The legal aspects of starting a business is something that Millennial entrepreneurs of color aren’t discussing as much as we should. For some of us, we associate the legalities of starting a business complex, confusing, and quite frankly scary – far from the glamorous side of entrepreneurship that we see on social media.
Nonetheless, knowing the legal aspects of starting or running a business is vital. And with a little education, it’ll help you and your business, and empower you to take smart actions to legally protect the one thing that you are pouring energy, time, and money into – your startup.
Growing up in the Bay area, Desiree worked her way out of a single parent household to the top of her class, earning degrees from both Hampton University and St. John’s University School of Law. Providing legal expertise for major companies like Viacom, Pandora, and other major media and entertainment companies, Desiree has gained valuable knowledge that entrepreneurs can benefit from. Since earning her law degree, it has been Desiree’s mission is protect people of color through sharing legal knowledge that most people are not exposed to.
In our recent chat with Desiree, we learned the 3 common legal mistakes new entrepreneurs make and how to avoid them. See below for our top takeaways!
Mistake #1: Not knowing your market
When asked about a major mistake that entrepreneurs make, Desiree told me, “Alot of entrepreneurs now just have an idea and try to go for it. While that’s great, they don’t really have the back end together – not knowing the competitors and really understanding the market.”
In addition to this, Desiree shared that many new entrepreneurs don’t know how they will legally form their business and why. Figuring out this information early on, and consistently reading and talking with experts so that you are educated, is vital for entrepreneurs.
Mistake #2: Starting a business with a friend without having the hard convos
When it comes to cofounding a business with a friend, Desiree shared “If you are starting a business with a friend, have those hard discussions in the beginning. Alot of people try to avoid those, but if you don’t have those hard conversations upfront, it may be detrimental in the end.”
It’s critical that you and your friend understand who has which roles and responsibilities, the ownership/equity percentage, the amount of salaries each founder will get, and more. When you do have those hard convos, be sure to get all agreements signed and in writing by you and your cofounder friend.
Mistake #3: Waiting to hire an attorney
According to Desiree “Alot of people wait until there are problems before they hire an attorney.”
Desiree also shared how important it is to have an attorney to help you set up your business and to help you have those hard conversations if you are starting a business with friends (see Mistake #2).
According to Desiree, having a lawyer early on can also guide you with getting a trademark for your business. “Before investing alot of money into your business, research and confirm [your business] name is available through the USPTO office online,” Desiree says.
Even if it’s taken, see if it’s taken for the same market or area of business you are in. Once someone files a trademark, it’s public knowledge. When getting a trademark, Desiree recommends to look at all of the available trademark categories and apply to buy all of the ones that are important to your business. It may be costly so you have to be strategic in understanding your market, and what area you see your business growing in.
Lastly, we asked Desiree about the 3 easy, budget friendly things you can do early on as an entrepreneur.
1. Purchase the domain name
Before you start marketing your business and spend money on marketing, use GoDaddy or another Internet domain registrar to purchase your domain name. As GoDaddy says, “You can’t have a website without a domain name. Like a street address that tells people where you live, a domain helps customers drive directly to your website.”
2. Get the social media handles
While you are searching to see if your domain name is available for purchase, also look on all of the social media sites to see if your business name is available on there too. You don’t want to spend money on a domain name, and find out later that some random person on IG has it.
3. Create a business name that isn’t too hard to spell
You want to make it easy for customers to find you so that they can pay you. While it is true that if someone truly wants your business, they’ll figure out how to spell it, but why begin a business with a difficult spelling name if you don’t have to?