Legal Checklist for Startups Step #2: Define Your End Goal

Welcome back! Item #2 in the Legal Checklist for Startups
is to define your end goal – begin with the end in mind. I’m Mark Lyda from the Lyda Law Firm, let’s
get started. So, defining your end goal is slightly different
from defining your mission statement. It’s more specific and it’s more concrete. What
I’m asking you to do here is to actually picture your business in one year, five years,
ten years, and at the end of your career. What, specifically, do you want your business
to become? Do you want to have lots of outside investors?
Do you want to be publicly traded on a stock exchange? Do you want it to be something that
has just kind of fit into your existing life and not become too big? This question of defining your end goal will
affect all of your later legal decisions. It’s similar to your mission statement in
that way, but it’s different because it’s more concrete. So for example, if you want to become publicly
traded someday, you’re likely to want to set yourself up as a C-corp (a subchapter
C corporation) right from the get-go. We’ll have more detail on entity selection in a
later video in this playlist. But that’s just an example of how beginning with the
end in mind will inform all of your other legal decisions. Another one is if you have some end goal for
the business that your partner doesn’t share, then that partnership might not work out.
We’ll talk more about defining your “who” in the next video. Your end goal will also affect where you will
do business and even what state you will register your business in. There are advantages to
registering in different states, but those advantages only really kick in based on certain
end goals. If you want to keep your business small and privately held, for example, there
may not be any benefit to registering in Delaware like some large corporations do. But if you
want to become a large corporation someday, you might want to go ahead and register in
Delaware. There are many legal decisions that will come
later that will ultimately trackback to the point where you define the end goal for your
business. So what are some examples of end goals for
small businesses? One would be acquisition. Maybe you want to
sell your business to a larger business someday. Another would be to have your business publicly
traded. Maybe you want to list your business on a stock exchange.
Another would be to create an enduring brand. Maybe your ultimate goal is to have your business
outlast you. Or, maybe you want your business to remain
closely held by you and/or your family. Maybe you just want, as an end goal, to have
it be supplementary income for you. Or maybe you want it to be, ultimately, the
main source of income for your family. All of those are legitimate end goals for
a business. No one end goal is better than the other. It’s just important to find out
what works for you, and what you envision for your future, so that you can have that
as a baseline for all of your legal decisions going forward. In our next video, we’ll talk about defining
your “who,” which is item #3 in the Legal Checklist for Startups. Thank you for watching and please remember
to click “Like” and “Subscribe” to help keep legal education accessible for small
business owners.

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