Category: Startup Issues
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Buy-Sell Agreements: The Cross-Purchase
If you’re choosing between a cross-purchase and an entity redemption buy-sell, here’s the short answer: a cross-purchase works best when you have a small number of owners, relatively stable ownership, and you actually want the surviving owners (not the company) to end up owning more of the business. If you have lots of owners, you…
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Why every business with 2 or more owners needs a buy-sell agreement
A buy-sell agreement is a document that preserves continuity of business ownership when specific events occur, such as death or disability of a business owner. It is a contract between shareholders or business partners concerning the future ownership of the business and can be drafted as part of the company’s shareholder agreement or as a…
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Why Every Entrepreneur Should Listen to 2Pac
Tupac Amaru Shakur is an uncomfortable case study for founders not because his life ended badly, but because his career looks like a high‑velocity organization operating inside adversarial systems: rapid brand expansion, constant scrutiny, hostile counterparties, and almost no slack. He built one of the most powerful personal brands of the 1990s while navigating legal…
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How Well Do You Know Your Business Partner?
“Not to trust another human until he’s checked out by every kind of background check you can check.” That’s the lesson one entrepreneur unfortunately learned after a business partner mismanaged their ventures’ funds. His partner’s mismanagement had catastrophic consequences for their companies and employees. Does this mean you should hire a private investigator? Well, that’s…
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What 300 Can Teach You About Business Law
Entreprenuer.com recently published an article entitled “A Spartan’s Guide to Business” in reference to the blockbuster “300.” The article highlights 3 business lessons that are to be learned from the movie: Your CEO needs to be a strong leader. Train your employees and foster a culture that promotes loyalty. You need to have a strong…
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Start a Legal Fund Instead of Purchasing Pre-Paid Legal
If you’ve started a business recently you’ve probably heard about Pre-Paid Legal. Basically, you are provided “access” to an attorney for a monthly fee. Think of it as legal insurance. This may be beneficial to some small-business owners, but I offer a suggestion: Rather than pay Pre-Paid Legal $35 or so monthly, pay yourself $35…
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Leasing Office Space
Once you’ve outgrown your garage, your home office or your executive suite, you will probably consider leasing commercial office space. The best advice I can give you, the entrepreneur, is to treat the office space lease process the same way you might the car buying process. If you don’t, you could end up legally responsible…
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Prevention Always Makes Cents, Part II
I wanted to follow-up with you concerning the importance of taking preventative legal steps when starting your business. Googling this weekend, I found a blog entry from Rhonda Abrams, author of The Passionate Entrepreneur on Yahoo! Finance. Here’s an excerpt: “Taking care of your company’s legal health is like taking care of your personal health:…
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Prevention Always Makes Cents
A recent Wall Street Journal article detailed the steps you should take to avoid collection problems when expanding your business across state lines. The article suggested prevention was by far the best defense. I believe that’s right, but I’ll make a much broader statement: Prevention is the best defense for any potential business problem. As…
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Friends Can Be Bad Business Partners
Launching a startup business with a friend can be an exciting and rewarding experience. However, I suggest you take a moment and really think about what the potential consequences might be. Starting a business is tough and having a friend involved will only make it more difficult if things go sour. Most importantly, your friendship…