It’s the age of small businesses in Charlotte — you see them everywhere and I love it. I admire anyone who takes the risk to become his or her own boss for the sake of passion. Especially because I don’t understand how people teach themselves how to build a business from the ground up.
Hiring an attorney can be part of the approach.
John Woodman, a business attorney at Sodoma Law in Dilworth, is a fan of teamwork when it comes to guiding business decisions. Which makes sense when you learn that he was formerly an event coordinator for the Charlotte Bobcats (now Hornets).
He talked me through six circumstances in which you might need a business attorney:
(1) When creating or entering into a contract.
When entering into an employment contract, know this: “North Carolina in general is an at-will state, which means that I can leave (a business) at any time or they can fire me at any time,” Woodman says. “Except if I’m in a protected class, race, gender, age, which the federal government generally controls.”
Tip: Be aware of non-compete clauses. Woodman says courts don’t like non-competes but will uphold them. Also watch out for these provisions that are really big in sales: non-solicitation of former employees and non-solicitation of current customers.
Tip #2: Of course, Woodman says: ”Read the entire contract so you know what you’re actually agreeing to.”
(2) When dealing with litigation.
Issues include: Suing for breach of contract, internal disputes (between business owners), the sale of a business, collection on invoices and stolen intellectual property. (Intellectual property involves trademarks, copyrights and patents. Learn how to register for those property rights here.)
(3) You can’t pay your debts and you need to file for bankruptcy.
In federal bankruptcy court, your business attorney is your advocate and would file your bankruptcy petition, Woodman says. The goal: to help you get a discharge so your debt goes away.
“Note: Not all debts can be discharged,” Woodman says, such as tax debts, student loans and debts incurred by fraud.
One benefit to filing bankruptcy is that it can bring about a plan for you to repay your debts. The three most popular approaches, Woodman says, are Chapter 7 (liquidation for individuals and businesses), Chapter 13 (reorganization of debt for individuals creating a plan to pay back creditors) and Chapter 11 (reorganization of debt, typically for a corporation, proposing a plan to pay back creditors while keeping the business alive).
(4) How to choose funding for your business.
A business attorney can walk you through documentation and structuring of funds, Woodman says. Options include private investors, Kickstarter and getting a traditional loan from a bank.
He has personally seen most businesses gravitate toward the traditional loan approach, but thinks the model is shifting a little bit to private investors.
(5) For thinking through an end point for your business.
“The business owner should be extremely proactive instead of reactive, always thinking with the end in mind,” Woodman says.
Three options: (1) Plan to sell your business — this should be when the market is good, (2) plan to expand into a new revenue stream to maximize new growth or (3) plan to hang onto your business for your lifetime, then plan out who it will go to eventually.
(6) When investing in a company.
Especially if your investment is for equity in the company, it’s ideal to have strong organizational documents in place to protect your interest/investment.
Photo: Sean Bucher Photography