While starting a business is an exciting endeavor, it does consist of some unexciting elements, like properly filing the required legal documents. Although it’s a mundane process, preparing all the appropriate documents is critical to protecting the future of your business. Bypass this step, and you are sure to get caught with your pants down during a crucial moment in your business’s development.
By now most entrepreneurs know about the common legal documents for businesses like bylaws, NDAs, and articles of incorporation. However, there are 3 documents that most new business owners either overlook or just completely ignore.
One of the perks of being your own boss is that you’ll never have to write a resume again, right? Wrong. It turns out that there are a number of instances that require an entrepreneur to have a resume.
For one, potential investors and clients want to know about the human element of your business. Sure, the nitty-gritty financials are important, but time and time again, well-known investors stress the significance of the individual running the company. “I always look for the person first—before the idea. I value an entrepreneur I can get behind and trust,” says Daymond John, CEO of FUBU and investor on Shark Tank. A well-written resume is one step toward gaining that trust. In fact, many request for proposals (RFP) actually require a background on the key members of the business.
Believe it or not, a resume is also the foundation of an entrepreneur’s brand. Before doing business with you, it has become commonplace for customers and partners to comb through the web for your online presence (LinkedIn, company website, social media) to learn about you and your business. In this regard, your resume becomes a part of your company’s marketing materials and brand. Lastly, a resume may also be required to participate in activities that build your company’s brand such as speaking at an event, becoming a member of a professional organization, or applying for a certification specific to your industry.
Read more on resumes
2. Prenuptial Agreement
Few entrepreneurs think about marriage and the effect that a divorce might have on the future of their business. Unfortunately, it is a necessary consideration. Without a prenuptial agreement, the business owner’s spouse is entitled to up to 50% of any increase in the company’s valuation between the time of the marriage and the divorce.
Losing half of your appreciated value in a nasty divorce would be absolutely devastating to survival of your business. Don’t forget that not only would your business be affected, but also your employees would suffer and most likely lose their jobs.
A prenup helps entrepreneurs to plan for the worst and is a failsafe that separates their business from their marriage. Couples can use a prenuptial agreement to decide which of their premarital assets will be separate property and which will be shared marital property.
Characterizing your business as a separate property will make it so that your spouse is not entitled to the increase valuation of your business. With that being said, a prenup can be voided if your spouse contributed time or money to the business or if any marital assets were used to support the company in some respect. So make sure not to intermingle your separate and marital assets. Ultimately, before you decide to pursue a prenuptial agreement, it’s crucial that you engage in a long discussion with both your spouse and attorney.
3. Business Plan
Of all the documents, a business plan seems like the most obvious to have. Yet, some have criticized the business plan as a waste of time. There is some merit to this argument with regards to a traditional, excessively researched business plan that goes well beyond 100 pages. However, business plans are evolving from their traditional academic form into a more concise and flexible document that focuses on the meat and potatoes of a business.
Remember that a business plan is not a one and done homework assignment that you turn in to receive funding. Rather it is a living document that requires regular updates and is meant to guide you through the development of your business. The process of actually crafting one may even be more important than the document itself. Creating a business plan forces you to consider all the aspects of your business and helps you to flesh out what was once an idea into an actionable plan. Once in motion, your business plan will reference point from which you can track and measure your progress.
In sum, the three documents above may not make or break your business, but they will open doors to new opportunities, help avoid unnecessary risks, and provide you with a blueprint for the future.
Author: Erik “EPIC” Episcopo is a senior editor at Legaltemplates.net, which provides cutting-edge technology to create free legal documents simply and quickly. If he needs a break, Erik can be found on the basketball court rooting for the Memphis Grizzlies or stuffing his face with delicious morsels of goodness.