of your company, it is possible to issue voting or non voting shares, entitled to preferential dividends or not. The issue of shares of your company must comply with the rules issued by the Autorité des marchés financiers, with respect to securities.

It is therefore important to think about the financial structure of your company from the start-up stage and to consult your banker, accountant and legal advisor at this level.

If you decide to go into business with other shareholders (corporation) or other partners (partnership), it is important to enter into an agreement between shareholders or a partnership agreement. See our article “To avoid the worst”. The goal is once again to avoid disputes with your business partners.

  •  Regulated sectors

There are a multitude of sectors covered by specific regulations. We can think among others professionals subject to the Code of Professions who must meet several requirements in the name of their company and in relation to the ownership of shares in their company.

There are also several areas where the company will need a license or permit to operate. We can think of the restaurant industry, travel agents, financial services, and so on.

It is therefore important to consult a lawyer to ensure that our business plan is well on the road and to avoid sanctions or infractions.

We refer you to our article “Do you have your license? For other examples where it is necessary to have a permit, published here.

  • Choice of premises

When you have found the premises of your dreams, you will already see the layout according to your tastes. However, before signing a lease it is important to think about the potential expansion of your business or its failure.

In terms of housing lease, there is a standardized document. However, in terms of commercial lease there is no pre-established model. In addition, if there is a multitude of rules for tenants to protect tenants, these rules are very different in terms of commercial leases. It is not uncommon for the landlord to offer a lease with many pages and many obligations!

Therefore, before concluding a commercial lease it is important to reflect on the short and medium term forecasts of our company. Do you plan to hire employees? Will additional space be needed in the future?

In addition, having your lease analyzed by your legal advisor prior to signing could save you a lot of surprises. Are you entitled to assign your lease? To terminate it? Do you have a personal bond? Can a competitor come to live in the same building? So many questions that may require a little negotiation with the landlord.

  • Establish good contracts

If you offer services, you will obviously think about your offer of services to make it attractive and different from the competition. To have good long-term relationships with your customers, it is very relevant to have a good service contract. This contract will allow you to avoid misunderstandings with your customers regarding the services to be rendered and your rates. In addition, having a good service contract can give a professional image to your young company.

I refer you to our ticket at this level “Service Contract”. This ticket includes a list of items that usually have to end up in a service contract.

If you offer for sale goods or products, it is also necessary to provide a good sales contract. The latter may provide the terms of return or exchange or your guarantees.

If you sell your products online, you should also take care to protect the confidential information of your customers transmitted online. One way to reassure your customers is to publicize your privacy policy on your website.

Your legal advisor can write these documents with you and avoid misunderstanding with your clients.

  •  Hiring employees or consultants

If you plan to hire employees or do business with consultants, it may be very relevant to enter into a contract with them. Non-competition and confidentiality clauses may be necessary to protect your business. It is often helpful to anticipate the duties and responsibilities of your employees or consultants, and to plan who will own the copyrights on the works created under the terms of reference.

Finally, you will be required to ensure the health and safety of all your employees while at work. Therefore, it is best to know the regulations and standards of health and safety at work.

Many are hesitant to hire employees or do business with self-employed workers. It is important to reflect on this aspect and to establish a work environment that will be consistent with this choice.

  •  Product design

If you want to proceed with the sale of a product, you will have to ask questions about the design of this product. Special care must be taken to ensure compliance with the Industrial Design Act .

The concept of industrial design includes visual features relating to the shape, configuration, pattern or decorative elements of an object.

Since the creation of an article requires effort and even more so the creation and marketing of the product, it is important to ensure that your product does not infringe any rights.

In addition, it may be relevant to register your industrial design in order to subsequently acquire protection to your advantage.

  •  Marketing and sales

When it comes to marketing and selling your products and services, you will need to meet certain standards, including those prescribed in the Consumer Protection Act , for example, if your target audience is individuals and not businesses.

Can you specifically name a competitor’s name in your ad? What do you need to indicate if you want to make a contest? Several rules are applicable at this level and it is important to know them well.

Finally, the regulations surrounding your industry may also contain rules regarding the marketing and sale of your services. Each case is therefore to be analyzed according to its particularities.

Conclusion

There are a multitude of other aspects that may need to be analyzed as part of starting your business. Each company being unique, it will necessarily have its own needs.

This article is an overview of some of the key things to look for when planning your business plan. Poor planning or poor knowledge of the risks that may arise in your business could jeopardize the survival of your business. Therefore, we recommend you to be very careful in the crucial step of starting your business so that it is a success. When we know all the risks to which we expose ourselves, we can better guard against them.

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