People all across California dream of cashing in on their “side-hustle,” or “Passion Project ” they pursue outside of their regular job. As is the case with any business venture, there is no guarantee of success, but there are people who have turned their Passion Project into a successful business.
For instance, one man started an e-commerce business that made its first $1 million within three months of launching. According to this article, he spent roughly an hour a week on the project, and ultimately, he sold his company for $10 million.
If you are hoping to turn your Passion Project into a lucrative business, it is important to assume that it may one day be successful and take the steps necessary to protect it. This is particularly true if you have a friend or partner working on the project with you. While you may not have any disputes in the early stages of what starts out as a fun undertaking, once it takes on increasing debt or starts making money, you stand to either be stuck paying all the debt, or be squeezed out of the business’s imminent success if you don’t have the proper safeguards in place to determine who gets what and when.
Here are three basic tips to avoid legal problems:
- Know your partnerships: Does your partner(s) treat you fairly who has the same vision for the company you do? If not, get out! If so, you may want to consult an attorney about how to structure and operate a business and what formalities you need to protect your share.
- Protect your product: Once your business entity is formed, you may wish to protect its intellectual property from unauthorized use such as your product or service, trade name, trademarks, licenses, assignments and non-disclosure agreements, etc.
- Comply with laws and regulations: Determine which federal, state and local regulations may apply to your business by obtaining the appropriate licenses, registrations, and filings. Penalties for noncompliance with can be devastating.
There’s nothing more rewarding than watching your Passion Project develop into a going concern, so discuss your business plans and objectives with an experienced business lawyer to help ensure that it is adequately protected.