With more and more people starting their own businesses, the startup community is rapidly expanding; but research shows that 9 out of 10 startups fail before they even reach market. We sat down with Hani Al-Dajane from Emerge Law to identify the factors that helped him succeed on his startup journey. Hani is a successful entrepreneur and owns his own law practice. He provides custom tailored and cost-efficient solutions to startups and small businesses. As an entrepreneur himself, he understands his clients. He works diligently to ensure they are given best quality services.
From the vantage point of a lawyer who has been through the startup stage, here is Hani’s top advice for every entrepreneur out there:
Takeaway #1: Create a shareholder agreement
A shareholders’ agreement is, as you might expect, an agreement between the shareholders of a company. Its purpose is to protect the shareholders’ investment in the company, to establish a fair relationship between the shareholders and govern how the company is run. Hani recommends incorporating a vesting schedule into the shareholders’ agreement to help the founders ensure that significant stock ownership doesn’t fall into the hands of parties not actively participating in the company. A vesting schedule is a critical vehicle for rewarding those who work tirelessly to make a startup great while keeping significant possession out of the hands of those who depart early in the process. It’s a must-have for founders who want to protect the future of their company.
Takeaway #2: Find the right business structure for your company
Of all the choices you make when starting a business, one of the most important is the type of legal structure you select for your company. Not only will this decision have an impact on how much you pay in taxes, it will also affect the personal liability you face and your ability to raise money. Some common types of business entities include sole proprietorships, corporations, partnerships and cooperatives. It is always recommended to seek counsel from experts when deciding the right structure for your business. Apply for our next Start Up Program cohort to learn more about business models, and which might be the right fit for you!
Takeaway #3: Make sure EVERYTHING is in writing!
People will say what they think you want to hear. They will agree with you verbally, but if the contract doesn’t say it, they might change their verbal agreement when it fits them. It doesn’t matter how long you’ve known someone or how nice they may seem, make sure you get everything down on paper. As the famous saying goes, it’s better to be safe than sorry!
We are excited to announce that ICUBE has partnered with Emerge Law to provide our patrons with access to top quality legal services for their businesses!
Emerge Law offers advising on matters ranging from formation to exit including equity compensation and intellectual property, employment litigation, and purchase and sale of businesses. For more information check out the firm’s official website at www.emergelaw.ca.