● The number of women-owned businesses rose 21%
● Revenue grew 21%, and
● Employment by women-owned businesses increased 8%
But even with the tremendous progress, potential roadblocks remain that every woman entrepreneur needs to tackle. And legal space is one area that needs close attention. And this is why.
Legal frameworks can be a thorn in the flesh for entrepreneurs. And no matter how great your business is, it can't be executed outside the law. In fact, the survival of your business depends on giving this area the time, attention, and resources it deserves from the early stages.
To set you on the right path, here are five legal tips for high-growth businesses to keep in mind.
Set Up The Right Business Structure
The business structure you choose can have a huge impact on your growth. Setting up the right one means you understand the benefits and drawbacks of sole proprietorships, LLC, corporations, partnerships, and S Corporations business structures.
For example, choosing a limited liability company (LLC) or a corporation over a sole proprietorship can be beneficial. The law views such a business as a separate legal entity from the owner.
Although the cost of setting up these business structures can be high, it's well worth it. First, you limit your personality liability risk. And secondly, more investors are more likely to support your venture. This can propel you and your business to greater heights.
Say No To Handshake Agreements
Got your first client? Congratulations!
But don't let the excitement get in the way of having contracts signed. Whether you're dealing with friends or family, say not to handshake agreements.
Make sure you have written agreements that describe what products or services you offer, for what pay and other ground rules such as when you get paid, and what happens when a customer defaults.
Protect Your Brand And Work
Many entrepreneurs wait until they become established to register their trademarks. But this strategy can be very costly.
Seasoned investors know that the earlier you register your trademarks the better. Apart from preventing others from stealing your intellectual property, trademarks also protect you from infringing on other peoples' property.
Take Sara as an example. She built a successful retail business for two years. She spent a lot of money marketing her business, built a website, and even created a perfect logo based on the name of her business.
But when she went to register, she discovered another company had already taken the business name and trademarked it. Sara was forced to change the name of her business and spend another deal of money on rebranding. Don't make the same mistake.
Don't Cut Corners
The repercussions of not putting your legal house in order can be devastating. Square, an e-commerce startup was hit with over half a million-dollar fine for doing business without a money transmission license. And fines are just the tip of the iceberg.
The damage you and your business suffer by hurting your reputation can be irreversible. Once customers walk away, they may never look back.
So make sure you're covered and you're not breaking the law. Even if the urge to keep up with competition intensifies, don't cut corners. Work with a reputable legal advisor to ensure you're operating within the law.
Budget For Legal Spend
A lot of entrepreneurs mistakenly assume they don't have the same legal commitments as established companies. They believe legal issues will only arise as they grow. And as a result, many don't budget for legal spending. This can cost you your business.
Industry experts recommend setting aside funds for legal fees. These costs can end up being more than expected due to case complexities, bonds, license fees, the constant back and forth, and other factors.
It can be beneficial to speak with other women entrepreneurs who have dealt with legal challenges to get a better estimate and learn other issues facing women-owned businesses.