Legal Essentials for Growing Businesses

Welcome to another episode of Own Your Genius where we empower entrepreneurs to use their education and their experience to create dope stuff. I’m your host, Attorney LaConya Murray. Last week I was on a call, and they shared the statistics where 92% of women-owned business owners don’t make $100,000 a year. You know, that’s crazy. $100,000 a year. Less than $100,000 most of the women that are in business. And the thing that makes it crazy for me is like, I know that we are in this time where there’s a lot of noise on the internet and everyone’s telling entrepreneurs that a six-figure goal is too small, and they should be focusing on seven figures and how to run million-dollar businesses. But if we’re struggling, if we are struggling to make $100,000, how in the world are we going to make 1 million? That’s the question that I have. 

From my experience, many business owners are stuck in the launch phase of their businesses with no hope and no desire of reaching the growth or even the scale phase. So today, what we’re going to do is dive into the different phases of businesses with a conversation of what you should consider from a legal standpoint from each phase and whether you are just starting out or experiencing rapid growth, understanding the legal landscape is going to be crucial for your success. But before we dive into today’s episode, make sure you subscribe to the podcast, so you don’t miss any insight on how to own your genius.  

Welcome back to the Own Your Genius podcast where we discuss building businesses, growing brands and what else? Only your genius. I’m your host, Attorney LaConya Murray, owner of Off The Mark IP Solutions. Off the Mark is a boutique intellectual property firm representing innovative entrepreneurs aka geniuses who are looking to protect their brand and grow their business with ongoing legal support and business mentorship. We have a good one for you today, so let’s get started.  

When it comes to business, I believe there are four phases. They are the discovery phase, the launch phase, the growth phase, and the scale phase. Now most people are going to skip the discovery phase and head straight into the launching. And as somebody who’s guilty of skipping that discovery phase, I do not recommend it. It’s ghetto, do stop, do collect your $200. Do not skip that discovery phase because in that discovery phase, you’re going to learn your audience by talking to them and by trying different offers to learn the best way to really serve them. Because that’s what business is all about, right? Business is about finding a problem and offering a solution. And you want to make sure that the solution that you’re solving or the solution that you’re offering is something that they want. I believe that every business should start here in the discovery phase because market research is your friend. And in the beginning, it’s easy to make a lot of legal mistakes because you don’t know what you don’t know. So here are a few legal considerations to focus on during that discovery phase. The first thing I would say is business structure selection. You want to make sure that you choose the right legal structure, whether you’re going to operate as a sole proprietor, an LLC, a corporation or a partnership. 

Each legal structure has a different implication for liabilities, taxes and management. What I want you to do is go back to episodes 118 through 121 because we broke down each of the different legal structures so you can know the difference between them. So go back and listen to those. Another thing when it comes to the business structure is make sure that you consult with an attorney or a CPA, but actually not or, not either or, both, because an attorney’s going to tell you from a legal standpoint, and then that a CPA or accountant’s going to tell you from a financial standpoint which structure is going to be the best fit for your business goals. So not either or, but both.  
 
The second legal consideration during this discovery phase is making sure that you register your business. You want to make sure, even if you’re operating as a sole proprietor, you want to make sure that you’re registering your business name with the appropriate states and the local authorities. You want to make sure that you’re getting all the necessary licenses and permits based on your industry and location. You want to make sure that you’re also getting not just yours, on the state level registering your name, you want to make sure that you also have your business license and things of that nature. You want to make sure that you have your business register in all the places that is supposed to be registered. 

And the third thing is many people wouldn’t think about this in the discovery phase, but in this phase, you’re going to make sure you have written contracts. You want to make sure you have written contracts for your clients, your vendors and your partners. And most people don’t think about having written contracts with their business partners during the startup discovery phase because money isn’t being made but money is being spent and ideas are flowing. It’s important to have a conversation about how responsibilities will be split, how money will be spent, and to ensure that the assets that you build during this pre-launch phase are transferred to the company when it’s time. Make sure to check out episode 143 for more on contracts and collaborations. Make sure that whatever contracts you’re using that they include terms such as payment terms, deliverables, confidentiality and how disputes will be resolved because as I always say in the beginning when you’re entering into these contracts you like each other but if something goes wrong all of a sudden the other person can do no right so if we have something in the contract it just says hey this is how we’re going to resolve these disputes that’d be great. That was the discovery phase. Now that all that market research has paid off and you have refined your offer it’s time to officially launch your business onto the market. 

In this launch stage, you have some ideas of your business legal needs, but you can’t separate myth from fact. Here’s what to focus on. During the launch phase, you want to focus on intellectual property protection. You want to make sure your trademarks, such as your brand name, logo, and slogans are protected. And I know we’re talking about the launch phase, but remember, you don’t have to wait until you launch to file your trademark. You want to go ahead and get that done while you’re preparing to launch to ensure that your brand name, one, doesn’t influence someone else’s, and two, can be protected in the first place. When we’re talking about intellectual property, we’re talking about your copyright, so you want to safeguard your creative works, such as your blogs, your videos, and other content, such as podcasts, books, curriculum, things of that nature. It’s important to make sure that you and your contractors aren’t using random images and content from the internet because yeah, that happens, and it’s not supposed to happen. Let me say that. 

And then as we talk about intellectual property, if you’re inventing something unique, you want to explore the patent options. The other consideration that you want to have from a legal standpoint in the launch phase is making sure you read each contract. And if you’re not going to read it, make sure you hire someone to do it for you. It’s important to make sure that these opportunities, because once you’re in this growth, once you’re in this launch phase, people are going to begin to recognize you and they’re going to see what you do. And then like, hey, bend here or come speak here or do this. 

These opportunities, right, will appear. I talked about opportunities in a previous episode, but you want to make sure that it’s aligned with your long-term goals. And you also want to make sure that your interests are protected when you’re working with these people. And you want to make sure that your money’s not funny. You want to read those contracts, people.  

And the third thing you can focus on during this launch phase is separating your business from your personal. Listen, if you have asked someone in the state to see you and your legal structure as separate entities, then you need to act like it. You need separate bank accounts, a designated business line, and office hours. Just separate yourself as much as possible from your business. And you can listen to episode 122 on how to maintain your limited liability. And that goes for whether you’re a limited liability company or a corporation that’s been granted limited liability status. Listen to episode 122 for more on how to maintain that. But it’s really important to from a legal standpoint, focus on keeping your business and your personal separate. Now in this growth phase, that third phase of business that I was talking about, your community, your customers, and your income are expanding, and that’s just awesome, right, you are doing more outsourcing, but it still may feel a little overwhelming with the amount of work you’re required to do to not only run the business, but grow the business as well. The challenge during the growth stage is ensuring that your legal protection keeps up with your business growth.  

Here’s what you should focus on during that growth phase. Employment matters because again you’re growing so you’re working with more people, you’re hiring a team, are those team members employees, are they contractors? It’s important to understand labor laws, wage requirements, and employee rights. And you want to make sure that you have the right paperwork in place when you’re working with that team member. If they’re a contractor, make sure you have a contractor agreement. If they’re employees, make sure you have employee contracts that establish clear policy.  

The other thing during the growth phase is contracts. As your client base expands, you want to review and update your contracts on a regular basis because what got you here, how you got here is not how you necessarily need to stay. You want to ensure that the contracts you’re using reflect your current business practices and protect your interest. And during this growth phase, now is a good time to have an attorney on your team. You want to start looking at ongoing legal support to help you manage all the legal stuff you have going on from managing your intellectual property portfolio to ensuring that you are properly classifying your team. Now one of the things that we offer at Off the Mark for our clients who want ongoing legal support, we offer free document review, free consultations, and a discount on legal services when they retain us for ongoing legal support, and that’s through our Genius Insider program. If you are interested in that, that’s something that you’re like, hey, I need that. We’ll make sure to drop that link for you. 

The final phase in business is the scale phase. And at this point, it’s like time to reap the benefits of your hard work. It’s time for you to stop working so hard and you’re stepping out of that, of doing all the things and managing all the things and stepping more into that CEO role and doing more hiring, building a team that can take the responsibility. And I think this team is a little bit different than the team that’s in the growth phase. In the growth phase, your team members probably look more like task checkers, you give them tasks and they do it. When you step into that role of CEO, it’s important to hire people that can own the responsibility for their roles. You’re also going to be implementing systems during this time to make efficient use of your team’s time while creating a uniform way of running your business. 

Now let’s address the legal essentials for scaling your business. The first thing I will say is compliance and regulations. You want to make sure that you stay informed about industry specific regulations, data privacy laws and tax obligations because those things change constantly. Compliance photos can be costly, both financially and reputation wise. And your business doesn’t want to, it doesn’t want to have to deal with that. You also want to make sure when you’re in this scale phase that you’re exploring strategic partnerships, collaborations and joint ventures. Make sure that when you’re exploring those ventures though, that you draft partnership agreements that outline roles, responsibilities and profit sharing. And the final thing you should think about as you enter the scale phase is what’s the end goal? What does this look like? And what happens if you get hurt? You want to be planning your extra strategy. You want to plan for the unexpected. What happened to you? You want to plan for the unexpected. You want to think about whether you want to sell your business or retire. This is going to be a long-term legacy that you want to keep in that family brand or if you want to sell it to someone and let them do what they do with it. So those are three things you need to consider when you’re in that scale phase. You want to make sure that succession planning is on your to-do list and that you have exit agreements. Thank you for tuning in to this episode of Own Your Genius.  

Remember, legal matters are not obstacles. They’re just opportunities to protect and grow your business. Make sure you consult with an attorney who specializes in the area of law that you need, whether it’s business law, intellectual property, employment, to navigate those complex aspects of the law. Geniuses, what are your takeaways from this week episode? Make sure you drop it in the comment. If you find today’s podcast insightful, share it with your fellow entrepreneurs, and don’t forget to subscribe, rate, and leave a review.  

Let’s take this conversation over to the Markedlegal Community. I want you to share this episode with three people and have them meet you there. But you know what to do before you go. Make sure you hit that subscribe button and rate the podcast. Until next week, I want you to keep building your business, growing your brand, and owning your genius.