In our last Start-up article, we discussed our 4 Key Considerations for Start-ups. Following on from this, we’ve created a list of our ‘Top 4 Start-up Stuff-Ups that every new business owner needs to avoid. Just like building a house, its important to have the right foundations for building your business. Starting off with shortcuts and shaky foundations can cause even the best business to come tumbling down.
- Assuming your ACN/ABN protects your naming rights
In a recent episode of Channel 10’s ‘Shark Tank’, where new businesses are pitched to a panel, one of the contestants mistakenly believed that an Australian Business Number (ABN) or Australian Company Number (ACN) protected their rights to the name.
This is a common misconception, it is essential to be aware of what rights you have under your registrations and whether you have any! The best way to protect your business name is to have a registered trade mark, as we discussed in our article, Trademarks: Are you protected?”.
- Exchanging equity for services without a contract
In the early stages of your business, it is very appealing to exchange equity, or a share of ownership or profits in your company, for services – particularly because there is little capital available to go around.
In many cases, equity is exchanged for a short-term service. After the service is not needed any more, business owners often realise that they have been putting in all the hard work for far longer and the original shareholding arrangement is no longer proportionate.
A flexible, and documented partnership or shareholder agreement is essential. Clauses can be inserted so that parties must re-consider the share of equity in a few years time, to ensure that the arrangement remains proportionate and fair.
- Entering the e-commerce game without Terms and Conditions
Many entrepreneurs start with an online shop because there are few barriers to entry – and a lot of the time, they don’t consider a Terms and Conditions (T&C) page necessary because it ‘isn’t worth the investment’ when starting business is slow, or they cut and paste one from somewhere else!
However, you would be surprised how quickly sales can pick up, and before you know it, you’re in a dispute with a customer about their lost delivery and you have no delivery/returns policy to rely on! Or if you have used cut and pasted T&C, they may not reflect the reality of your business.
Skipping the T&C is not only a risky start to your business, but the presence of a T&C tailored to your business makes your online store look far more trustworthy and professional to consumers – and in the fast-paced world of e-commerce, reputation is everything.
- Going public about a product too soon
It’s incredibly exciting to have come up with a brand new, unique product. Most inventors know that these products need to be protected under Intellectual Property (IP) laws, but when is the right time to apply for a Design registration or Patent?
This is something that you should discuss with your lawyer as soon as possible. In some instances, once you disclose your IP or commercialise it you may lose your ability to apply for registered protection (such as a patent).
If your product is truly unique and is the core of your business, then it’s worth spending the time, effort and sometimes expense to protect it. If you don’t have your IP, then you don’t have your business.
Gladwin Legal specialises in assisting you to achieve your dreams. We are flexible and modern and provide affordable legal services to a wide range of clients in the retail and start up sectors. If you have any questions or require any assistance with starting up your business, please contact us at or 0433 114 748.