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Why You Should Care About building Your Business on A Solid Foundation

June 14, 2010

Last week I suggested questions to ask your business lawyer.  But let’s accept it – legal isn’t as much fun as working in your business, or marketing it.  Legal stuff just isn’t sexy.

 So, if like millions of other entrepreneurs, you are tempted to ignore the legal stuff, or to write it off as a lower priority in your limited start up budget, think again.  Remember the foundation of your home isn’t sexy either, but that’s not to say that without it your home would crumble beneath you.

Why starting up too soon can be the wrong move

It’s common when you’re starting up in business to want to focus on actually getting started so you can begin marketing your products or services.  In the rush to sort out business cards, a website, telephone, email, premises, and the like, it’s all too easy to forget that the right time to consult a lawyer is BEFORE you do these things.

 It is the exceptional entrepreneur who hasn’t already got their website under way before they come to see us.  Some even have an e-commerce site nearing completion, have already chosen a name, settled on their domain name, incorporated a company, commissioned a logo design, before even thinking about finding an Intellectual Property and Internet lawyer.  Usually they turn up for guidance about Intellectual Property rights, such as trade marks, or because they realise they need some website terms.  However what they are really after is legal documentation – and even then almost as an afterthought.

The idea that a lawyer might be able to add considerable value in getting you started up on a more successful footing isn’t there for the majority of start ups.  What a pity.  Because with the experience of life, business, and the law that many of us lawyers have, there are useful tips and know-how  we can pass on about how to start up in business or online successfully.

Risk of Infringing Trade Mark rights of others

Although to some extent this impatience to get up and running quickly is understandable, remember that starting too soon could get you off wrong.  You may then have to spend as much time again putting right your early mistakes.

For example, the sort of distractions you may face flow from choosing a name that may be someone else’s registered trade mark.  If you’re LUCKY this will come to light quickly after you start your business when you will have invested little more than a website, business cards, email address, and other marketing materials.  What will be involved is to effectively start over with a new name, and new marketing materials.  In the next blog post in this series, I’m going to share with you the story of how this actually happened to me personally.

The longer you continue investing in a name that you cannot own, the more serious will be the repercussions for your business if someone else has trade mark rights in your chosen name.

Equally problematic is setting up with utterly descriptive and non distinctive names.  A descriptive name may give you a marketing short cut in those early days when nobody knows you exist and what you do.  But what a waste of time it is to build up a business let alone an online brand using an utterly descriptive name.

 Risk of getting a website you have to scrap

Another risk is that of ending up with the wrong sort of website.  It is not unknown for people to have to start over with a new website once they turn their attention to getting it seen in the search engines. That is often when it is discovered the structure of the site is not effective for indexing by the search engines.  You then find your time and money and resources going in to having a new site built, instead of towards search engine optimisation.

Given that websites are often the biggest item of expense for start ups, and involve complex technology, it is surprising that so many people commission them without first taking legal advice.  If you end up with a flash site, when all you asked for was a good looking site, or an ecommerce site that alienates your potential buyers because it is so difficult to buy from, or other unsuitable website, then such a mistake could literally wipe you out.  The cost of a replacement site may be affordable for you, but the lost opportunity to get proper business benefits from your site should not be discounted – and the lost time in putting it right, could mean you run out of money before you can recover from this early mistake.

 Make sure you understand websites and the possibilities first

The majority of businesses commissioning a website do not have a clue about the choices and considerations that determine the right site for them.  They rely on snatched conversations with web designers instead of getting proper independent advice.  A website is a bundle of Intellectual Property rights.  So it’s important to understand the ramifications of the contractual arrangements you reach with your web designers, as this can have long term implications for your business.

If you know deep down that you’re not paying enough attention to the legal stuff – and for some of you this reluctance may be partly down to a fear of legal fees, or simply be a perception that legal is boring – then resolve to consult a business lawyer immediately.  You do know the legal framework on which you build your business matters, so stop distracting yourself with the next thing that will keep you from seeing what’s been staring you in the face all along.

British Library Course

We cover the issues discussed on this blog in more depth as part of our workshop at the British Library Business and Intellectual Property Center, follow this link to find out more. The next course is on 5 August.

What Next?

Register for the Free Teleconference to find out about our new system for assisting online businesses to access legal help at prices all SMEs can afford.

This post is part of a series, to view all of the posts in this series, please click here.