PART 2: PREPARING FOR OPENING DAY
In this 4-part series, we will walk you through our roadmap for successfully starting and operating a business from a legal perspective. In our first segment we discussed the different steps needed to formally organize and set up your business in Florida. In this second segment, we are discussing what you need to be ready to successfully run your business from day one. Next week, we will be focusing on different ways to act now to avoid business disputes in the future, and finally, in week four we’ll bring you our ultimate legal checklist for starting your business on the right foot.
This 4-part series is a collaboration between Robert N. Pelier, P.A. and Aymee C. Gonzalez, P.A.; Coral Gables business attorneys dedicated to serving business owners and entrepreneurs in every step of their journey.
Depending on the nature of your business, preparing for opening day may entail stocking shelves, meeting with potential clients, creating or obtaining inventory, and much more. But from a legal perspective, preparing for opening means mainly one thing: thinking ahead. In order to be truly ready to hit the ground running with your business you should have a plan for all of the practical aspects of the business. This includes having agreements in place with vendors, service providers, landlords, etc., having form invoices, proposals and other essential documents drafted and ready to go. Don’t waste valuable time scrambling to get these things done as they come up, make a plan to prepare your business from the start.
1. Plan ahead by setting up your office or business location
The first step is to decide where you’ll run your business. In today’s world this means not only picking a location, but before that, deciding if you even want or need a physical space. There are pros and cons to each, and the right choice for your business will largely depend on the type of business you are starting and what market you are targeting. If you decide to have a physical location, you likely will need a commercial lease. A commercial lease is a specialized lease for business and commercial properties. It is much more complicated and nuanced than a residential lease. For instance, the term is usually much longer, there are restrictions as to use of the space, additional expenses, there may be lease payments tied to profitability or sales at your business, and in many cases, you will have to personally guarantee the lease, putting your own personal assets on the line. Don’t make the mistake of entering into a commercial lease lightly, this is a long-term commitment that can have huge financial consequences for both your business and you personally. We strongly suggest that you engage an experienced attorney to guide you through this step. A knowledgeable business attorney will understand the legal implications of the lease, and make sure that the lease contains provisions that protect you and your business
If you choose to set up a virtual office or run a strictly online store, then your focus should be on setting up a proper and secure virtual business. This means ensuring that your work files, data, website, payment acceptance portals etc. are fully secure. You may also wish to consider some sort of backup system, or cloud-based storage. You will need to decide if you feel confident in your abilities to set up your own virtual business, or if you want to hire IT professionals, website designers and other professionals to help you. If you do decide to hire help, consider whether or not this should be a one-time relationship, or whether your business might benefit from ongoing IT services, in which case you should consider entering into service agreements which outline the scope of this ongoing relationship.
2. Plan ahead by obtaining all of the contracts, service agreements and forms you’ll need
Once you have your business location or virtual office set up, you should start thinking about the day-to-day operations of your business. Will you have vendors? Do you need to hire employees? What goods or services will you need to run your business on day one? Depending on your answers you may want to have vendor contracts, employee offers or written agreements, possibly with non-compete clauses, and a variety of different service agreements prepared and ready to go. You will also need to have certain forms prepared, such as invoices and proposals. We recommend that you get these documents prepared and ready before opening day. In today’s competitive market a delay in formalizing agreements can cost you a vendor, an employee, or can lead to costly delays that you can’t afford at the start of a new business; plan ahead to ensure your business gets off to a smooth start.
There is a temptation, especially with small businesses, to not enter into contracts and ignore these business formalities. However, this can be a costly mistake. Take contracts with vendors for example, the Uniform Commercial Code, which has been largely adopted by Florida statutes, contains specific provisions and rules regarding commercial dealings; you want to understand how these laws affect your relationship with your vendors, the rights each of you have and what actions or requirements can and cannot be required by either party. Also, it’s important to keep in mind that certain contracts MUST be in writing, otherwise they are unenforceable under what is known as the statute of frauds. You also need to consider the language you include on business forms, such as invoices. Depending on the nature of your business you should include language that disclaims certain implied warranties, or other language that may protect you from liability. A business attorney in Florida can explain how local laws will affect your business, your employees and your vendors and help you prepare all of the documents, contracts and forms you need to be ready to start on day one.
3. Plan ahead by obtaining business insurance
You’ve just started a business, now you need to make sure its protected. Consider obtaining liability insurance for your business to protect your business and your assets. Liability insurance can compensate you for property damage and cover the medical costs for anyone injured on your property and more. When you open a business, you are also opening up the risk of liability. You can have liability both in terms of physical losses to your property, and inventory, and also with regard to injuries to people, or damage to goods occurring on your property or because of your business.
You should also consider business interruption insurance. Business interruption insurance is a specialized type of insurance that covers lost business income in the case your business is forced to close due to a physical loss such as a fire or hurricane damage. Business interruption insurance is meant to ensure that your business can survive unexpected challenges by covering the cost of operating expenses, payroll etc., subject to the terms of the policy. Our office is well versed in insurance issues and can help you understand the terms and limitations of any insurance policy you choose to buy.
Starting a business can be overwhelming, there are a lot of decisions to be made, and many documents and legal forms to prepare. Preparing, or reviewing contracts, leases, and other agreements or forms is nuanced and specialized work, which needs to be done right; reaching out to an experienced attorney to help you in this step not only can give you peace of mind, knowing that things are done right, but can also prevent business disputes and save you time and money in the future. Getting this done right means giving your business the best possible start. The Law Office of Robert N. Pelier, P.A. has experience handling a wide variety of business-related matters. We serve all business types, from small to large, we serve international clients, and our South Florida local community alike. We are located in Coral Gables, the heart of the greater Miami area, and are dedicated to serving our community. We can help you set up your business the right way, and be in your corner ready to help in every step of staring and operating your business.
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