Congratulations on forming a company!

You’re creative enough to have an idea that can be brought into commerce and disciplined enough to do the work to get here. You have likely defined your concept, conducted market analysis, created a business plan, and formed a company to both establish a liability shield and help you build value in the enterprise.

So…now what? I’m asked this question often by entrepreneurs, and my answer is simple: use your BRAIN.

MN Cup Applications Are Open!

It’s that time of year again!  No, not eggnog and carols, not leaves falling, not cabin season (quite yet…), but time for aspiring entrepreneurs to apply for entry in the MN Cup.  For those who are not frequent readers of entreVIEW and don’t know about the MN Cup, it is the largest annual business plan competition in the country for emerging entrepreneurs.

The Startup Hunger Games: Survival Tips for Entrepreneurs

In 2025, building a startup feels more like surviving The Hunger Games than building a business. Venture capital has been tight, interest rates are high, and only the most resourceful founders emerge from the arena with funding intact. But the tide may be turning, according to Crunchbase data: global venture funding climbed to $97 billion in Q3 2025, up from $92 billion in Q2 closing up 38% year over year. AI startups dominated, capturing over 46% of total funding, with just eighteen companies securing one-third of all capital deployed. This intense capital concentration favors founders who are disciplined, legally sound, and ready to scale. History backs them: Airbnb, Uber, and Slack were all born in downturns. The entrepreneurs who survive 2025’s volatility are not riding the wave —they are building enduring businesses that will thrive when the market rebounds.

You Don’t Know What You Don’t Know

My parents are in the middle of winding down their farm operation in Northern Iowa. The idea was simple: sell the land; retire and walk off into the sunset. But as they began the process, so too came layers of complication. The deal involved land that had been in the family for decades, the estate of my grandmother, multiple siblings (nine total, to be exact), and complex tax treatment. It was to say the least – complicated.  

At some point in the process, they realized they needed help—not because they lacked capability, but because there’s no clear-cut blueprint for navigating situations like this. You can only go so far on your own before the complexity outpaces what you can manage without professional help.

Startup Law 101: 5 Mistakes That Can Blow Up Your Startup – Don’t Sign the “totally fine” ChatGPT Contract

Startups move fast, but legal mistakes move faster—and they hit harder. Whether you’re bootstrapping or backed by big VC, your lawyer isn’t just a formality—they’re your firewall. Too many founders treat legal like an afterthought, then wonder why things explode. From boardroom to courtroom, these are five founder mistakes that separate the bold from the bankrupt. So, before you launch that app, hire that friend, or sign that “totally fine” ChatGPT contract, read this:

1. Don’t Wait Until You’re in “Oh Sh*t” Mode to Call Your Lawyer

In the startup world, things move fast—your legal strategy should move faster. Waiting to bring in counsel until there’s a co-founder fallout, a misfired contract, or a surprise lawsuit is like trying to install brakes after your Tesla hits 90 mph. We’ve seen it all: 

• One founder stops showing up but still owns half the company because no one drafted a real agreement. 
• Someone grabs a one-page operating agreement off Google that leaves you stuck with default state rules that don’t fit your company’s needs. 

A little legal foresight upfront saves hours of cleanup later.

Lessons from FARMCON: Kevin Van Trump’s Wisdom on Investing in Startups

Last week, I had the privilege of attending FARMCON in Kansas City, MO. Hosted by Kevin Van Trump, FARMCON brings together some of the sharpest minds in agriculture for a few days of networking, learning, and inspiration. For those unfamiliar, FARMCON isn’t your typical conference—it’s half market overview, half start-up incubator and designed to push boundaries and equip agricultural entrepreneurs with tools to thrive in an industry that’s as challenging as it is rewarding.

Kevin Van Trump, who is the man behind The Van Trump Report, is a well-known name that is synonymous with innovation and insight in the ag sector. Kevin started from the bottom of the commodities world in Chicago and built his reputation by not only understanding market trends but by helping others navigate them. Through his report, read in over 35 countries, and his consulting firm, Farm Direction, Kevin has become a trusted voice for farmers, investors, and executives alike. Kevin has an overarching passion for rural America—a passion that shines brightly at FARMCON.

While FARMCON covers a range of topics, Kevin ran a panel that offered insights on investing in startups, and his comments stood out as particularly impactful. His decades of experience investing in ag-tech startups and other ventures have taught him hard-earned lessons, many of which he shared during the conference. Here are my top five takeaways:

The Power of Finding your Community on Twitter

What if I told you that a place existed where you could interact with hundreds of entrepreneurs, lawyers, accountants, bankers, investors and more, all from your seat on the couch? In that same place, these people share ideas, tips, and stories from their years of experience. And the best part—you can gain access to this vast base of knowledge at your fingertips, and all for free. That place is Twitter, and no matter what business or industry you’re in, you’ll likely find that there is a Twitter community catering to it.

Hot off the Press: SEC Proposes Conditional Exemption for Finders

It has been over three years since the SEC’s Advisory Committee on Small and Emerging Companies recommended (by a split vote) that the SEC should propose a conditional exemption for finders from the broker registration requirements of Section 15(a) of the Exchange Act for certain capital raising activities involving accredited investors. Last week, the SEC finally issued such a proposal. 

This is potentially big news! I’ve spent countless hours advising emerging companies about issues related to the retention of “finders” to assist with fundraising. For almost 30 years, these “finders” have been pointing to the Paul Anka no action letter* (from 1991) as evidence that they can be compensated for helping raise capital without being registered as brokers. 

The problem with the Paul Anka precedent is twofold. First, it is based on a very narrow situation that rarely matches the actual circumstances faced by people who regularly work to help emerging companies find capital. Mr. Anka only did it once in his life, and he never had any contact with the potential accredited investors about the investment. Second, given the SEC’s stance on the need for broker registration for anyone receiving transaction-based compensation in these situations, the SEC had essentially stated in recent times that, if it had a “do over,” even on the limited Anka facts, it likely wouldn’t have provided no action relief in the current regulatory climate. 

You are not alone

This week (October 9-16) is startup week here in the Twin Cities. It is a time when you can find entrepreneurs, from all walks of life throughout various corners of the metro area, coming together to learn from and celebrate each other. There is something on the agenda for almost everybody.

Meanwhile, startup weeks have happened, are happening, or are otherwise scheduled to happen all over the country (see some links below). It’s a powerful reminder to all entrepreneurs that you are not alone in your journey. To be a successful founder, you need to have a network of mentors, so find ways to reach out to and embrace your local founder community, whether it be at a startup week gathering or otherwise.

One awesome example of this in action is Josh Fedie at SalesReach, a Minneapolis-based startup that has developed a system to help sales teams deliver marketing-approved content to sales prospects at the right time (what he calls “Smarketing”). In addition to putting in hours to run his business, Josh has committed significant hours building a strong following for his podcast, The Founders Mentality, which consists of casual, conversational interviews with a plethora of successful founders. He has become one of my favorite LinkedIn profiles to follow because, as a startup attorney who works with founders nearly every day, I find that the interviews offer invaluable insight into all sorts of hot topics for founders and help me better understand the founder “mentality” so that I can better serve my clients.

The Little Drummer Boy: An Entrepreneurial Story?

As I was contemplating my latest post, I happened to be listening to The Little Drummer Boy. I can’t recall exactly which version it was, because I own several (I know you may think this is weird for a guy whose holiday season is filled with potato latkes, dreidels, sufganiyot, and candle lighting). I can’t help it that I like Christmas carols—especially The Little Drummer Boy. As one of the characters from one of my all-time favorite musicals, Striking 12, says “You can’t ruin Little Drummer Boy.” He then proceeds to describe the weird version of the song sung by Bing Crosby and David Bowie as proof. If you don’t believe me, check out the video.

In any event, I started thinking about how I was going to find a clever way to connect The Little Drummer Boy and entrepreneurship. I mean, there must be something about the song’s author, Katherine Kennicott Davis, that connects to entrepreneurship, right?

Securities and Your Business: An Overview for Beginners

As an entrepreneur with a great new idea, probably one of the last things you want to hear when you’re raising money is: “Oh, and we also need to make sure you’re compliant with securities laws.” It’s yet another hurdle to clear on your way to bringing your idea to market. You know you’re supposed to care about it, but you may wonder how it really has anything to do with your business. 

Let’s break it down: Does your business use other people’s money? If the answer is yes, then securities laws likely apply. 

What is a “security” anyway? This is actually a complicated question that courts have grappled with over the years. 

10th Year of Minnesota Cup Another Success

This past Wednesday, I had the privilege of attending the final awards event for the Minnesota Cup. The awards event concluded the 10th year of the Minnesota Cup, which is a statewide competition for early stage businesses in Minnesota. Gray Plant Mooty has been a sponsor of the Minnesota Cup for most of those 10 years, as we’ve found it to be an excellent supporter of Minnesota’s entrepreneurs and start-up community.

At the event, which I thought was the best yet, they provided some interesting statistics. During the 10 years of the event:

• Over 9,000 businesses have participated.
• Greater than $1,000,000 in prize money has been awarded.
• Division winners have raised in excess of $160 million in private capital!

This year’s event, like the last few years, was hosted at the McNamara Alumni Center on the University of Minnesota campus. The room was filled with past participants and winners, entrepreneurs, students, business and political leaders, and others interested in Minnesota’s entrepreneurial community. Even our state’s two US senators sent video congratulations to the winners and participants.

Each of the seven division winners and runners-up gave one minute “elevator” pitches of their businesses.  The pitches were great, and displayed a variety of interesting business ideas. Among the elevator pitches by the division winners, the audience liked the presentation from Jonny Pops the best, and voted for them to win an extra $1,000.  Jonny Pops, which makes all natural smoothie-sicles on a stick, was also handing out samples of their product at the event. I thought they were quite good and will plan to buy a box soon for my kids to try.

At the end of the evening, the judges selected 75 Fahrenheit (75F) as the grand prize winner of this year’s Minnesota Cup. In addition to receiving $50,000 for being the grand prize winner, 75F also won $30,000 as the clean tech/water division winner, and received a $25,000 grant from the Southern Minnesota Initiative Foundation – total prize money of $105,000! 75F has developed an interesting technology that allows users to regulate building temperatures in an environmentally friendly way by using wireless zone controllers to monitor airflow temperatures in building zones.  

The other division winners were equally as impressive as 75F. I imagine the judges had a very difficult decision in picking a winner.  

For any aspiring entrepreneurs who were not able to participate this year, I suggest that you give strong consideration to participating in next year’s competition. Just by submitting an application, you are forced to think through some issues in your business plan that you might not otherwise consider. If you are chosen to be a semi-finalist in the competition, you will have access to mentors, advisors, investors, and others in the entrepreneurial community who can help you further refine your business strategy.  Even if you don’t win any of the prize money, the Minnesota Cup provides a great opportunity to make valuable connections for your business that you might not otherwise have. 

Congratulations to all of this year’s participants, and especially to the winners.  We’ll be looking forward to next year’s competition.

Tips for Budding Real Estate Entrepreneurs, Part Two

Marcus LeBeof continues his list of six steps to entrepreneurial happiness in the residential real estate market. (Missed Part One?: Check it out here.)

Step #4: Do the House Flipping Math

When doing your initial house flipping analysis, you can do a little “napkin math” to estimate if the house is a winner. The first thing you need to do is determine the potential selling price of the house when it’s all fixed up – this is what’s known as After Repair Value (or ARV). Then simply subtract the purchase price, repairs and all your monthly carrying costs. What you have left over is your profit.

If all this initial math points to profitability, then you may have an excellent flip opportunity on your hands and you should consider purchasing the house.

Step #5: Manage the Rehab Tightly

Once you do purchase the house, don’t just rely on your contractor to handle and supervise all the repairs. Make sure you manage this process tightly if you are on your own, but better yet hire a professional contractor to oversee all the rehabilitation, especially if the rehab is extensive. Make sure you personally supervise the repairs to ensure that they are being carried out properly and on budget.

In the end, your profit largely depends on what you pay for the house initially, but making sure that the repair costs stay within your budget is equally if not more important. Likewise, overextending yourself by doing more than your budget allows on the rehab or taking your eye off the ball and allowing your contractor to run free are two of the quickest ways to ensure that your make profits will go up in smoke.

Step #6: Work Fast, Make a Profit

Time is of the essence when flipping houses for profit. It’s a race against the clock because the longer the rehab takes, or the longer the house sits on the market once it’s done, the less profit you make. Soft costs such as financing payments, insurance payments, town taxes, utilities and other carrying costs, all of which have to be paid at regular intervals, add up to diminish your profits the longer you own the house.

It’s simple—the shorter the time you hold onto your investors’ money, the better your profits will be, so make your improvements fast. Do the job well, but do it fast. Make sure your contractors do the job on budget and on time and hire good real estate agents who help you price the final product so it sells quickly. In all of our house flips, we estimate six months from purchase to sale, but factor in a few additional months of expenses to make sure we profit on each and every flip we do.

I constantly remind my mentees to be intentional in everything that they do. If you want a certain type of job, you need to network with the people who hold the position you aspire to so that you may learn their path and avoid pitfalls. If you want to attend a certain institution, you need to identify the members of the admissions committee and find ways to appeal to their interests so as to stand out from the crowd. With investing, be it in real estate or otherwise, it is always wise to take on a mentor (or two) so that you may benefit from the collective wisdom of those who have gone before you. And you need to assemble the right team of advisors to ensure that you can navigate the inevitable problems efficiently and successfully.

Tips for Budding Real Estate Entrepreneurs, Part One

As a young married couple, my wife and I are often encouraged to look beyond our W-2 income for ways to generate wealth. Real estate is often identified as the low-hanging fruit of investments. You buy a house, fix it up a bit and then put it back on the market for more than your purchase price plus the cost of your fixes. This topic came to mind as we headed down to Houston, Texas last Memorial Day weekend, which also happens to be where I purchased my first home—one that I still own to this day. 

While it may sound simple in theory, investing in real estate can be rather complex and has risks. Consider carefully the steps to success to increase the turns of wealth generation (not degeneration). I hope that I can help shorten your learning curve and make your entrepreneurial real estate endeavors more profitable in a short period of time (Hat tip Michael Lacava’s Beginner's Guide to Flipping Houses For Profit). The first three steps in my guide are below: 

Step #1: Assess Your Cash Situation

Before you get started, take stock of your own financial resources. You need to know how much money you have to invest on your own, or whether you’ll need to find investors (or win the lottery) first. Finding investors is an art unto itself (and the subject of many posts on this blog), but knowing how much cash you have to invest before you begin is the logical first step. Having your own money to invest is a bonus. If you don’t, there are plenty ways to flip houses with money from banks, private money lenders, and other means.

Another great way to get started if you don’t have the money to do it all on your own is to find a partner or partners who have money to invest with you. Splitting your first house flip profits with other partners is a great way to start, while building some momentum and getting your first house flip under your belt. Sure, you’ll have to split profits, but it’s far better to get 50% of something than 100% of nothing.

Step #2: Start Building Your House Flipping Team

After you finalize your cash situation you should start building your house flipping team. This team will help you to find, fix and sell the property—the right set of collective wisdom will surely help you reach your house flip goals that much faster. No matter your level of experience, you simply will not be able to do everything on your own. Enlisting your own mastermind group will not only help you be more productive, but will help you work through the inevitable problems and challenges that you’ll face.

Your team at the very least should be composed of skilled real estate brokers, contractors, architects, insurance specialists, accountants and money lenders. All these professionals can help you shorten your learning curve and get you making money flipping houses faster than you would have been able to do on your own.

Step #3: Find A Good House to Flip

Finding a suitable property to flip is certainly a challenge. This is especially true if you have decided to look in a specific geographic area—one that you’ve fully researched and which interests you. Ideally, you should be able to buy the house for a low price, eyeball it as suitable for a quick and relatively cheap rehab (so you can sell it at a higher price), and (obviously) make a profit. Knowing all these aspects in order to make the profit, you’ll need to rely heavily on your house flip team (see Step #2 above).

A skilled real estate agent can assist you in finding houses to flip. You can either focus on properties that may not need expensive repairs or you can look for properties that need more extensive repairs, but the kind of repairs that are likely to substantially increase the equity. Both real estate agents and real estate wholesalers can help you in finding both kinds of properties.

Feel like you’re just about ready? You’ll have to at least wait for the highly anticipated thrilling conclusion to this post next month. Keep reading to learn steps 4-6…

Employment Law and the Entrepreneur

Since I’m new to entreVIEW, I decided to do some homework, make sure that I knew something about being an entrepreneur (and how to spell the word entrepreneur). So in my own entrepreneurial fashion, I researched my market.

The first place I started was startupsanonymous.com, a blog where anyone involved in a startup can share their stories and ask questions. The first post I read was What Happens After You Fail. Holy moly. This candid picture of failure exemplifies why I admire entrepreneurs so much. The heart this person put in – the courage – is breathtaking.

I next sought information from a friend who works with entrepreneurs. He explained that he’s seen every personality type and motivation for starting a business. But they all share one overwhelming trait – courage.  

Entrepreneurs are willing to take great risk.  While launching a new company, you may or may not know what your risks are or are simply too focused on that launch to see or address the risks. That’s where people like me fit in.

Every attorney is a Negative Nelly to some degree. We have to explain to entrepreneurs all the possible risks – from creating a legal entity to protect their personal assets to making sure they’ve signed up for Minnesota’s unemployment services when their hire their first employee. We explain legal failure, the failure to do or not do what the law says. We repeat, “If you don’t do this, this may happen.” Most of us are not negative people, and we know that no one likes to be told what to do. Instead of telling you what to do, we advise.

When it comes to employment law, the risks for start ups can’t be overcome with perseverance and courage alone. Here are a few:

 Choosing to engage individuals as independent contractors instead of employees. No doubt about it, the independent contractor relationship is much easier from an administrative perspective – no tax withholding, no unemployment reporting, no requirement to monitor hours worked, etc. – however, agencies like the Minnesota Department of Employment and Economic Development (MnDEED) are becoming increasingly savvy at and utterly determined to investigate companies who misclassify workers. Here’s a brief overview of misclassification analysis.

 Doing the paperwork. Once a startup has an employee, the sea of paper is daunting for anyone, especially an entrepreneur focused on a new product or service. Unemployment, worker comp, employee benefits, I-9s, harassment and discrimination policies, overtime, recordkeeping, tax withholding and reporting – forms, fees, and fun! More employees = more paperwork. 

 Protecting the ideas. A startup relies on its new ideas – a new product, service, delivery, etc. By entering into noncompetition, nonsolicitation, and assignment of inventions agreements with workers, entrepreneurs can protect those ideas and their success. While trust is fantastic, a contract has teeth.

Now these issues carry some risk – MnDEED investigation and penalties, a lawsuit, trade secret misappropriation, etc. Even though the risk may be low – you may believe all new staff members are family members – fending off the risk and facing the risk can be costly and will shift time and resources away from business success.

In addition to the courage, drive, and focus, entrepreneurs understand one thing that makes life for employment lawyers easy. You understand that your people are a key to your success. They too share your courage since they too are making an investment in your new business. In fact, some commentators wish all employers would follow suit and create entrepreneur-like workplace culture. Knock on wood, appendages crossed, that investment, courage, and perseverance will all pay off.

A Post by Kate Bischoff, Guest Blogger

Observations on Good Board Practices

Happy New Year to all of our entreVIEW readers. Here’s hoping that 2014 will be your best and most prosperous year yet!

This is one of my favorite times of the year (if you don’t factor in our current weather). After all, ‘tis the season for lots of wonderful get togethers with family, friends and co-workers. ‘Tis also the season, apparently, for Board meetings. Over the last few weeks, I have attended several Board meetings and have a few more approaching in the next few weeks. After reflecting on all of these meetings, and preparing for the ones to come in the near future, I thought I would share a few simple observations of Boards that operate well.

I recommend regular meetings of the Board, if at all possible. Boards don’t need to meet monthly, but they should try to meet quarterly. The discipline of preparing for Board meetings, even though it can take time, is time usually well spent for management and Board members alike. For management, it allows them to reflect on key accomplishments during the period since the last Board meeting and, more importantly, forces them to focus on what they would like to accomplish during the period before the next meeting and beyond.  This permits management to be thoughtful and realistic about what has been accomplished, where they are, and where they are going. Regular Board meetings also help the Board fulfill their fiduciary obligations by getting regular updates from management.

It is a good idea to schedule regular Board meetings on the same day and at the same time each month or quarter. If you try to coordinate a date and time that will work for everyone’s calendars for each separate meeting, you will have to wait a long time and spend hours and hours scheduling and rescheduling. Everybody’s calendars are too packed to try and coordinate a day and time that works for everyone. A better approach, I think, is to set your meeting dates and times well in advance and on the same day and time. For example, if you have regular quarterly meetings, have them all on the same day of the quarter (e.g., at 10:00 am on the last Tuesday of the quarter). It is inevitable that there will be conflicts on one or more of those future dates but, by setting the meetings in advance, you allow people the opportunity to try and plan the rest of their schedule around the regular Board meetings.

Finally, try to have at least one meeting a year in person. It is easier to do, of course, when all Board members are located near each other. But even, and perhaps especially so, for Boards that have members scattered across the country (or world), regular in-person meetings (yearly, bi-annually, quarterly, whatever) are a good use of company time and resources. In-person meetings are good for Board chemistry and allow Board members to become more engaged and committed to the company’s success. One Board I work with has regularly scheduled monthly meetings. The first two meetings of each quarter are held by teleconference, and the last meeting of each quarter is held in person. The Board has members in a few different states, but they all make an effort to attend the quarterly meetings in person, which I think has allowed them to become more involved with the company.

Some of these suggestions probably seem obvious to well-functioning Boards. However, if your Board is not currently having regular meetings, at regularly scheduled times, with at least one in-person meeting, you may want to consider changing that practice to relieve some administrative hassle, as well as to permit your Board to become more engaged and involved in your company’s success. Consider it a New Year’s resolution for a more successful Board in 2014!

Random Thoughts About The World’s Youngest Billionaires

I happened upon this recent list of the “World’s Youngest Billionaires” (yes, there are 29 under the age of 40, 11 of whom are from the US) in Forbes Magazine.  It made me contemplate what an incredible world we live in where young “hoodie-wearing” tech entrepreneurs can (at least on paper) be worth more than a BILLION dollars—or, in the case of Zuckerberg, $13.3 BILLION, but who’s counting?

I didn’t bother scouring the list to see if I was on it—after all, I am a few years over 40. However, I had remembered during a recent Las Vegas journey to sample the fine cuisine at In-N-Out Burger (without even ordering off the "secret" menu), that (at least according to The New York Daily News and Huffington Post) Lynsi Torres, the heiress to the chain who is only 30 years old, was a billionaire . But she isn’t on the list. 

Turns out that, according to this other recent Forbes article, she’s probably only worth about a half a billion dollars. That’s because she doesn’t yet own the entire company under some trust arrangements. The complicated case surrounding the ownership and related family intrigue detailed in the article is something I’ll challenge my fellow entreVIEW author, Anne Bjerken, to analyze for readers in a future post.

Once I stopped daydreaming about all the things I would do if I had a billion dollars (not to be confused with the Barenaked Ladies classic song about a sum with three fewer zeroes), it was time for me to attend Tuesday evening’s “Entrepreneurs Rally,” an event put on by the local chapter of EO, an organization for entrepreneurs. I had agreed (along with a few colleagues, two of whom are fellow entreVIEW authors) to serve as a mentor at the event, which is structured like “speed dating.” A group of 2-3 mentors and 7-8 entrepreneurs are paired up for 30 minutes to discuss issues and try to offer insights, ideas, and contacts to help the entrepreneurs with pressing issues.

As with the event last year, I was struck by how varied and vibrant the participating entrepreneurs (and mentors) were. Whether it was the guy “pedaling” kits for turning regular bikes into recumbent ones or the woman looking to “sew up” SEO for her online embroidery business, you can imagine the energy in the room with over 200 driven and engaged entrepreneurs talking about their business plans. 

Wouldn’t it be great if a couple of the attendees ended up on the Forbes list in a year or two? There should be room for a couple more because Larry Page and Sergey Brin, co-founders of Google each worth about $23 billion, will be turning 40 soon….

Tips for Navigating the Exit of Long-time Entrepreneurs

In recent months, I have had the pleasure of working with two lifelong entrepreneurs on the sales of their businesses.  Each of the entrepreneurs had decades of deep business experience, but that experience did not include buying or selling other companies.  Counseling them through the sale process, it was evident to me that we, as deal professionals (including attorneys as well as investment bankers, accountants, etc.), sometimes forget that M&A is not something that many business owners experience on a routine basis.  That being the case, I offer these five basic tips for entrepreneurs preparing to start down this path:

1. Get your legal and financial advisors involved in your potential transaction as soon as you either decide you want to sell or receive an offer or inquiry from a party interested in purchasing your business. Many key deal points are raised by buyers early on, and while you may not be technically committing to completing a transaction on those terms, it can be difficult, time-consuming and expensive to try to change those terms later.

2. If you have not bought or sold a business recently, ask your attorneys, accountants, or other advisors for a roadmap of the process. It will help you feel more comfortable if you have a better idea of what issues and questions to anticipate from the buyer and have realistic expectations regarding timing and transaction costs.

3. You will feel frustrated, angry, impatient, thrilled, and excited at various stages in the process.  Decide whether or not getting your deal done is worth enduring those stages and, if so, know and accept ahead of time that these things are going to happen.  Keep in mind that the deal process is a means to an end that is profitable for you.

4. Share your concerns and questions about the transaction with your attorneys.  Remember that they are on your team and they can only help address issues that they are aware of.  An experienced M&A attorney I know routinely asks sellers before a deal is signed or closed, “Is there anything that keeps you awake at night?”  That is a good way to gauge your comfort level with the transaction and whether or not you have raised every issue you should raise with your advisors.

5. Once you’re in serious discussions with a potential buyer, do not try to hide your business’s weak points.  Buyers understand that every business has “warts” and the earlier in the negotiations that these are discussed and understood by both parties, the smoother the process is likely to go, and the more trust that will develop between buyer and seller.

A Post by Alyssa Hirschfeld, Guest Blogger

Working with Professionals

I just returned (barely avoiding the wrath of the “Frankenstorm,” Hurricane Sandy) from an extended weekend in Washington, D. C., where I was pursuing my avocation—my musical adaptation of the children’s book, “Pickle-Chiffon Pie.” The weekend involved more than three days of rehearsals with eight professional actors and other theater professionals (a director and musical director/arranger), culminating with a staged reading for an audience at the Adventure Theatre-MTC in Glen Echo, Maryland.

More than two-thirds of the way through about 15 hours of rehearsals, my primary collaborator on the project and I started to wonder how on earth these people were going to manage to digest our complex score (the handiwork of our brilliant arranger, Bill Yanesh) in such a short period of time. It clocks in at 153 pages of music with several group songs involving between three and seven separate vocal parts.

I didn’t try to learn the script and sing the score myself (something for which the audience is undoubtedly eternally grateful.) I left it to the professionals. Why? Because they are professionals. They know their craft and are amazingly skilled at it. The reading was, by any measure, a success, with tremendously favorable feedback from the audience! While I think the music, lyrics, and script we created are terrific, nobody would have noticed if it hadn’t been for the hard work, dedication, and professionalism of those involved.

Too often, entrepreneurial clients fail to trust that their professional advisors (including lawyers) know best how to do their jobs. Entrepreneurs think they can save a few bucks by doing something themselves that they really aren’t trained to do. We often receive a “draft” document to review based on some form the client found on the Internet—which invariably takes more time to review and fix than just starting with the right foundation in the first place. Other times, we end up spending more time trying to unwind something done in an incorrect or unusual way than it would have taken us to do it right in the first place, had we been involved.

If entrepreneurial clients would trust the skill and business sense of their professional advisors, it would inevitably make life a lot easier for everyone involved and increase the likelihood of success for the enterprise. 

Advisory Boards: An Underutilized Entrepreneurial Weapon

Not to generalize (okay maybe just a little bit), but the entrepreneurs I know can be a pretty headstrong and opinionated bunch. Maybe this is part of the reason I don’t know many who have engaged an advisory board to help them develop and grow their businesses. While I’m not an entrepreneur myself (still waiting for that million dollar idea), advisory boards can add a lot of potential value for a new company.

An advisory board is similar in some ways to a corporate board of directors, but without the legal risks; there is also often less formality around them, too. The role of a corporate board of directors is to act as a fiduciary for the corporation’s shareholders and to oversee the executive officers of the corporation. An advisory board typically does not hold any official corporate power (or liability) and literally functions only in an advisory capacity. To be clear, an advisory board does not replace a board of directors, it’s just another tool in an entrepreneur’s arsenal of expertise.

Entrepreneurs, like everyone else, can use an occasional reminder of their own strengths and weaknesses. None of us are experts in everything. I have often observed that some of the most successful people are those who are not afraid to admit this and to ask for help in areas in which they may not excel.

You should consider an advisory board as an opportunity to augment the skills, networks, and relationships that you already have and seek advisory board members who have specific skills (e.g., finance, marketing, operations, or human resources) that are otherwise lacking in your business. Also, consider the professional connections that advisory board members may be able to bring to your businesses.

Creating a formal advisory board, rather than a loose set of advisors, can have other benefits. Being part of an advisory board tends to help an individual feel more invested in the success of the business. This could lead to additional sources of financing, contacts for potential customers or suppliers, or simply the benefit of lessons learned by another business owner.

It may be easier to attract quality people to serve on your advisory board than on a board of directors, because they do not have the same fiduciary obligations (and liability exposure) as members of a board of directors. Using an advisory board, you can tap into complementary skills and experience of members, without subjecting the individuals to the same level of risk or the same expected time commitment. Also, never underestimate the appeal to a person’s ego when they are asked to serve as an “expert.”

You’ll need to decide whether and what to compensate members of your advisory board. Many entrepreneurs do not provide more than a lively conversation with some adult beverages and food. Others do provide some sort of compensation, although usually stock options (rather than cash) to align interests in creating value. If a potential advisory board member is more concerned about the compensatory arrangement than how he or she can add value, you may be talking with the wrong person.

There is no one-size-fits-all recipe for an ideal advisory board. Still, an advisory board that has clear expectations as to its role and operating procedures is likely to provide more value to the business owner. When forming an advisory board, an entrepreneur should consider other issues such as: (1) whether the advisory board should have regularly scheduled meetings, or just be convened as particular questions arise; (2) what would be a reasonable time commitment to expect from advisory board members; and (3) whether there are current specific challenges in the business that the advisory board is expected to help solve. Communicating these expectations to your prospective advisory board members will help them take their role seriously and help you get the most value out of their generous support.

A Post by Alyssa Hirschfeld, Guest Blogger