Q. What’s the most damaging legal myth holding young entrepreneurs back?
The following answers are provided by the Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.
1. You Must Adhere to Non-disclosure Agreements
The more you’re free to talk about your idea, the better the chance you’ll find people to join you and believe in it along with you.
– Panos Panay, Sonicbids
2. Attorneys Are Necessary
It is a major myth that you need a paid attorney to prepare the legal forms necessary to launch your business. There are websites, such as LegalZoom, that can help with this for a much more affordable price.
– Andrew Schrage, Money Crashers Personal Finance
3. You Need to Spend Thousands on Legal Paperwork
Lawyers are salespeople too. They have to sell the need for their services just like anyone else. Don’t be misguided into spending thousands of dollars from your shallow pockets on legal paperwork before you’ve got your business figured out. Start with an MVP, get a little traction, then worry about a “board of directors” and “offering docs.” Don’t try to be a Fortune 500 on day one.
– Andy Karuza, Brandbuddee
4. You Have to Trademark and Patent Everything
Although trademarks and patents are important when starting a new business, they aren’t musts in the beginning. If this were the case, most entrepreneurs would be zapped of what little money they started with and would be behind by a year or more. It’s important you have a viable product or service before spending on patents and trademarks.
– Phil Chen, Givit
5. You Need to Raise Money to Get Started
Many startups feel constrained by lack of capital and often rush to raise money before they’ve even had their first sale. Always focus on sales first. Not only will sales drive growth, but sales will also validate the amount of money you need to raise (if you do at all). I’d rather have sales under my belt than start with other people’s money.
– Sarah Schupp, UniversityParent
6. You Can’t Afford to Fight Big Companies
Most young entrepreneurs believe they cannot afford to defend themselves against large companies. But in reality, a strong defense and resiliency can overcome any dispute, regardless of cost of counsel and size of the legal team. Where there is a will, there is a way.
– Raj Abhyanker, LegalForce, Inc.
7. You Can’t Try It out First
You can start a business without starting a “legal” business. By that I mean you can always test the waters and start working on your products/services, plans, etc. without having all the pieces of a legal entity set up. Of course you’ll eventually need to do these things, but don’t let them prevent you from getting started.
– Nicolas Gremion, Free-eBooks.net
8. You Need Legal Documents First
Too many first-time entrepreneurs get caught up in what they think they need to start a business rather than what they actually need. What they actually need is a product or service that is ready to be sold for money. Every legal document that is related to that can be obtained at any time with any lawyer. Build a product, sell the product and prove there is a genuine need.
– Max Sobol, Idea Evolver
9. You Need a Large Law Firm
Entrepreneurs throw around the name of their legal reps as brand names, which can scare early-stagers because those firms cost a lot. If you are in the early stage, look for a firm that is also entrepreneurial so they can understand what you do and help you do it.
– Benish Shah, Before the Label
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