Business Prenuptials

One of the most common questions I hear from people starting a business is "Should I be a sole-proprietor, LLC, S-Corp or C-Corp and what's the difference?"

One of the most unasked questions is "Should I have a contract / operating agreement / buy sell agreement with the person I'm going into business with?"

There are many factors involved in the first question, but only one for the second. Should you have such an agreement with your business partner? Yes - Emphatically YES! I can't stress the importance of this. I don't care if you are best friends. I don't care if you are brothers - identical twins, that grew up never fighting and would die for each other. This is a must have.

While everything might seem like a marriage made in Heaven today, the chances are that there will come a time when someone will want out or need out of the business. It is at this time that the agreement gets pulled out and acts like a prenuptial between the two partners who are married through the business. Without it, chances are you will end up in the business equivalent of divorce court.

Here are the general scenarios I usually use to convince people of the importance:

1. One of you decides you get tired of the business
2. A better opportunity comes along for one of you and you need out to pursue the other opportunity
3. One of you decides to retire and wants the other to buy them out.
4. Your partner dies unexpectedly and his will gives his share of the business to his wife, who wants nothing to do with the business nor does she have the expertise to run the business.
5. Bottom line, the future is uncertain and you never know what tomorrow holds - both good and bad.

If they say "Gosh, I guess we should look into doing that sometime in the next year or so." I say, "Gosh, you're an idiot and should really do that this week before any of those 5 things have a chance to occur."

I've seen some (and heard more) horror stories of business partners with good intentions but no agreement get started fine, but end in "custody battles" worse than a Hollywood divorce. How much easier it would be to pull out a piece of paper that you both signed and read word for word how to handle the situation.

Yes, it will cost you a few hundred dollars to have an attorney draft up the thing. So? Even if it costs you $1000, it will be the best $1000 you've ever spent to save the friendship you enjoy today.

I know this analogy of marriage, divorce and business is a little crude, but honestly, if 50% of the marriages end in divorce and 50% of the businesses fail in the first 5 years, what do you think the chances of your business partnership lasting "till death do you part"?

Feeling Sick, But Not This Sick

Just a quick post as I think I'm heading home sick this afternoon instead of going to the Southern Colorado Economic Cluster.

Being an entrepreneur today seems to require picking out your own social cause to support if you want to be successful. I've seen green issues (by the way is anyone else sick of green week?) 3rd world country issues and perhaps popularized by Brangenlina I've seen adoption issues.

But, I never thought I'd see this kind of adoption story. That's just sick!

What ever happened to just being an entrepreneur?

The Entrepreneurial Spirit In The Fall

Part of an entrepreneurial spirit is the belief that you can do anything. Following that belief is the belief that if you can't do it today, you'll be able to teach yourself by tomorrow.

So, when I discovered that my son loves pumpkin pie I thought to myself, we need to make a pumpkin pie for him to eat. The air is crisp and smells like fall and it's perfect pumpkin pie weather. However, this couldn't be just any pumpkin pie made with canned pumpkin. Oh, no - this had to be a pumpkin pie made from a real pumpkin, fresh from the patch.

The only problem with this was I've never made a pie before in my life. So I got online and found a recipe with instructions on preparing the pumpkin and got to work.

I may not be a professional pie and pastry chef (yet) but it doesn't mean that I couldn't if I worked hard enough at it.

The end result, I have to say, was pretty amazing. But don't take my word for it. Judge by the expression on his face.

Lunch With Barry Moltz

Being the "good professor" that I am, I'm taking the time to post this blog in the middle of the mid-term exam I'm giving to my students. As stressful as a mid-term was as a student, I had no concept of how boring it would be for the faculty.

After this, I'm on my way up to the Denver airport to meet Barry Moltz for lunch. I'm a big fan of Barry's and my wife has even criticized me for going to meet with him just because I'm a fan. In reality, I'm meeting with him to discuss the possibility of coming to Colorado for our Small Business Awards Luncheon as the keynote speaker and I'm simply taking advantage of him already being in Colorado for another speaking engagement.

So, on my hour drive north I'm planning on coming up with a list of questions for Barry that I can post tomorrow. I'm thinking something like, "If you were a tree, what kind of tree would you be?"

Okay, maybe something more like, "Your new book, titled "Bounce" is coming out soon. How do you hope it will impact the entrepreneurial community."

Finding Passion from Passion

Sometimes you see a story and think, "okay that's nice, whatever" and other times you see something that makes you think "I'm a total slacker with my life and should really do something beyond what I'm currently doing."

This video is the latter. I am beyond impressed with the idea and the results that Muhammad Yunus was able to accomplish with very little resources and a lot of passion. This social entrepreneur is deserving of the Nobel Peace Prize.



I recently heard Steve Bigari, a local entrepreneurial mogul, say "I don't care what you stand for, just take a stand. If you don't know what you want to stand for, call me. I've got a cause you can stand for."

Motivated by the passion of Yunus, this brings me to my second point. (My first was compared to Yunus, I'm a slacker) How does one go about finding a cause that they can devote their entire life, or at least a good portion of their life to? Is there anything that I am passionate about? Something that makes me take a stand? Is there anything that makes you take a stand?

As I was doing some research to find a way to answer these questions for myself, I came across this article, which discusses the 5 steps to finding your passion. Perhaps a little sterile for such a deep topic, but it at least it provides these tips to help get you started.

1. Identify what gets you excited. "If you're at a party, and there are people talking in different corners of the room about different subjects, and you overhear somebody talking about a subject that fascinates you so much you want to hang around and listen, what would that subject be?"
2. Go back to your childhood. (this implies I've left mine)
3. Take stock of your talents. "You don't love what you're not built to love."
4. "Shop" on the job. "Wherever you work, take as much time as you can to 'shop' around the various departments. Learn the ropes, and find out what you get a kick out of"
5. Look at the big picture. "Do I like doing it? Am I good at it? Does the world need it?"

The Next Generation of Entrepreneurs

The second week of class is in session here on campus and college students can be seen scurrying between buildings, carrying backpacks loaded with books. In today's class, Entrepreneurship 100, I had the distinct privilege of educating 44 freshman about mission statements and setting them on their path for success framed with one concept. "Mantra, not Mission for a start up"

The text I'm teaching from came with a DVD loaded with video clips. About the only one I'll use was one from Guy Kawasaki describing the pointlessness of a mission statement for a start up company. As he talks about minds being ruined with the thought that you have to have a mission statement to be successful, I felt somehow, I was doing my part by giving these young and impressionable students the idea that they don't have to have a mission statement to start a company, and perhaps they will never need one. If they do, we had fun in class playing with the now famous Dilbert Mission Statement Generator so they could avoid the two day, off-site process it takes to write one.

You can watch the video clip I used today in class here [link]. Sorry I couldn't embed it for ease, I'm not refined enough to figure out how to pull that off without Youtube's embed code.

Though I've never called it a mantra, the four words I live by easily fit the definition of my mantra. "Work hard - Have fun" I'm interested to see if anyone has a mantra for their life / business or what it might be if you don't have one yet.

On a side note, Guy Kawasaki is giving free autographed copies of his book, "The Art of the Start" by installing Truemors to your Facebook. [Details here]

Molding Young Minds

I just found out last night at 9:30 that I'm going to be teaching a class here at the University on entrepreneurship this fall semester. So, not only do I get to impact / pollute (you decide which is more correct) the minds in the community, but I also get to have that same effect on college students. This will be my second year of teaching BYOB (Be Your Own Boss) to a bunch of freshmen and now this class will involve the entrepreneurial side of technology firms as part of our new Bachelors of Innovation program.

Honestly, I cant think of a more appropriate topic to teach to college students today. This article talks about how today's generation is perhaps more entrepreneurial than any other before it. Saying that the college campus is now a fertile breeding ground for company builders says a lot about our young minds.

Jeff Cornwall, the Massey Chair in Entrepreneurship at Belmont University in Nashville is quoted saying, "Forty percent or more of students who come into our undergraduate entrepreneurship program as freshmen already have a business."

When I was 18 I didn't even know what I wanted to do, much less have a company started to do it. Kudos to the young kids.

The Cost of Doing Business

I got this email from my good friend who was the best man in my wedding. We were exchanging email back and forth and reminiscing about the good old days.

[you are] Giving me flashbacks with all that talk about AIT, Duane and Jennifer - man, she was cute, little anal retentive though (like Kari wasn't.) Weren't we trying to blow up fish in Duane's pond that trip too? Any idea of what he and Mike doing now? Soooooo many good times! Camping at Arrowhead, going to Iowa games with you and your folks, Model UN trips which were basically about checking out brainiac girls, torturing Fiscus and Martin constantly, joining the cross-country team with you (sorry - at least I joined the golf team though - and sucked!) That party at your place before I left for Basic is still the best sending-off I've ever had, and definitely helped keep me going during that 10 weeks of hell. I remember getting back and laughing because I had no hair, and you had more-or-less a curly-haired afro. All things considered though, we really were pretty good kids back then, eh? We didn't really drink, never touched a drug, never got suspended from school (more than a few detentions though!). Hope our kids are as good as we were when they hit their teens.

Reading this, and then re-reading it about 3 times made me think about how much different my life was back then and how much different I imagined my life to be now. At age 16 I was going to never grow up. I was always going to blow with the wind and be carefree until the day I died and wear my curly haired afro til the day I died. Somewhere along the way, I came to the conclusion that I had to grow up if I wanted certain things in life.

So, along the way, I sold off portions of carefree and cut my hair (or maybe it just fell out) for more responsibility and something I wanted more than being able to spend a whole day doing nothing. I'm not sad about it. I knew what I was doing and would never want to go back with my receipt and try to get a refund. It was a necessary expense to get what I wanted more than to be carefree. It was the cost of doing business.

Now here's the business analogy. When you started your business, did you say to yourself, "I'm always going to provide the best quality at the best prices possible." Did you make promises that you would always serve the customer no matter what? Did you swear on a stack of Bibles that you would never cut corners no matter what the savings and you were going to donate a percentage of your business to a charity - you probably even had the charity picked out before your first sale.

Most entrepreneurs make these kind of 'curly haired afro' promises to themselves. But, the difficulty is that as you get into your business, things like cash flow and that pesky Accounts Payable keep trying to take a priority over your promises.

What makes this hard is when we hear the successful business owner talk about how they made a commitment to customer service, or some other promise you tried making but haven't been able to keep, and that's why they are so successful. Just remember, it's easy to talk a big talk when you're making money hand over fist. But, when you're in the trenches trying to make payroll by Friday so your employees come back to work on Monday and you can keep your clients, it is much harder said than done.

So, while lofty ideals are good to start with, don't be discouraged if you find yourself in the predicament of cutting a corner or two to get the job done. Remember the old saying, "If you shoot for moon and miss you'll be among the stars." Which isn't such a bad thing either, it is just part of the cost of doing business.

Divapreneurs

I just got the first three issues of a new magazine sent to me by the publisher to help them promote their publication to my clients who might be potential subscribers.

The magazine, called "Divapreneurs" with the tag line "Committed to Colorado's Business Women" seems to be a good resource for women business owners. The name is catchy and obviously makes the connection of women and business owner. After reading the cover letter and thumbing through a few of the articles, I got the feel for the type of articles they were going to be writing and who they were targeting.

I then closed the issues and laid them down, and noticed something I thought was peculiar on the covers of each of the magazines. You can make your own assessment of who you think their target market is by browsing through the online magazine here. My opinion is that I don't think the magazine cover is on target for who they are marketing toward.

These are the covers of the first three issues of the magazine. Without reading anything inside, my first inclination is it's a business version of Maxim Magazine. It appears that they are promoting long, tan legs in high heels instead of business women in Colorado. As a result I would imagine that more men than women would pick up the magazine based on the picture.

As a male I am required to stay relatively neutral on issues such as women's rights and what's appropriate in the workplace between men and women. For the most part, this gets dictated to me by lawyers and other women across the country. However, in my ignorant male mind, it seems a step backward for women to be self publishing a magazine about women in the business world where women have been long thought of as sexy secretaries and executives who have slept their way to the top and then put images related to that stereotype on the cover. I especially think they've missed their audience because the women featured in the articles of the magazine, while are nice looking, aren't exactly the modelesque figures on the cover.

But, what do I know, I'm just a dumb guy who doesn't understand women anyway. What could I possibly know. Oh wait, this article (written by a woman) uses the definition of a divapreneur as "a talented and confident woman, who undertakes and operates a new venture, and assumes some accountability for the inherent risks"

Again, I didn't know that talented and confident required long tan legs, but I'll sure make note of that the next time I go to hire a talented, confident individual.

Entrepreneurial Success

I just came across this article in the Spring issue of the JCI Leader magazine. Evidently it was originally published in Entrepreneur magazine, but I mention JCI only to plug them as a neat organization with some great resources for the young entrepreneur.

The article, 7 Secrets to Success by Brian Tracy is one of those articles that when you read it you are continually saying to yourself, "Yeah I knew that." But, later you are asking yourself "Why don't I practice that?"

Brian's 7 steps are:

1. Clarity: You must be absolutely clear on who you are and what you want.
2. Competence: You must resolve to join the top 10 percent in your field.
3. Constraints: Your ability to identify the most important factor that determines the speed at which you achieve your business goals is essential to your success.
4. Creativity: The essence of successful business is innovation.
5. Concentration: Your ability to concentrate single-mindedly on the most important thing and stay at it until it is complete is an essential prerequisite for success.
6. Courage: It takes tremendous courage to take the entrepreneurial risks to become wealthy.
7. Continuous Action: The entrepreneur is always trying new things and, if they don't work, trying something else.

Some excellent points to immediately implement in life regardless whether success is in business or personal life, it all applies. Plus they all start with the letter "C". Doesn't that just scream "I should be extra motivated and I have to do this now?"

Why I Do What I Do - Great Treats and Helping People

There are lots of perks to my job. I get to travel occasionally, but not all of the time. I get to meet lots of great people like the mayor and bank presidents. And, while the pay isn't outrageous, the benefits are. But, the true reason why I like my job is that I get to be involved with helping people accomplish their dreams.

Yesterday, I drove my staff over to Nocon's Gelatoria and met my wife and kids to be one of his first customers ever. Frank Nocon, a client of ours, fell in love with gelato while stationed in Italy in the Air Force. Yesterday, he and his wife began the next exciting phase of their life by opening their own store.

If you've never had gelato before, let me explain. According to the sign in the store, 'gelato' translated from Italian, means ice cream. But, in the United States in order to call a frozen dessert ice cream, there are certain characteristics and guidelines to follow. For example, the product should have a minumum of 10% butter fat. Most ice cream on the market have up to 18% butter fat. This cream flavor gelato contains from 4-8% fat and the fruit flavors contain less than 1% fat.

However, don't be mistaken that gelato is some kind of health nut, twigs and bark flavored stuff. The chocolate is rich and creamy. The white chocolate is equally good and my favorite, the coconut, makes me feel like I'm in the palapa bar in Mexico. But with over 30 flavors, you'll have to make up your own mind.

If you're in Colorado Springs, stop in and eat your fill. It's on Union, between Research and Briargate. Tell Frank "Hi" for me.