As more and more start ups are popping up, business owners should be thinking more and more on how to develop and distribute responsibilities between their core members by using a founder’s agreement. A Founders’ Agreement is a contract that a company’s founders enter into that governs their business relationships. The Agreement lays out the rights, responsibilities, liabilities, and obligations of each founder. If you are looking and planning to run your business with co-founder, a founders’ agreement is essential. A business lawyer or an online legal service can help you create one, so you can take an important step in avoiding possible conflicts between co-founders.
A typical founders’ agreement consists of clarifying each owner’s role in the venture, provides a structure for resolving disputes, protects minority workers, provides clarity when it comes to entering and exiting the business, as well as signal to investors that you mean serious business. Other things to consider when it comes to founders’ agreements is the length of validity, company goals, equity breakdown, intellectual property, salary, compensation, vesting schedule and termination clauses.
A founders’ agreement is optional but is essential to building a healthy business relationship with your co-founders, since it provides the structure of how things work when the company is getting started, as you can include procedures in this document for making necessary changes and updates. By working close quarters with your co-founders, you can think of potential problems that might arise and think of ways to combat them easily.
Creating a founders’ agreement can be extremely easy in some cases, you can just use a template, fill out the document, discuss company duties, responsibilities and goals, as well everything important when it comes to the company and ensuring that no damage if done between co-founders. By working together and consulting fellow entrepreneurs you can build a meaningful and healthy business relationship. Finally, consider visiting a lawyer, sometimes creating an agreement is easy, but at other times it can become a complex and problematic process, hence why you should consider a business or startup lawyer. In the end, if everything is fine, you can finalize and sign.
Creating a founders’ agreement puts you one step closer to professionally running your small business, turning a profit, and growing more and more, while maintaining a healthy business environment. With time, you’ll learn more and more about your business and the market, as well as improve upon your strategies and relationships.
