Why is Knowledge of Law Quintessential to Entrepreneurs
So, all you entrepreneurs out there, you have struggled day in and day out to set up your dream organization. You have left no stone unturned to see to it that you give your best shot at whatever you are doing. You have hired the best available people to do the jobs best suitable for them, and things have finally started flowing as you had always dreamt them to be flowing. Things are finally turning out to be as you had envisioned, and lo, you hit a road block and here begin the rising tempers and piling files!
What road block am I talking of? The Legal Roadblock, people!
Whether we lawyers admit it or not, it is an established fact that lawyers are often treated as royal pains by business people and entrepreneurs. Lawyers are hired not because business people want to be law-abiding, but just because if they do not comply with that whole labyrinth of legal framework, they would be in some serious trouble. Thus, even before the startups start officially functioning, it would be no surprise to see lawyers buzzing around entrepreneurs, trying to deal with all the compliance work and the structuring of the business.
Not to mention, all of this is an inevitable burden on the per se shallow pockets of entrepreneurs. Legal advice and legal service are costly, and more so for startups. What’s the solution? Are Entrepreneurs legal illiterates? Is hiring of lawyers compulsory for startups? Is it risky not to hire lawyers? Not at all. It remains to be a matter of prudence to decide what has to be outsourced and what should not be. Be it anything, it wouldn’t harm anyone if Entrepreneurs equip themselves with some basic legal knowledge, if not become masters of Law and its processes.
Here are a few reasons as to why Entrepreneurs need to know a bit of law by themselves:
- To reduce costs: First things first. It’s a given that businesses are drivers of profits and none establishes a business to do charity. Thus, every little hole in there which facilities the trickling down of money needs to be plugged ASAP, in order that financial stability and growth are achieved by startups. And, equipping oneself with the legal basics would drastically help reduce legal costs which are normally incurred even before a startup begins to function. So why not learn the Law?
- To be in Control: You know it very well – No One On This Earth Knows About Your Startup Better Than You Do. You not only know of the strongest points, but are also acutely aware of the weak points. You are the sole person who knows the ins and outs of your startup. So, why throw your hands up when it comes to handling legal issues? Law ain’t rocket science and a little bit of patience to only read the documents would go a long way in enabling you to better control your organization. I am not advocating for you to attain law degrees, unless you really want to, but then, you could manage most of the compliance work by yourself, more so now than ever before, as the entire process of setting up of businesses has gone online, and there are tons of DIY legal toolkits available online, most of them free of cost!
- To Better Strategize: Take this – your lawyer very well knows how to structure an equity split, or how to draft the Joint Venture agreement. But, would s/he know the extent to which such structuring would personally affect you and your finances? Lawyers are subject-matter experts, but they cannot possibly stand in each of their clients’ personal shoes and assess the situation as if their clients’ business is their own. In fact, may be this is why it is said that you take legal advice, not guidance. They only advice, and once they are done with it, the ball rests in your court. It is you who should decide what’s best for you and your startup, and accordingly strategise.
- To be in the Loop: How far can you trust your lawyer? What if, God forbid, your competitor has bribed your lawyer to not only mislead you, but also financially and strategically destroy you? Wouldn’t it be far wiser and proactive of you, if you knew the basics of Law?
- Law gives life to your Business: You admit it or not, it is Law that bestows a valid recognition upon your dear organization. If Law doesn’t recognize your startup, it’s as good as your startup doesn’t exist at all, and you would be in great trouble if you cannot morally claim, what is legally yours. If used wisely, law can prove to be a great tool for you and your organization in order to sail across the tumultuous sea of break neck competition of this era.
- Law as an effective Business Strategy: You are the Captain of your startup ship. And, a Captain cannot plead ignorance if the ship starts sinking. The Captain has to know how to use the winds and the direction of their flow to benefit the smooth sailing of the ship. The Captain has to know how to adjust the sails. Likewise, the Captain also has to know how to wade through the legal quagmire and use the situations in such manners as to give brownie points to his ship, and not to the competitor ship. Examples are replete, when mighty corporations have run into crores of losses just because of one small faulty legal decision, and on the other hand, corporations have earned crores of profit, by virtue of timely and wise legal decisions (For example, the Apple v. Motorola case, and many other IP infringement cases). Law is a double edged sword. It’s the wielder who decides what s/he wants to do with it.
Thus, these are few of the reasons why it’s quintessential for Entrepreneurs to know about Law. We at withstartups would be happy to answer your queries regarding the legalities of startups. Just send us a message here as a comment to this post, or leave us a message here, and we would be happy to get back to you!