I’ve been approached by a few startups lately who have questions about getting their business off the ground. After listening to their goals and business plan, I generally have a good idea of whether or not the company is ready to hire a lawyer. Sometimes they’re ready. Other times they aren’t. What’s the difference between these two companies, and why should you wait before you hire a lawyer?
You don’t have to have all your legal ducks in a row
The IRS probably isn’t coming after your small business. The local sheriff probably won’t penalize you for operating without a license. Hopefully, you haven’t done something serious enough to expose yourself to a lawsuit. Chances are, most people won’t even know your small business exists. A lawyer will help your small business navigate these requirements and avoid penalties, but seeking an attorney’s help isn’t the first step.
But, sometimes you should
Some businesses should discuss their business with a lawyer first. If you’re opening a bar, and you’ll be selling alcohol, you need a license. To get a license, you need a business entity. Chances are if you’re starting a business that needs a lawyer, you’ll know this, because it won’t be the first business you’re starting. Or you’ll be investing a significant amount of money into the business, so hiring a lawyer won’t be cost prohibitive. So, when should you wait to hire an attorney?
First, you need to know if your business will make money
Isn’t that the goal of your business? Before you invest the time, effort, and money into hiring an attorney and building the legal framework for your business, you need to find out if there’s a need for your product or service. Are people willing to give you money? Can this business support your lifestyle, or at least provide some income on the side of your day job?
Ultimately, the reason you hire a business lawyer is to reduce risk, protect assets, and increase profits. If your business isn’t going to be exposed to risk, maintain any assets, or earn any profits, then you probably don’t need a lawyer. Not coincidentally, it probably won’t be a very successful business, either. But at least you didn’t waste money on a lawyer.
Go out there and start your business. Market yourself. Sell your services. Spread the word. Hand out business cards. Attract clients. When your business starts earning money, then it’s time to seek professional help.