This article is part of a series I launched at Social Change Nation – I interview social entrepreneurs from around the world for my podcast, and now you’re getting the inside scoop on the lessons they are teaching me…I’m sharing these with you so that we can learn together from these change agents. I’ll publish a new one of these weekly for at least a month – and even longer if you all love it & comment on it. Want to keep up? Then follow me on umano.me, subscribe to my podcast, or just link up with us at socialchangenation.com.
This week, for my podblog, I interviewed the Social Venture/Law Firm Wright Connaster Law out of Dallas, TX. Founders Bob and Adam are on a mission to equip social entrepreneurs with the best legal tools at a level that makes sense for a cause minded startups.
As I’ve linked with people around the world who are looking to start social ventures, legal questions are consistently the largest hurdle that social entrepreneurs see themselves facing. But, the beauty of all of this is that new and improved legal structures is that for those of us who don’t want to be constrained by the non-profit model & want more purpose than the traditional for-profit model, we have some new and exciting options. Let’s check out three of the legal tips I learned from Wright Connaster Law , and then you can dig into the full podcast here.
1.) Check if your state has B-Corp Legislation. Know the difference on this one – about half the states in the US allow a legal distinction for B-Corporations, but there is also a separate certification called B-Corp (it’s sort of like the ‘certified organic’ label of cause based business). Both are cool, but they offer distinct benefits. The certification is just your way of getting a stamp of approval that says to customers ‘yes, we’re a cause based business.’ If your state offers the legal distinction, what this essentially means is that you will be able to bring in investors who you can legally require to consider your social return as well as economic returns when evaluating your biz performance.
2.) Get started with legal stuff right away. I see way to many cause based startups thinking that legal structure is something that they can put of for a later date. IT’S NOT. You need to seriously address basic questions of legal structure right away – especially if you want venture capital or even crowdfunding oftentimes. The good news is, this doesn’t have to be insanely expensive. Firms like Wright Connaster Law run on a lean startup model, so they can offer a la cart services that’ll get you exactly what you need without the frills. Don’t do this right away, and you run the risk of having to put out a major fire in your biz later, when a little prevention now would’ve gone a long way.
3.) Your Legal Structure and Certification can Serve as a Beacon. Customers are looking for cause based companies to do business with. So, if you have a certain certification of legal structure that is purpose based, you can show that front and center on your website, and it will be a quick way for people to know what you’re all about. Oh, and by the way, there’s a new class of angel investors that want to invest in cause based companies. Set yourself up with the right foundation from the get go, and you’ll have the key ingredients in place to draw them in.
Legalize always seems like a scary and expensive part of any business, but it doesn’t have to be. Find yourself a nimble practice like Wright Connaster that specializes in social entrepreneurship AND flexibility, and you’ll be well on your way to a solid foundation to build your biz on.
Want more stories of purpose-driven entrepreneurs? This story originally appeared in our Social Good Guide – 50 businesses. 50 causes. 50 ways to change the world. You can find them all at socialgoodshopping.com.