“Penny wise and Pound foolish” was a phrase I heard constantly growing up in a home connected to my parent’s corner shop in England or later their hospitality business in Mississippi. I find this phrase motivating in my 14-year law practice in giving small business owners a refined, focused, and deliberate contract rather than the boilerplate, one-size-fits-all downloads that I often see when a business owner urgently needs my help after a critical issue arises from these online turnkey templates.
After numerous years of serving small business clients in the aftermath of a failed business transaction, disputes regarding the agreement, and costly litigation, a common question that, without fail, follows such tragedy: How do I avoid these types of scenarios and the often inevitable and unfavorable results that follow?
The answer to this question takes me back to that proverb echoed by my parents throughout my childhood, and I reiterate the importance of engaging the assistance of an experienced business attorney at the beginning of a small business dream.
There are several must haves for starting a small business:
- Business Contracts (Terms and Conditions) – Providing a service? Or Selling Goods? A customized contract that is prepared for your business is critical. It can be incorporated into your price quote, added before entering an online payment portal, or a stand-alone agreement for each of your customers to sign.
- Service Contracts and Independent Contractor Agreements – Is your business receiving services provided by another company or an individual that is not an employee? Be specific and outline all aspects of the agreement and expectations that either party may have. Transparency is priceless.
- Release of Liability – Does your business need its patrons to sign an agreement to release it from any injuries or damages that may be sustained? Or, how about protecting your business from unknown events i.e., COVID-19 disruptions. DIY downloads are not always State specific and fail to protect your business if it Is not customized for the service or activity you offer.
- Lease Agreement – The benefits of well-prepared real property leases, equipment leases, or a lease for personal equipment to your business can protect not only your business with valuable protection, but it could also eliminate your exposure to personal liability.
- Non-Disclosure Agreement – Perfect to protect your business from competitors by having all potential employees, possible investors, interns, service providers or independent contractors sign this agreement that is narrowly tailored to protect confidential information that may be learned as you grow your business.
- Employment Agreement – Be proactive and smart by specifying the rights and obligations of all of your full-time or salaried employees.
- Non-Compete Agreement – The state specific laws with regards to non-compete agreements must be fully understood in order to prepare this agreement for it to be effective and enforceable. If employees of business partners competing against you could be detrimental to your business do not attempt to navigate this without an attorney.
- Employee Handbook or a Business Policy and Procedure Manual – Transparency is key to any successful business. Make sure your employees and/or independent contractors understand what is expected of them at all times.
You may not need to have everything on this list for your small business, but seek guidance as early as possible. Remember, “an ounce of prevention is worth a pound of cure.”
