Launching a business is exciting, but new entrepreneurs are prone to leaping before they look. Know what you're getting into.
The struggle involved with initiating a startup can feel all-consuming.
Developing the idea, engaging with others, securing funding, refining concepts, and implementation require the majority of an entrepreneur’s time.
While these are essential components to developing your startup, it is also necessary to spend time planning to protect what's being built.
This begins with protecting your idea, hiring the right people, and guarding your personal finances.
Protecting Your Idea
Intellectual Property is an intangible, but important component of your startup that must be protected. It can include patents, copyrights, trademarks, logos, and registered designs. Your company needs a policy that covers establishing intellectual property rights, chronicles the steps taken to ensure their security, and recourse when people fail to respect them.
Begin by completing trademark and patent searches to make sure the idea and specifics you want to use for the startup haven’t already been claimed. If they are free, file your paperwork as soon as possible. This needs to happen before you put the idea out into the public and begin discussing it openly with other people.
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Asking people to sign over intellectual property rights to the company can feel uncomfortable when you're building a business together. In the beginning, everyone is enthusiastic and it’s difficult to imagine everyone not being on the same page. The reality is, people and circumstances change. It’s important that at every step along the way the intellectual property rights are assigned to the company so the startup is protected from issues further down the line.
The question of who needs to sign over those property rights is easily answered. Everyone who works on any aspect of the development of the company. Founders can wander off and employees may want to take the idea they come up with and start their own startup. By assigning the rights to the company rather than to an individual, the company is protected.
Secure Your Data
At the same time, you must protect your data. Startups and small business owners often mistakenly believe their data would be of no interest to hackers, and fail to employ an adequate IT team to construct and maintain data security protocols. You may believe that antivirus software will be enough to protect your data. It's not. There are many cloud-based data management companies that can help smaller businesses set up security procedures that will more fully protect their data.
Businesses can also improve their data security in-house. In great part, this relies on consistent management techniques. Keep your software current. Frequent updates are necessary to secure your network. Backing up computers and networks is the next component to internal security. Even the most secure system can experience a power surge or hardware damage. If the data stored on those systems hasn’t been appropriately backed up, all of the information can be lost. Ideally, backups should be stored offsite for optimal security.
Hire the Right People
Finding employees you trust can be a challenge. Hiring the right person for an open position is more complicated than simply filling out a help wanted advertisement in an online database, at least it should be. The first step is to outline the core values of the company. If there is more than one person involved in the startup, it’s essential everyone discuss what values new employees need to embody. Outline, discuss and revise until everyone is on the same page and then winnow out candidates who don’t match, regardless of their skill set.
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Once the values and attitude needed have been established you have to decide where to recruit. It’s possible to join a massive job board and hope for the best, but some of the best talent isn’t sitting around stalking the newest openings. Consider advertising on your own website and using social media to spread the word, or look for perspective candidates on LinkedIn or niche job sites. When you find a good match, move fast. Make an appointment to interview prime prospects before they are snapped up by the competition.
When the candidate pool has been narrowed, it’s time to look beyond education, experience, and compatibility. It would be ideal if everyone could be trusted to tell the truth about themselves and their experiences, but the gulf between ideals and reality is wide. Background checks are essential regardless of the size of the business. Every component of creating a secure environment rests on the trustworthiness of the employees.
Find an attorney that fits within the defined parameters of your company’s culture. Choose an attorney with experience, authority in the industry, case history, and client reviews.
Many new startups are in the on-demand services industry. Some of the most well-known include Uber, TaskRabbit, GrubHub, and SpotHero. These kinds of startups require a different kind of protection because their workforce is made up of independent contractors rather than traditional employees. Legal counsel will make sure your contracts and agreements are appropriate to your business, even if you're working in a relatively new industry.
Protecting Your Bank Account
While protecting the various aspects of your startup are vital for your business, you also need to protect your personal finances. One of the most important steps in protecting your personal wealth is to establish business credit. There are several reasons to do this, the most important being if the startup falters at any point those involved in starting the business will limit the impact on their personal finances. Established business credit also looks good to potential investors and it can make it easier to borrow larger sums.
Another resource to consider is credit insurance, sometimes referred to as receivable insurance. Essentially, a business purchases an insurance policy that will pay a set amount if a customer fails to pay their bill. The maximum limit directly affects the cost of the policy so it is important to be realistic about what must be covered and the premium the company can afford. As a new startup, it is unlikely your business will have the financial cushion needed to absorb losses. If the money is available for this type of insurance, it can be the difference between success and having to close the doors.
Most entrepreneurs have no idea what they are getting themselves into when they decide to develop their awesome idea. Initiating a startup requires careful planning that goes far beyond a stellar idea. Take the time to ensure you bring the right people in to help make the business a success, protect your personal finances, and keep your ideas safe. Then start working on the next great idea.