Before you meet with your attorney to discuss legal and business strategies for your startup, do your homework so that you can maximize the value you gain from the consultation. Here are five concepts you should be familiar with and tasks you should complete before you meet with your attorney:
Write a Strong Business Plan
Your business plan should communicate your business goals, how you plan to achieve your goals, potential obstacles and strategies to overcome them, an analysis of the potential markets for your product and your main competitors, how you plan to market your product, your company’s organizational structure, and financial projections.
Each section of your business plan should be thoroughly researched and based on a deep understanding of the key issues from both a business and technical perspective. You want to build a solid business plan that will win over potential investors, business partners, employees, and customers.
Choose a Business Location
There are numerous factors to take into account when choosing a location for your company. If you are in a heavily regulated industry such as energy or environmental technology, you need to think about which locations will allow your type of enterprise. Carefully research regulations and zoning laws. After you have determined which locations are possible from a regulatory standpoint, ask yourself how your company’s location could affect its success. Given the nature of your business, the type of product it sells, and the demographics of its clientele, what is the optimal location? Where are your potential customers, employees, suppliers, and investors located? Is geographical proximity to them required? Factor in the variations in rent, salaries, and operational costs. In addition, think about how the tax rates in a given state or city could affect your company’s profitability.
Decide How You Will Finance Your Business
Determine how much capital you’ll need to operate your business until it begins to generate profit. Decide how you plan to supply that capital. Will you use personal savings or take out loans from family, friends, banks, or government agencies? Will you keep your day job and run your business on the side, or will you quit your day job and devote yourself full-time to your venture? Do you plan to get capital from angel investors or venture capitalists? Do you plan to use crowdfunding? Over the longer term, do you wish to sell your company, go public, or keep your company privately held? When creating a financing plan, think about your long-term goals.
Learn About Entity Types
Think about whether you want your company to be a C Corp, S Corp, LLC, or LP. Different entity types offer different fund-raising potential, tax features, management structures, and legal and accounting costs. Your choice of entity type depends on your goals for your company. For example, if your company is a tech startup that will be seeking outside investment in the short to medium term, the C Corp structure is the best choice. A C Corp can issue multiple classes of stock to an unlimited number of shareholders who can be foreign or domestic individuals, partnerships, or corporations. A C Corp is much more flexible in its fund-raising ability than an S Corp, LLC, or LP. Thus, a C Corp can access capital from venture capitalists, crowdfunding, and foreign investors. While you should consult with an attorney before choosing an entity type for your company, you may want to educate yourself on the basic features of each entity structure before meeting with your attorney.
Familiarize Yourself with Startup Basics
Before meeting with your attorney, do preliminary research on the basics of setting up a new company so that you don’t have to use up valuable consultation time on routine questions and can focus on strategic issues. Familiarize yourself with the following topics:
- Registering a business name.
- Getting a tax identification number.
- Registering for state and local taxes.
- Applying for business licenses and permits.
- Your responsibilities to your employees.
- Protecting your company’s intellectual property.
- Getting adequate insurance to cover your company’s needs.
By taking the time to educate yourself on the fundamentals of setting up your business before meeting with your attorney, you will save yourself time and money over the long run. You will be able to ask targeted, strategic questions of your counsel and accomplish your goals faster if you come to the meeting prepared.