Entrepreneurs in the “startup” phase are typically overwhelmed with all aspects of the business launch, and not surprisingly, legal aspects can take a backseat to many other areas. It is when legal issues unexpectedly move up to the forefront that the entrepreneur wishes there had been more focus earlier. It is imperative that you build a strong legal foundation from the beginning, ground up, rather than in hindsight.

Here are 5 steps that must be carefully addressed and injected into the company culture in the early stages in order to minimize the occurrence of problems later:

1. Loose Lips Sink Ships.  In the early stages of any idea or project, the tendency is to share thoughts and dealings for a number reasons, least of which is the mere excitement factor. However, until all proper systems and documents are in place, you could be unknowingly fostering a potential competitor or threat within your space. RULE #1: Keep your mouth closed except when yawning.

2. Protect your IP. The intellectual property of a startup venture could be the backbone of your concept, depending upon the nature of the project. Trademarks, copyrights and patents, as well as trade secret protections, are key elements for any new venture. So, in addition to keeping matters under strict confidentiality, you must protect your IP as best available under the law. Even if your IP is not entirely protectable under governmental authority, a competent attorney can advise you how to implement other systems to minimize an attack on such an important and proprietary asset. RULE #2: Ask your lawyer about IP protection and application.

3. Corporate Formation.    It is imperative that you form a legal entity separate from yourself for a number of vital reasons, including personal protection against potential business liabilities. Make sure you receive proper legal advice as to how to select and structure your new venture. RULE #3: Incorporate!

4. Set up Your Company for Success.        From the outset, you need to establish legal and financial protocols and systems which will set the foundation for growth and success. This entails some critical legal documentation. Your experienced corporate lawyer will advise you of the need for certain agreements to be used in dealing with investors, vendors, consultants and employees. Having theses essential documents prepared in advance will greatly improve your chances of avoiding common pitfalls while keeping your organization lean, mean and clean for future due diligence review. RULE #4: Keep your venture tidy and mighty.

5. Protect Yourself.           As your business grows, so will your organization. It is common to accept investors and assemble a board of directors. You need to implement a strategy to ensure that you, as the founder, remain in control of your venture. This will allow you to achieve your goals as you see fit. While many founders eventually will hand over the reins to others, you will want this event to occur on your terms. RULE #5: Protect yourself from unintentional consequences.  

Bottom Line: you need to commit a minimum required amount of time and money to the legal needs of your venture in an efficient, effective and strategic manner. Having a well thought-out plan that prioritizes these early stage legal necessities and allows for seamless execution will place your venture in a position to avoid costly consequences later, when there could be much more at stake.