Avoid these simple mistakes to ensure that doing business is enjoyable and not a headache!
By: Adam Kiolle , Blenheim Attorneys
As a legal advisor to small and medium businesses in the Netherlands, I help my clients through some of the most exciting and some of the most frustrating parts of doing business. In this blog, I share three simple tips to help you avoid some of the most common problems that I come across in my practice.
Doing business can be one of the most rewarding things there is. There is nothing more exciting than starting a business, closing big deals and – if things go well – signing on investors, merging with or acquiring other companies, or even selling your business. I love advising on these kinds of processes.
Unfortunately, there are also times when I am called on to help my clients with some of the more frustrating parts of doing business: disputes with customers, business partners, investors or, occasionally, competitors.
One of the most striking things about so many of these disputes is how easily they can be avoided by observing these three golden rules during the start-up phase.
1. Think about and choose the right entity or form for your business;
In the Netherlands, there is a business entity to suit every small or medium business, from simple sole traderships, partnerships and “v.o.f.”s, to the well-known B.V. Things to take into account when selecting a business form are costs of establishment, the number of people involved, protection from liability and the ability to accommodate investors.
2. Think about and enter into clear, written(!) agreements with your business partners
If you are going into business with a partner or partners (even if it is your best friend), it is important to lay out your ground rules clearly from the very outset and to make sure that you have a record of them in writing. This can help to prevent misunderstandings and avoid disputes when it comes to working out how to share profits or making strategic decisions down the track such as bringing in outside investors, or selling or dissolving the business. Depending on your situation, you can do this using a partnership agreement or shareholders’ agreement.
3. Make sure that you have clear, written agreements with your suppliers and customers
In the same vein as the last point – make sure that you have evidence of your understandings with your suppliers, customers and other third parties who you do business with. It is a lot more difficult, time-consuming and costly to settle disputes in the absence of a written contract that clearly stipulates the nature and duration of your business relationship, as well as each party’s rights and responsibilities. Eliminate doubt with a good set of general terms and conditions and individual agreements such as service contracts, distribution agreements, sales contracts etc.
Some of the most costly and frustrating legal disputes are at the same time the most easily avoided. Taking the time to do some planning and making sure that you have a written record of your agreements when starting your business and commencing collaborations with third parties can save you some serious headaches and expense down the line. You don’t even necessarily need to involve a lawyer although, depending on your circumstances and the complexity of your business or deal, it may well be wise to seek legal advice.
Adam is an English-speaking lawyer practicing commercial and corporate law at Blenheim Attorneys, Amsterdam.
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