The best advice I can give to anyone who is starting a new company is this: The most effective and least expensive strategy to reduce dispute and expensive litigation occurs when you are forming a new company. Unfortunately, the moment that business owners and entrepreneurs seem to have the least amount of openness to the advice of their business attorney is at the point where they are forming their new company. This paradox has always challenged new business owners. When forming a company, many entrepreneurs are boot-strapping their new venture, and want to put all available money into the new company or keeping it back to make sure they will make it through start-up. I understand that. I’ve not only helped hundreds and hundreds of new businesses come to life, I own a small business myself.
Here’s the challenge: the most common source of disputes and expense, and the risk to a new business is internal. Disputes between co-owners or members, or unexpected life events are the most common source of business disruption and litigation. The best way to avoid them altogether is to take a small amount of extra time in the beginning to ensure that your corporate documents are well crafted. If you are forming an LLC, do not “short change” the operating agreement. We literally take our new start-up clients through an extensive interview that anticipates every foreseeable contingency, so that we can structure the operating agreement in a way that facilitates their new business, contributing to the likelihood of success.
We anticipate the issues that will arise before they ever come up, and provide clear language and a process for resolving the dispute or providing valuation for an owner’s interest in the business. These issues are much easier to fruitfully discuss when a business is being started. Everyone is working together with one spirit and the conversation is usually much more enjoyable, easier and faster than at any time in the future.
Learn about the importance of working with our experienced business formation attorneys at the outset of your company. Work with seasoned business coaches who have helped hundreds and hundreds of San Diego businesses to start, grow and thrive. If you are forming a new company, or would like additional insight into your corporate documents, we invite you to contact us for a free and substantive consultation at 858-535-1511.