Congratulations on starting your business. It feels good and exhilarating to form a vehicle with the potentials to live your dreams. However, where good things are bound to happen, bad things also have the potentials to creep in. So while gearing up for starting your journey, make sure you refrain from making these mistakes. They will definitely cost you dearly.
1. Not getting a lawyer
A lot of people believe lawyers are blood sucking parasites who are out to get all your money. Based on this, they find ways to avoid getting a lawyer when starting anything. This is a sign of bad decision making as a business owner. Having a lawyer is very essential to your business. He will be the guardian angel always leading you in the right part, giving you advice on virtually everything you should or shouldn’t do.
A lawyer would be handy in advising on the suitable business structure, helping to draw up and reviewing agreements, keep track of all your lawful obligations and other pitfalls that may be lawful but not beneficial to you and of course for the appropriate fee. Believe it or not, having a lawyer at starting up is more cost effective than getting one later.
2. Not having the right business structure
In Nigeria, there are business structures as stipulated by law and understanding these structures will help in understanding the appropriate structure to suit your current needs. Legal business structures are determined whether you’re starting off as a sole proprietorship, partnership, private or public company limited by shares or guarantee, an unlimited company or a non-profit organization.
It is possible to move to move from one form to another based on a few restrictions but understanding the particular one needed at the moment is very vital.
3. Not keeping records
Keeping records is definitely a no-brainer for every business owner. The importance of keeping records cannot be over emphasized as it helps not only as a source of reference but can be very handy should any legal issue arises. Apart from contentious legal matters, records can also be helpful when computing taxes. While paying taxes, your records would go a long way with determining allowable deductions.
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4. Absence of Formal Agreements between Partners
Love of money they say is the root of all evils. Nothing may separate a unit faster than misunderstanding when it comes to finances. To forestall every unforeseen disagreements and unwanted strife, it is always pertinent that as soon as ideas between two or more people becomes a going business concern, a formal agreement should be drawn up to determine the scope of the powers and liabilities of each of the partners.
Agreements of this nature will usually contain management formula, profit sharing mechanisms, mode of resolving disputes among partners and also criteria for admitting new partners or expelling a partner.
5. Accepting Handshake Deals
You have finally found that investor that is about to give your business the much needed boost to announce your arrival in the business world and you are basing heaven and earth that has been promised to you on a handshake. You might have just played yourself. It is very uncommon to find people with a large heart who naturally want to help in the business world.
Majority of deals in business are driven by personal interests and what stands to be gained. So when you find that investor you have been praying and fasting for, kindly ensure you draw out something on paper (if there is a pre-drawn agreement, ask a lawyer to review it for you), meet to hammer out the fine details, have it signed and then, you can have your handshake.
6. Not paying your taxes and other obligations
Give to Cesar what belongs to Cesar. Paying your taxes are very important. They should be calculated properly and paid promptly as it prevents you from having unforeseen problems from the law. You don’t want to come to your place of business on the first day of the week and find your premises sealed for lack of compliance. It also helps your firm profile.
Investors will be more confident in your business when they find out that you’re regulatory compliant. Also, getting lucrative deals nowadays have the prerequisite of having a tax clearance certificate of which you can’t get if you don’t pay your taxes. In addition, if your business is operating in a service industry that requires certain licenses and permits, make sure you obtain them.
7. Absence of contractual obligations between you and your clients
You should be familiar with words like terms and conditions, warranties, disclaimers and return policies. These terms are important in regulating the relationship between you and your clients. Absence of having a contractual of service that creates obligations between you and your clients has untold repercussions. Clients can be very nasty at times and the moment they get away with something, they may tend to want to keep doing it, so when there is a pre-existing contract of service, clients bullying may be averted.
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8. Not protecting your Intellectual Property
It is always a good idea to have your products tested before you put it out. Unfortunately, it’s a cruel world out here in the streets, and the moment your precious products you have entrusted to the wrong party gets copied or imitated, your sweat and hope of cashing in takes a dent. This can simply be averted by having potential investors or that innocent family member of friend sign a non-disclosure agreement before showing them your products.
9. Not taking cognizance of employment laws
Absorbing new talents is always a big step when employing to grow your business. But before you do that, make sure you are fully abreast with regulations concerning employment in Nigeria or the country of your business. Issues like minimum wage, maternity leaves, pension contribution, firing an employee are very important and they can put you in a lot of trouble with the law.
10. Getting a lawyer when it is too late
Lawyers are like cars. Whether luxury or regular, they provide essentially the same services. However, the differences are the level of comfort, speed and the certainty of getting to your destination in time. Failing to retain a lawyer as a business owner can be very fatal.
If you wait till you have legal problems before you get a lawyer, chances are that you will be paying more legal fees than you would have paid had you retained a lawyer. This is simply because most problems that business owners are usually problems that could have been avoided had they sought legal advice before they embarked on such endeavours.[Read Also: Nigeria needs N36 trillion investment to achieve stable power supply]