Smart entrepreneurs learn from their mistakes, while smarter entrepreneurs learn from the mistakes of others.

Managing start-ups can at times be an overwhelming experience, but can be done right if certain crucial mistakes are avoided. Although some legal slipups are easily fixed, others will cause big problems to your business in the long run. Here are a few common legal mistakes entrepreneurs make that have serious long term consequences.

Not having a shareholders agreement with co-founders

Think of this as a pre-nuptial agreement between the co-founders. When you launch your start-up, you all have the same goal and the same vision for your company. As your business grows and expands however, interests may change, and if the deal is not clear between you, this can result in legal troubles. Just think of the Zuckerberg/Winklevoss scandal back in 2004.

The deal between co-owners must be made clear from the very beginning to avoid legal troubles in the futures. Establish issues such as:
– What percentage of the company does each person have?
– How will you decide the sale of your business?
– What is the goal of the business?

These are just a few questions to be asked. Make sure your agreement is exhaustive and will protect you from any possible conflict between co-founders.

Disregarding Trademark and Copyright

Once your company innovates a new product, a new idea, or a new technology, this innovation has to be protected. Many intellectual property protective measures can be used by start-ups such as patents, copyrights, trademarks, trade secrets, etc. Inform yourself on which protective measure is appropriate for your business.

It is also important to note that this concept goes both ways. As much as you need to protect your intellectual property, make sure you don’t infringe other companies’ trademarks and copyrights. For example, make sure you do ample research before deciding on your company name or your domain name. You can use tools such as GoDaddy to avoid legal issues of the sort.

Not Lawyering Up

Saving money by cutting back on expenses is definitely a good thing for your start-up. However, you should not hire an inexperienced lawyer or a friend to guide your start up: while you may save money at first, the legal troubles caused by an inexperienced lawyer will definitely catch up to you in the long run.

A good lawyer can also help with trademark and copyright, as well as your terms and conditions and privacy policy. Invest in a good lawyer, and make sure he or she is specialized for your type of business. Different online resources are available in order for you to find the lawyer that is just right for your start-up.

These are just a few important legal tips to think about when starting your business. Legal mistakes are often made by start-ups, but it is crucial to avoid legal problems that you won’t be able to fix down the line.

To apply for funding to various programs (including ProMontreal Entrepreneurs), candidates are often required to submit a letter of reference, and I am always asked for my advice on whom to request a letter from. It’s not a good idea to ask for a reference letter from an employee or a parent, because of the conflict of interest it creates which therefore makes the person writing the letter not credible.

So, what is a letter of reference? The letter serves as a character reference, where the person is vouching for you, your skills and your abilities to get the job done. In the letter, they need to provide context as to where their knowledge comes from, and they should clearly outline the project, context or experience they had with you in order to write the letter.

That being said, who can you ask to write you a reference letter? Here are the top 5 sources:

1) People from the same industry
It’s important to establish yourself as an active participant in your industry. Presumably, you are in contact with other individuals from your industry that are not direct competitors but that know the industry and the opportunity your product or service may offer. They could talk about your potential impact or innovation, or express an interest they might have in doing business with you. This is also known as a letter of intent. Even though this contact may not know you on a personal basis yet, they should state in their letter that they have intentions of working with you or doing business with you in the future. Of course, just because they mention this in their letter does not make it legally binding.

2) People currently doing business with you
If you are a few years into the startup stage of your business and you have some traction, chances are you are already doing business with various people. For example, it could be a supplier, distributor, or retailer you’re working with. We once funded a company that got a reference letter from a store that was directly implicated in selling their products. They can vouch that you have a good quality product or service.

3) Past employers
Past employers are great sources for attesting to your work ethic, your achievements, your leadership, and any transferable skills that you have in the workplace. They are ideal because they have firsthand experience in working with you.

4) Past professors
Asking for a reference letter from a past professor is a great idea for younger entrepreneurs who may not have as much experience in a professional work environment. In the past, I’ve received glowing letters of recommendation from professors of Masters/PHD students we’ve funded. Professors can attest to your diligence, work ethic, and they can easily back up any of their claims with references to your past projects or grades.

5) Community service
Perhaps you don’t have much experience in a work or university environment, but you spend a lot of time doing community service. If you’re an active member of an organization (i.e. you’ve volunteered there more than once or twice), and especially if you hold some sort of leadership role, getting a reference letter from a supervisor could be valuable.

If you have any other ideas for reference letter sources, feel free to leave a comment below!

Today’s startups need the best possible talent. Great people are out there and it’s up to you, as the entrepreneur, to find them or to attract them. Perhaps you have never been an employer before, so it’s imperative to have a clear understanding of the kind of talent you need, but most importantly, the kind of work environment you wish to cultivate. Like every individual has a personality, every company has a culture. What kind of culture do you wish to have? Is it unique? Energizing? Compelling? Here are some tips for hiring based on your company’s culture.

Hire slow & fire fast. If an employee doesn’t fit the vision you have for your workplace, listen to your intuition and let them go. Not all people will fit within the culture of your company; they may hinder the creative process and slow down teamwork, even if, on paper, they’re qualified for the job.

Hire relevant experience. Desired work experience should be defined not in terms of years, but rather in terms of specific work achievements. A way to define work experience is in relation to their previous work environment. As you review candidates, pay attention to work histories in which applicants were required to perform with little managerial supervision and team assistance.

Don’t be too micromanagy. At some point, you’re going to have to relinquish some of your responsibilities. This is the only way your company will grow. Hire people you have confidence in so that you won’t be inclined to monitor their every move. An autonomous and proficient worker will give you peace of mind.

Pay well and have the right incentives. It seems like a no-brainer, but paying well and having the right perks in place will really help you attract some killer talent. Instill a results-oriented work environment wherein the employee is allowed freedom, and the main mandate is getting the job done. This is the type of innovative perk that attracts people.

By the time you create the right company culture, you should have the type of start-up where great talents want to work at. Who seeks out companies like these? Individuals who are sharp, capable, and motivated.

Like attracts like. Kind attracts kind. And if you want to attract innovators, you’ve got to be innovative.

No money to start a business? Even though you have limited cash, it doesn’t mean you don’t have any options. It is possible to start a business with very little money, if you have the right combination of skills, work ethic and marketing know-how.

According to some experts, to succeed in a business project, you should think carefully about all the skills you have that could be helpful to others.

A great way to start is to make something. Yes, making something does take an initial cost in supplies, but often times, these products can be sold for many times over their actual cost. What you decide to make is up to you, but there are several places you can sell your handmade options online:

• Abe’s Market deals in natural and organic goods, such as lotions, candles, granola, and more.
• icraft deals with independent artists and crafters from around the globe. They sell only new handmade products.
• Etsy is one of the largest online markets for almost anything homemade, from jewelry to wooden toys for kids.
• eBay is one of the biggest online eCommerce marketplaces in the world.

Many business owners sell their products on multiple platforms to get the most exposure possible. It is important to make sure your inventory stays updated on all sites you have a storefront on. If you want to learn about more resources for selling homemade items, check out this Lifehacker post.