Entrepreneurs have to know the business world inside and outside to even get a business or idea going. They usually go to companies like our next sponsor in our Sponsor Spotlight series, Van Osdol, for all legal documents when creating a business. Based out of Kansas City for the past 75 years, this law firm has focused on maximizing value for their clients while providing personalized, cost-effective services for all of their business and personal needs.
We spoke with Shawn Stogsdill of Van Osdol about various facets of entrepreneurship and why they need to go to law firms before diving into the business world. Stogsdill states that entrepreneurs or startups need to put together a competent team of advisors before going all in. That includes a good accountant, financial advisor, attorney, and insurance agent. He advises that “these individuals are certain to know more than the entrepreneur in very key areas. Too many times, entrepreneurs encounter trouble with tax, intellectual property issues, etc. Then try to tackle those alone and without the knowledge or experience to do so effectively.” Having a team or “think tank” behind you really helps.
All of those “think tank” members are important, but getting an attorney should be an entrepreneur’s first priority. Stogsdill explains that all businesses encounter legal issues, and “in their infancy, startups require advice on entity selection, governance, tax, and often intellectual property issues.”
Van Osdol sees businesses with innovative concepts fail a lot because the owners neglected to address issues that later become problems. For example, many companies start out with two owners who each own 50% of the company’s interest. They have seen instances where the owners begin to disagree on certain issues and cannot resolve them properly because neither has the power to outvote the other. Another issue Stogsdill mentions is how business owners very often consider how to get out of the company. He states “they are so focused on getting off the ground that they never put any thought into what to do when one of them wants to move on.”
One very important document Van Osdol can help out with is an Operating Agreement. A startup cannot really get off the ground before this is finalized. Stogsdill explains that this document is “very critical, especially as the number of owners increases.” According to Van Osdol, Operating Agreements, or by-laws, set forth voting rules, responsibilities and powers and often cover what happens in the event of an owner’s death, disability, termination, etc.
Operating Agreements and by-laws are the first place owners should to go in the event of a dispute. Too often, these documents are simply boilerplate agreements and very little is thought about them. “Good attorneys will be thorough and insistent and their clients have a good understanding of the provisions these documents,” says Stogsdill.
Shawn Stogsdill and Van Osdol is ready to help you with your startup needs! Contact them today.