Top Ten Mistakes Made by Entrepreneurs (Please read this one if you’re considering a startup!- Russ)

The life of a startup can be precarious, a wrong turn disastrous. Harvard Business School professor Constance Bagley discusses the most frequent flops made by entrepreneurs, everything from hiring the wrong lawyer to puffing up the business plan.

"I’ve heard many war stories," says Harvard Business School associate professor Connie Bagley, reflecting on conversations with former students who have started business ventures. To prepare current students for the HBS Business Plan Contest, Bagley gives a seminar in which she shares these war stories with the prospective entrepreneurs, in the form of a list of "top ten" mistakes often made by the unsuspecting. In addition, Bagley teaches the second year elective course, "Legal Aspects of Entrepreneurship," which covers the waterfront of issues typically faced by entrepreneurs in starting and running a business, including securities and intellectual property law issues.

Bagley’s teaching and research focus on legal aspects of entrepreneurship and corporate governance. Before coming to HBS in 2000, she taught at Stanford Business School, and prior to that she was a corporate securities partner in the San Francisco office of the law firm of Bingham McCutchen. She is author or coauthor of several textbooks, including the just-published second edition of The Entrepreneur’s Guide to Business Law.

Bagley recently met with Harvard Business School’s New Business magazine, and talked about the legal issues commonly faced by entrepreneurs, as well as her thoughts on how to successfully deal with them.

In Bagley’s view, there is a tendency on the part of many entrepreneurs to think that the lawyers can handle the legal issues and to delegate too much to the attorney.

"While the language of the law can be intimidating, the concepts are usually quite straightforward," she says. "Lawyers tend to be risk averse, and if you delegate to them you will usually stay out of legal trouble but can often compromise your business objectives. My goal for the course—and for the coaching I give entrepreneurs—is to give them sufficient comfort with the legal concepts to feel confident in driving the process, to understand the ways in which the law is a constraint, but also the ways in which it is a tool that can help you create and capture value." Lawyers who have no experience working with entrepreneurs and venture capitalists will most likely focus on the wrong things. —Constance Bagley

by Harvard Business School New Business Staff Constance Bagley

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