Growing a business is an exciting milestone for any entrepreneur, but it’s not always as straightforward as it seems. Legal considerations are crucial. Joining us on the latest episode of The Small Business Show to discuss business growth and legal aspects you need to know is Latrice T. Smith, Esquire, the Founder and Principal Attorney at Thomas Law and Consulting.
Key Takeaways
1. It is crucial to establish a business with a solid foundation and clear agreements that reflect partners’ intentions and responsibilities. Smith emphasizes the importance of creating and operating agreements that anticipate future growth and potential disputes among partners.
2. Different legal considerations apply to businesses based on their nature (e.g., service-based vs. tangible product-based). Examples include:
- Vendor agreements.
- Lease agreements (for storefront businesses).
- Understanding legal implications related to expansion into new territories.
3. Additionally, Smith notes that strategic planning for growth involves negotiating contracts with growth in mind (e.g., considering larger spaces, exit strategies, and vendor capabilities for future growth). Entrepreneurs should also consider taking into account legal considerations regarding employee roles, compensation structures, ownership options, and access to sensitive information (e.g., patient data in healthcare businesses) if they want to grow.
4. It is advisable to seek legal counsel early in the business formation process for guidance on agreements, compliance, and strategic planning. Highlight the role of attorneys, accountants, and other experts as essential partners to ensure legal compliance, optimize agreements, and support business growth without incurring unnecessary costs.
5. In her discussion, Smith addresses common legal challenges, including trademarks, non-compete agreements, and intellectual property protections. She emphasizes the importance of balancing and protecting business interests while also supporting employee growth and career development. Additionally, she highlights new entrepreneurs’ common mistakes, such as failing to prepare for growth, lacking strategic planning, and hesitating to delegate responsibilities.
"Having a strategic plan in place to guide you through the process and building on those partners as soon as possible... You want to have an attorney reviewing those agreements, setting up your employment for success, and an accountant to help you with those tax things." – Latrice Smith
