5 Ways to Draw Up Winning Plays for Your Business
Here is how to use your legal team to get proactive and win in business.
Legendary Alabama football coach Paul “Bear” Bryant is credited with coining the phrase, “Offense sells tickets, defense wins championships.”
That may or may not be true on the football field, but in business, it is dead wrong. In business, if you are constantly playing defense, you are letting someone else dictate your strategy, tactics, and resource allocation. You are not winning.
A business can implement its legal counsel or a legal team through both defensive and offensive strategies. A defensive legal strategy may help your business and brand when it has already been exposed to risk or becomes involved in a dispute or lawsuit. An offensive legal strategy, on the other hand, can reduce costs, give your business a competitive advantage, further your business goals, and even generate revenue. It could be the one thing that keeps your business alive!
Just like every team needs a good offensive strategy to win, your business needs an offensive legal strategy to thrive. Recently, I spoke with Ashley Smith, a great business attorney, to get her insights on how to use legal to draw up winning plays for your business.
1. Corporate governance: Critical to protection from personal liability
Many businesses take on entity formation without hiring an attorney. The actual process of registering your business entity with your state may not be difficult, but there are aspects of business formation, corporate governance, and ongoing legal requirements to ensure that your entity status is not jeopardized if you do eventually find your business on the defensive end of a lawsuit. Not following the proper formalities for your business structure could result in a plaintiff piercing the corporate veil, exposing the corporate officers or LLC members to personal liability or other legal issues.
2. Exit strategy: Start with the end in mind
Entrepreneurs are great at starting new businesses. But sometimes they fail to consider how to properly leave or sell a business. When a partner, shareholder, principal, or member exits (either voluntarily or involuntarily), the business’s ability to continue to operate at the status quo could be threatened. An exit strategy should be determined at the formation of your business, not when you are ready to leave. In fact, startups often cannot raise money from outside investors without first having an exit strategy. A well-designed exit strategy will increase the value of your business and help keep your business focused on making returns. Work with your legal counsel to explore the various options best-suited for your exit strategy. Some exit strategies to discuss with your legal counsel could include:
● Initial Public Offering (IPO)
● Merger & Acquisition (M&A)
● Retaining ownership, but finding someone you trust to run the business
● Cashing out by selling to an ideal buyer who can help scale the business
● Selling to a co-owner, employee(s), or family member(s) over time
● Liquidating and closing based on a strategy you created long before deciding to shut the
3. Intellectual property (IP): How smart is your business?
Your IP is one of your business’s most valuable assets, so securing your business’s IP rights is one of the best legal offensive strategies you can implement. Your IP sets your business apart from your competitors, provides revenue and grows your brand. Intellectual Property law includes: (1) patents, (2) trademarks, (3) copyrights, (4) trade secrets, (5) licensing, and (6) unfair competition. These can be complex areas of law and may require an attorney who specializes in Intellectual Property law. While some businesses attempt a do-it-yourself approach to their IP, the United States Patent and Trademark Office strongly discourages such attempts. Just because you can do it yourself does not mean you should. By working offensively with your legal counsel, you can properly protect your IP, enforce your rights against infringement, earn royalties through licensing, and earn revenue by selling your IP.
4. Contracts and agreements: Understand, agree and commit (UAC)
Drafting a contract is not something you should attempt to do on your own because you could run the risk of creating an unenforceable agreement that does not protect your interests. Importantly, the party who drafts the contract, or has the contract drafted by an attorney, has the advantage of setting out the initial terms of the agreement between the parties. Ask your legal counsel or legal team to draft your contracts and agreements when possible to ensure your interests are protected and that the contract provisions work in your favor if a contract dispute arises. If you are asked to sign a contract, always have your attorney review it before signing it. Whatever you pay an attorney to review a contract is far less than what you will pay the attorney to defend you in a breach of contract action when you discover the contract has terms you cannot keep.
5. Relationships: Involve your legal counsel in business moves sooner than later
Having a professional relationship with your legal counsel or a legal team is the best offensive strategy. Creating such a relationship may require having an attorney on retainer, but it also allows you to contact your attorney at any time to include him or her in your strategic decisions. When you seek out legal counsel in your business decisions, you will better understand how to minimize your business risks.
As a business owner, you cannot claim ignorance as a defense, so start by having a smart offensive legal strategy. If you view your legal counsel as a critical member of your business team, you will have an advantage over your competition that fail to use legal as an offensive strategy, and you will level the playing field with those competitors who also recognize the value of their legal counsel. Insure from now one you look at using your legal as a great offensive strategy for growth.
Entrepreneur Editors' Picks
James Dyson Created 5,127 Versions of a Product That Failed Before Finally Succeeding. His Tenacity Reveals a Secret of Entrepreneurship.
7 Meaningful Ways Your Business Can Honor Memorial Day
Breast Implants Left This Founder With Debilitating Symptoms, So She Launched an Intimate-Apparel Line That Goes Beyond Buzzwords
Kids in the Hall's Bruce McCulloch Says TikTok Is the New Punk Rock
'I Am Not a Diversity Quota,' Says the Founder Disrupting the Dessert Category
Memorial Day Is a Time for Remembrance, So What's With All the Mattress Sales?
Pharrell Williams, Contemporary Artist Nina Chanel Abney and Brand-Builder Shaun Neff Announce Launch of Game-Changing NFT Platform