I am running into way too many of the following – easy to avoid – problems that all entrepreneurs can easily avoid:
1) Why would you be in a 50/50 voting partnership or LLC? Are you really going to agree on absolutely everything and if you don’t then what? Or better yet, what if your partner/LLC member/fellow shareholder starts to withdraw their own draw or salary and never shows up again? Then what? You’re really going to sue them? Good luck with that?
2) Your partner never assigned the trademark or copyright to the entity? I see that the shareholder agreement requires the assignment but NO ONE EVER made anyone sign an assignment? Now what? Go after your lawyer or legal zoom? Again, good luck.
3) You lent your start up significant (for you at least) money to get started, pay AP, or hire someone. You never even took the time to write out a promissory note OR worse you did but you have zero security interest. Have you ever heard of the expression junior most lien holder? Well if you are only a shareholder, that is you. May I call you Junior?
4) You rented an office for your new entity, have version 1 of your product and even money in the bank but your insurance policy is in your own name because you bought it from the same guy who sold you your personal car insurance. Now the company been sued for trademark infringement and guess what, the policy doesn’t cover your new company because it is not a named insured.
5) You rented that above office as a subleasee up in Silicon Valley South and the owners of the building just stopped by to say hello and sees that you have a large fish tank. Isn’t that nice. The owner also sees that your company never got written consent and has decided to raised the rent effective next month or begin eviction of the master tenant. Now what?
6) Your form documents cut and pasted an indemnity provision in there which you never read and never really understood. Would you believe me if I told you that your doc says “you hereby indemnify your client for any claim arising from the delivery of your service to them?” What? Why would your lawyer draft that provision? She didn’t? Well, where then did that provision come from?
7) How much money do you need to spend to make your next $1 in net profit? Don’t answer by telling me you are investing in your business. Tell me about what it will cost you to make $1 million in net revenue? Ok that too tough? How about $1 million in gross?
Go for it. I am always here for you.