When you’re looking to start your own business, there is a lot to consider. Beyond the immediacy of names and product ideas and an office to set up shop, you want to make sure that you are preparing for success rather than simply working hard with the aim of seeing where things go. Envisioning a goal or target can help you get through those long days and nights. But while you’re on the road towards achieving that goal, there are a lot of other details along the way that can threaten to take your business off track.
If you’re running your business as a side project during your off hours from your day job, you should be aware of what your employment contract says about ownership. While some businesses permit their employees to work on whatever they choose when they’re outside the office, others are restrictive regarding employees’ extracurricular activities, especially if it’s a project in the same field. Other employment agreements stipulate that the company you work for owns anything you create while in their employ, including things done in your off time. Before you put in considerable time to your own entrepreneurial projects, be sure to read your employment agreement.
If you are able to create your own business, you want to make sure that you are separating your personal affairs and assets from your company’s. While it may seem like an arbitrary distinction in the early days, when you are the sole employee and financier, you’ll want to be sure that your personal future is secure as your company starts to grow. Having a business entity is crucial to the viability of your long-term business, and will allow you to keep your personal assets separate in case of business failure. A business entity also allows you and any co-founders to avoid any messy complications when it comes to ownership of intellectual property rights; by assigning any patents or other rights you own to a business entity, you can avoid potential ownership disputes should one or more co-founders leave the company.
It’s easy for entrepreneurs to get caught up in the physical assets they have on hand, but a business’ intangible assets are often overlooked. Many startups make the mistake of thinking that intellectual property is the domain of tech companies, but the truth is that all companies have IP. Making sure that you own your company’s intellectual property will also help to ensure your company’s future. Eighty percent of a business’ value is tied up in its intellectual property, and by not protecting your company’s IP you risk its future prospects.
You also want to make sure that you have ownership of all the assets that you have been using for your business, IP or otherwise. It’s common for website developers to use open source code for websites, and the licensing agreements for that code could contain language that stipulates what you can use that code for; if the agreements state that you can’t use the code for anything commercial, that could create a considerable issue. And the same could be said if you hired developers to create a website for you on contract. When you are using outside sources to do work for hire, make sure that any agreement or contract that you have includes stipulations that you own the work you paid for.