When starting out in business the first thing we often do is set up the relevant legal structures:
- Partnership agreement
- Logo design
- Business name registration
- Operating company
- Holding company
- Non disclosure agreement
- Holding company trust
- Member terms & conditions of product / web usage
- Specific bank account
- Small business book keeping software
- insert other legalese business recommendation here
Startup blog advice is this: Don’t waste your time or money. Get revenue first, register later.
With the only possible exception being a .com registration – which if you’re in the on line world may be an actual requirement to simply operate. No doubt this is contrary to all you’ve read in business guides. Sure, keep accurate cash flow books, run things professionally and stick to project deadlines. The reason for the recommendation is pretty simple. Most startups never get to revenue. If you’re like me you have a hard drive full of business ideas, half written business plans, and a spare room full of product prototypes. Until we have revenue (which doesn’t mean a couple of orders, it means thousands of dollars) we have nothing to protect. It also adds a strong reporting and administration burden which startups could well do without.
So why waste time and money building a fence around nothing? Build the castle first, or at least get the foundations in place. If we follow the lawyers advice, they may be the only people who ever make money from the venture.