As a lawyer, I have worked closely with hundreds of innovative companies to establish legal foundations. This includes working with single-person side hustles and established companies with dozens of employees. During that time, I’ve seen patterns.
I’ve seen companies succeed by understanding the legal framework in which their business exists.
The principles below can apply to any business, but they have extra power when applied to creative companies. A creative business is a business whose primary asset is its original, creative work.
The four things are as follows:
You must address and invest in these categories for a business to succeed.
And here’s a secret that not many creative business owners know: these categories rely upon simple legal principles — that, once understood — can unlock and transform companies.
I’ve seen the transformations that happen once someone learns these legal principles and puts them into practice. Instead of working against the wind or getting frustrated by things that don’t matter or won’t work, these companies devote time, effort, and money towards something that will work and create lasting value.
It’s almost magical, and I love seeing it happen.
These are simple concepts, but putting them into practice takes a little forethought. The good news is that all these things are available to any business owner, no matter how small. So even if you are a new business, these things can benefit you from day one.
Without much further ado, let’s get into the four legal foundations that all creative businesses need.
The brand represents the way that your customers see you. That’s all it is. But that thing — the brand — encapsulates a ton of value.
Think about this.
When we talk about the most prominent companies globally, for instance, Apple, McDonald’s, and Nike, we talk about brands. We notice a trend in that each of those businesses gains value from having a solid and distinctive brand. For most people, the mention of any of those brands conjures specific images and benefits associated with that brand.
In short, we perceive each brand differently. And whatever our opinion, the brand is something that the company consciously cultivated from day one.
You build your brand’s foundation upon trademark law.
Each of the brands mentioned above — or any other existing brand — can function the way they do because of a body of law that protects them and the brand value the company has built.
To build a strong brand, you must understand a fundamental principle of trademark law.
All brands flow from a single principle: trademark law helps consumers find the same company again.
If you know that principle, everything else in trademark law — and consequently, building a brand — becomes easier to understand.
Define your brand
If you are building a business, you are making a brand. A great deal goes into that, but the first step is to define the mission of your business and why it exists. Once you have done that, you can better communicate your value to your customers.
Have a brand that people remember
If we understand that trademark law functions as a consumer protection law and not just a means to protect your brand, we find easy guidance in naming and defining our brand. Of course, you want a brand that differs from other brands and isn’t too descriptive.
Clear your brand
If you plan to build a brand, the first thing you should do is clear your brand. Too many people skip this step and run into a shipload of problems. The process is straightforward, you perform a knockout search, and if everything is fine there, you get a professional trademark search done. To get this right, you clear your brand before committing to it so that you don’t have to have an awkward conversation later.
Register your trademark
Once you have a brand name that you like and that you have cleared, you should register your brand with the United States Patent & Trademark Office.
“Organization” means how you structure and set up your business. Whether it’s one person or 1000 involved in the company, the organization always matters. With no organization, you have no business.
The whole point of a company is to enable one or more people to work towards a common goal. So, naturally, it’s simpler if you’re working alone, but don’t be fooled by that simplicity — structure still matters, as you will see below.
You need to know the legal principle if you want to structure things the right way: you are not your business.
In other words, when you commit to creating a business, you commit to creating an entity distinct from yourself, even if you provide the bulk of the services.
Separate yourself from your company
When you create a company, you create something larger than yourself. While you may be a guiding hand for the company’s development, the company soon becomes a separate legal person.
That’s a powerful concept once you let it sink in.
And it leads to a few conclusions. First off, you and your company are no longer the same. Instead of your company consisting solely of you — the person — it becomes an asset you can build up.
Once you have adopted that perspective, your job changes, and you move from being a source of labor for the business to the owner of an asset that can exist independently of you. It can be grown, bought, sold, and changed like any other property.
Your job goes from working in the business to working on the company.
When you settle into the role of the business owner, you face a new set of challenges. As your business grows, new people may seek to be involved. Maybe that’s new partners or new investors. Perhaps you give stock options to new employees.
Each of these moves triggers new considerations surrounding ownership. But if you think ahead and plan well from day one, you can create and maintain a structure that serves your ends.
Structure things correctly
If you think about how you will structure your business early, you save a ton of pain.
Every business will have this structure. We call these structures “business entities.” A business entity is a legal construct such as a corporation or an LLC. Business entities serve to do one thing: create separation between you and the company and set the rules for how the company will run and who owns what.
Businesses do not exist in a vacuum.
That means every business has relationships with people and companies outside the business. Those relationships include customers, vendors, and partners. All of those relationships prove crucial in the long-term success of any business.
Relationships in business work like relationships in any other area of life: they live or die upon clearly expressed understandings. In other words, clear communication forms the basis for a successful relationship.
The legal principle that supports your business relationships: have clear, preferably written, understandings.
Have hard conversations early
Too many would-be business owners want to jump right into writing up a contract. They think that’s what they are supposed to do — have a contract. It’s true that written contracts matter (see below), but deals become worthless if they don’t come from a foundation of mutual understanding.
A written contract records and memorializes things to which you’ve already agreed.
And getting to an agreement means having hard conversations about things that most of us would rather not: money, failure, responsibilities, and boundaries.
I’ve seen that when people do not discuss these things, these same things often lead to a blow-up later.
You will doom the relationship if goals and expectations are not well defined. If you work with someone in a business situation, you will do well to discuss to achieve clarity and not suffer from mismatched expectations.
Document your understandings
Once you have decided what to do together, you must document it. We document because memories fade and because people remember things differently.
We might forget what we agreed to or have misunderstood something. Or we might have an assumption that poses a hidden risk. You address this by writing things in a contract.
The contract need not always be complicated, but it should still exist. The complexity of any agreement depends upon how much we have at stake. For small things, a simple email might suffice. For more extensive collaborations, a 40-page plus document serves us well.
Focus on the relationship, not the transaction
As time goes on, the nature of the relationship changes. Conditions change, goals change, and people change. It’s a law of life, and you should be ready to adapt to these changing conditions.
Adaptation means being willing to revisit or negotiate things you may have decided upon earlier. The flexibility enables stronger relationships and better outcomes.
While a deal’s a deal, the real value of contracts comes from using a transaction as the basis for a trusting relationship.
Every business makes something. Every business creates. It might be a new product, original art, or service. But since we are talking about creative industries, we need to pay special attention to using creative work as a central element in building your business.
The legal principle: your creative work is an asset.
Treating your creative work as an asset does nothing to diminish that work’s status as an act of brilliance. On the contrary, when you — the creator — view your original work as an asset, you position yourself to benefit fully from that work.
Take stock of your creative assets.
I know that it might be a stretch for some people to think of their creative work in terms of assets, but all that means is to think of the work you create as a product. It has a value that you can use when you build your business.
Get legal protection for your creations.
The law wants you to create new things, and there is a system to support you. The problem is that not many business owners understand the fundamentals. They are not complicated, but you ought not to ignore them. The two main moves you will make in creation are copyright registration and trademark registration. There are others, but you will be in a good position if you start there.
By registering your assets properly, you get extra protection. When you bring additional security, you build extra value. So your work literally — and immediately — becomes more valuable.
Know how to use your creations
If you think of your value solely as the work you do, you limit your value to the amount of time available. You can only do so much and help so many when your worth comes from the amount of time you physically work.
A beautiful thing happens when you think about assets, especially assets you have taken steps to protect: you can find new ways to use your creations. For example, a blog post can become a video, and a book can become a podcast; you can license your brand to another company and earn royalties. All established companies do things like this. They repurpose creations and find new ways to generate value with them.
How do you get started with all of this?
I know that we went over a lot in our discussion of legal foundations for creative businesses, but don’t fret.
You don’t have to get all of this down in a day. You will iterate through all of these things throughout your business life. These things will always be a part of the company and evolve through trial and error.
So the key is to get started. Unfortunately, the first step is not always apparent, so it can be helpful to bring in extra support from time to time.