Rules of engagement
Going it alone can be tough. Teaming up with a business partner, or several, can be a great way to share the risks and get started faster – provided you put a partnership or shareholder agreement in place first. Preferably drawn up by a lawyer, it should specify how the business will operate and what your options are if one of the parties starts behaving badly or decides they want out.
Failing to document these foundational ‘rules’ could pose a great risk, Rennie says. “When things don’t go according to plan, or there’s a point of divergence, it can be a long, expensive and sad journey to resolution. And it may end in the business busting up.”
Put it in writing
It’s a good idea to make documenting your dealings with customers and suppliers a habit from the very beginning. Doing business on a handshake can seem convenient and cheap, but it’s a nightmare in the making. For example, when the other party’s memory of what was agreed differs from your own.
“If you take the attitude that any relationship or dealings should be put in writing, that’s a very strong base to move from,” Rennie says.
“We frequently see people complain about something not being done, paid or honoured and, with nothing to confirm what the arrangements were, seeking redress can be complicated and costly.”
Starting a business doesn’t have to mean getting bogged down in legalities. Educating yourself about the issues, taking an attitude of informed risk and finding a team of advisers whose expertise you can call on will help your business get off on the right foot.
Disclaimer: It is important to note this information does not represent legal advice and you should seek specific legal advice for your circumstances. We recommended Australian Business Lawyers & Advisors to help you find the right solutions for your business.