Business Ideas and Plans

You’ve got a great idea for a new business and you’re ready to think about the legal side of things – so what should you do now?

When you’re starting a business in New Zealand, it’s crucial to get your legals sorted properly from the outset. However, in the early stages, it can feel overwhelming. Whether you’re still brainstorming or have begun to take concrete steps, it’s important to begin documenting everything.

For those entering into a partnership, it’s particularly vital to start documenting agreements and understandings. Solo entrepreneurs should also make this a practice.

Start documenting

Having an idea or a business plan is just the beginning. The next step is to start thinking about your legal requirements. Documenting your business plan, innovative ideas, and unique propositions is crucial for several reasons:

Firstly, having documentation ready can save you time and money when consulting with legal, accounting, or other business professionals, as it provides a clear overview of your business.

Secondly, the act of documenting can help you identify potential risks and areas for improvement in your business model. Reviewing the key business areas outlined in the previous chapter can be a helpful exercise.

Thirdly, in New Zealand, copyright law automatically protects original works documented in material form, offering you immediate copyright protection for your documented ideas.

Get into the details

Collaborate and brainstorm. Identify the risks your business may face and consider strategies to mitigate those risks.

Listing risks that are beyond your control is also important. While it may be uncomfortable, considering worst-case scenarios can inspire creative solutions to potential problems. For unavoidable risks, being prepared can help you manage them more effectively should they arise.

Business partnerships

If you’re embarking on a business venture with a partner, it’s crucial to discuss and document the specifics of your partnership. Many businesses falter because founders fail to align on their vision, roles, and responsibilities from the start.

Here are some key points to discuss:

Get into the details

Collaborate and brainstorm on potential future scenarios and how you would like to address them. Topics to cover include:

• Defining each partner’s roles and responsibilities
• Setting business goals
• Deciding on the business structure
• Conflict resolution strategies
• Procedures for if a partner wishes to exit the business
• Funding strategies for start-up costs
• Revenue models
• Identifying your target customers
• Choosing a business name
• Marketing strategies

Write it down

After reaching an agreement on these points, it’s wise to formalise your discussions in writing. Consulting a lawyer to draft a co-founders term sheet or memorandum of understanding can ensure clarity and coherence. A legal professional can also guide you through important considerations and advise on standard practices.

When you’re ready to formalise your business arrangements further, this document can serve as a foundation for drafting a Shareholders Agreement or Partnership Agreement.

In conclusion…

Starting a business, especially in the ideation phase, can make it seem premature to consider legal aspects. However, discussing your plans with partners and documenting your ideas early on sets a solid foundation for your business’s future. If you need assistance with navigating the legal landscape of starting a business in New Zealand, don’t hesitate to get in contact with us for guidance!