Having a great idea is just the tip of the iceberg when it comes to starting a new business in Denver. When planning for success, it’s definitely an uphill battle: 20% of small businesses fail in the first year of operation and 50% fail by the fifth year, according to the Bureau of Labor Statistics’ Business Employment Dynamics.
While there is no way to guarantee success for your business, there are legal measures you should take as soon as possible to reduce some of your risk. Here are 6 legal documents you should craft right away:
- Comprehensive, well-thought-out business plan. This document should include your business goals and how you plan to achieve those goals. Besides an executive summary and overall description of your business, this plan should also include information on your competitors, an analysis of your financial projections, hiring practices, operational plans and strategies for marketing.
- Legal structure document. Will you run your business alone (sole proprietorship) or will you have a team of executives (partnership)? Perhaps you want your company to be owned by shareholders (corporation). In some cases, it is more beneficial to set up a limited lability company (LLC) that combines features of both corporations and partnerships. There are tax ramifications and reporting laws for different types of structures. A Denver business plan lawyer can help you determine the right structure for your goals.
- Employment documentation. Every employee should agree to an employment contract (preferably written) that outlines compensation, benefits, job responsibilities, job title, termination rules – every single aspect of their employment with your company. This will protect both parties in the event there is any type of job dispute.
The employee should also be provided with a handbook to outline your employee expectations, job rules, employee rights, discrimination or harassment protocols, job safety and more.
- Confidentiality documents. Having every employee and all business partners sign non-disclosure documents will ensure that your proprietary information will not be shared with your competitors or the general public. Even if you are partnering with (or employing) your very best friend, there is no way to forecast how personal relationships may shift in the future. This document will provide a layer of protection for your trade secrets.
- Non-compete document. Your business may have proprietary information that you want to be kept strictly confidential. By having employees and all business partners sign a non-compete agreement, you will be taking one more step to protecting your confidential secrets. This document can also restrict an employee for working for one of your nearby competitors for a specific length of time.
In the initial stages of creating your business, some of these forms may seem like overkill. However, by planning in advance for bumps in the road that may threaten to ruin your success, you’ll be one step closer to taking your company past the 5-year mark…and well beyond.
It is highly recommended that you enlist the help of a business planning attorney in Denver to help you draft comprehensive documents to protect your business. The team at Brown & Crona, LLC know how to get you thinking about potential pitfalls and ways to avoid them. Call us today at (303) 339-3750 or visit our website.