Disputes over a Business Plan

A startup business is one that is just beginning, but expects to grow quickly. What this means is that they have something that they expect to be able to provide to a lot of people because the market for their product is large. Startups are especially common in the tech industry for this reason.

Startups are often smaller, and as such they are less structured than traditional small business models. They are typically innovative and able to adapt quickly to changes in technology or the market. Startups also tend to be more efficient, and have less overhead, which allows them to be competitive in their pricing. Many startups emphasize providing a personalized experience for their customers. This ability to personalize their services and adapt to the unique needs of their customers means that startups often enjoy a degree of loyalty that many other businesses do not.

Despite its many advantages, there are considerable disadvantages to startups as well. One of the biggest disadvantages is the level of risk involved. Many startups fail within the first year, and getting a startup off the ground means working more hours than may be feasible for many people. It takes time to be profitable, so the compensation might be low in the beginning.

Additionally, the cost of a startup is high. One thing that contributes to this high cost is working to acquire customers, as well as a share of the market. If the startup does not possess the capital to conduct the necessary market research and hire competent employees who share the same vision and dedication to the company, the startup is less likely to be successful. Fewer financial resources also mean that the startup is especially vulnerable to competitors even as it starts gaining customers. Bigger businesses will use their larger budgets to push the startup out of the market.

What Are Business Plans?

Business plans are documents that contain the goals, guidelines, and instructions that a business needs to follow in order to accomplish its main purpose. Generally speaking, these plans are created before a business is started, although they can often be reworked or re-implemented later on as the business encounters new challenges. Having a proper business plan in place is essential for the success of any business, especially newer small businesses. A business plan is what forms the backbone for any successful start-up business enterprise.

Business plans should be clearly written and should contain information that will help the organization operate in a smooth and efficient manner. A thorough business plan should include the following information:

• A clear statement of the business’ overall purpose and mission;
• A breakdown of specific business goals and aims;
• Guidelines regarding business conduct and standards;
• Names, contact information, and background information of possible members and other important parties;
• Instructions regarding financing, loans, and various other business expenses and financial matters;
• Provisions regarding how business conflicts are to be resolved, breaches of contracts, and legal disputes;
• Instructions regarding business succession, such as selling/transferring business and dissolution; and
• Change of leadership procedures.

The ideal business plan should provide a clear map of where the business will be going and how it will get there. This is especially crucial for the first few years of the business’ existence. What exactly a business plan covers can vary greatly depending on the needs of each specific business. Business plans can cover many other topics and issues; in general, the more thorough the plan, the better.

What Are Some Commonly Occuring Disputes Over a Business Plan?

To reiterate, business plans are necessary to help get a business up and running. However, they can often be a source of disputes. This is due to the fact that many parties may be involved in the planning practice. Some examples of the most common disputes over business plans may involve:

• Disputes Between the Business Operators and Local, County, and/or State Entities: A common issue with many business plans is that they need to conform to the zoning, planning, and land use laws in their operating area. Failure to obtain approval from a government agency or a local business bureau can create an obstacle for the business start-up;
• Disputes Between Business Partners: Personal interests can sometimes create disputes over a business plan, especially regarding the various duties and liabilities of directors. The partners may need to come to a compromise in order to ensure that the business runs smoothly despite their disputes;
• Disputes with Investors: One of the main goals of many business plans is to attract investors who will contribute capital to the business. These arrangements can often involve disputes over funding, such as a breach of contract; and/or
• Disputes Involving Shareholder Rights: From the very beginning, share and dividend disputes can occur even at the planning stage. An example of this would be how the distribution of stocks is often a point of contention between the business and its shareholders.

How Can Disputes Over the Business Plan Be Resolved?

It is not uncommon to experience a certain degree of disputing over the terms of a business plan. Actually, that is one of the main purposes of having a business plan, to expose and resolve any differences beforehand, so that they do not become a problem later on in the long run.

If a business plan dispute becomes prolonged, or begins to delay the business operations, it may be necessary to seek legal assistance. In some cases, a legal claim must be filed in court. This is especially true in cases where the dispute is actually causing business losses for other persons involved. The conflict may be subject to court intervention, such as prescribed mediation. Alternatively, the court can order a damages award if losses have already been experienced.

Many business plans will include a clause that calls for alternative dispute resolution. Alternative dispute resolution, or “ADR,” refers to ways of addressing and settling disputes outside of court and its traditional, adversarial atmosphere. Alternative dispute resolutions are often so effective that the American Bar Association actually recommends them as a first step, as opposed to immediately going to a court to order a resolution. 

Furthermore, many courts actually require alternative dispute resolutions to be pursued before they will begin litigation, such as mediation and arbitration. Settling disputes outside of courts can save time and money, and often the processes are less formal and more flexible than those in the trial court.

Another advantage is the cooperation and creativity of the parties involved. Because of the collaborative nature of ADR, each party may come to better understand the other’s position, and solutions that the court cannot legally impose may be implemented. Some types of alternative dispute resolution are:

• Case evaluation;
• Collaborative law;
• Divorce coaching; and
• Private judging.

The two most common types of alternative dispute resolution are arbitration and mediation.

Should I Hire a Lawyer for Disputes Over a Business Plan?

If you are experiencing disputes over a business plan, or wish to initiate the process of creating a business plan, you should consult with a local business lawyer. A skilled and knowledgeable local attorney can ensure that your business plan will be effective, and help avoid disputes over the business plan by ensuring you understand how your state’s business laws may affect your case. 

Further, an experienced and local business attorney will also be able to help you arrive at a suitable business plan that conforms to the laws in your region. Finally, an attorney can also represent you in court as needed.