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Start-ups & Commitment: Growth of the start-up alongside legal

FYI… The growth of the start-up can happen alongside legal. Legal documentation and contracts are not necessarily a hindrance to development, growth and flexibility. It all depends how the start-up uses them!

With a future so uncertain, start-ups try to avoid overburdening itself with commitments and legal obligations. As a result, start-ups are reluctant to engage in legal activities, reducing the amount of obligations. Naturally, this makes sense. ‘Legal’ is not the first thing that comes to mind to entrepreneurs. Their focus generally lies with growing the company as fast as possible – and legal is not the answer. By that logic, it seems to act as a barrier to that growth. In reality, it is not, and start-ups will encounter crucial legal documents that they will most certainly need to draft and sign in their favour. This article will explore the types of contracts that start-ups will encounter and how those contracts can allow the start-up to grow.

Non-disclosure agreements

In our previous article on NDAs, we explored the relevance of the documents and why start-ups should engage them. To summarize, the NDA helps protect sensitive details when disclosing information to individuals outside the start-up or to companies that the start-up intends to work with. Leakage of this sensitive information can cause profit losses. 

Now it seems that NDA’s act as a barrier to communication. However, without the NDA, the start-up would not be able to hold the person in breach or in violation liable. Where there is liability, there is the possibility of reimbursement for damages. Furthermore, with the NDA, individuals will be less prone to leak the information shared to avoid sanctions. Naturally, this will allow your start-up to grow as your energies would be focused on the business rather than the legal aftermath of leaked information. 

Privacy statement / terms and conditions 

As we live in the 21st century, online presence is crucial to get the name of the start-up out there. With online presence, comes online responsibility – privacy & terms and conditions statement are just to name a few. It is essential for users of the website to know that the start-up is GDPR compliant, protects the individuals’ data and explains the terms of use of their website to visitors. Having this information displayed on the website is a legal matter that should not be seen as a barrier. Having such information displayed promotes transparency in the company and creates greater trust between clients and the company. 

Terms and conditions essentially is a contract between the company who hosts the website (the start-up) and the visitor. It allows a company to include information about what the site should be used, liability limitations, intellectual property protections and customer assistance information. By these means, the company hosting the website can avoid legal liability when disclosing what responsibilities they have and don’t have.

If you need an example, take KNOWCO COLLABWITH’s terms and conditions and privacy statement as reference!

Employment Contracts

Start-ups need people to function and there are many types of employment contracts that can be developed. Based on the needs of the start-up, some contracts are more suitable than others. 

Types of employment contracts:

Fixed term employment contract 

Fixed term employment contracts are good for growth if the start-up needs a job completed for a particular time period. An example could include hiring a web designer for a determined number of months to set up a website for the company. After that time period has expired, the contract can either be renewed or it simply finalizes the term. When a company does not need the skills ‘all-year-round’ so to say, it can explore hiring free-lancers or fixed term individuals.

Permanent employment contract 

Of course, several individuals will be key to the development of the start-up, which is impossible without some permanent employees. They push the vision and the mission of the start-up forward and need to be there to manage the day to day working activities. The permanent employee contract is indefinite, meaning it does not have a time limit as the fixed term employment contract does. Naturally, this entails more responsibility for the start-up, but is something to consider if the job is essential for the start-up eg. CEO. 

Zero-hour worker contract 

This contract is known for its flexibility. A start-up can respond to its needs quickly and effectively when there is a surge in work, without having to commit to permanent employees. Many delivery companies, the fashion industry and the catering industry use these contracts to fill in seasonal spurs in work. This is not a long term solution, but could prove useful for the start-up to manage unforeseen events. 

Consultancy agreement 

A start-up still has lots to learn, and may need some outside assistance to be advised on particular matters. The consultant would be able to advise the start-up on matters regarding fiance, marketing, growth etc. and that advice generally does not come free. The consulting agreement would help determine timelines, cost of service, ownership and assist in solving any disputes that may arise from working together.

If your start-up needs some examples of the employment contracts, Lawyerd is a great source for templates. 

Collaboration agreement

As a user of the KNOWCO COLLABWITH services, collaboration agreements are available for all members to work with each other on projects. Collaborations are another way for start-ups to grow. Through collaborations, new ideas and projects can be developed that would not have been possible alone. 

It is important to define the terms of the collaboration as explained in the previous article on Tips to Avoid Unethical Usage of Research Results. Determining IP, publishing rights and ownership distribution are just to name a few. Establishing these aspects prior to the work will save you and your start-up a lot of time and effort in the case that the working relation doesn’t work out.

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