Businesses Like Sharks Need to Move Forward or Die

That line from Woody Allen’s Annie Hall was originally “relationships, like sharks, need to move forward or die.” But with a business closing your doors may not mean dying. It might just be your exit plan at work. Planning and implementing your ability to close the doors and retire should be a part of your overall business plan. Another big “moving forward” step is when you seek outside funding. Whether from angel investors, Venture Capitalists or through a crowdfunding deal, perhaps no one event in a business’ life is as significant as its first outside funding. I have years of experience and can help with both of these business life-cycle issues.

Traditional Investors

Dealing with Investors
Many people start a business with visions of investors rushing to put money into their company. Some find investors who actually do invest. But the road from sitting around the kitchen table thinking great business thoughts and seeing $XX,000,000 wire transferred into your business’ bank account is rocky and fraught with frustration. Here’s a very quick and simplified typical progression: Start business, draft business plan, present plan to various investors, get rejected, re-write business plan, run out of money, find angel investor, re-write business plan, find lead investor, spend three months and kill large tracks of forest writing up “Series A” deal, lose lead investor, find new lead investor, re-write deal for smaller amounts, find secondary investors, reconsider whether you really want outside funding and if all the stars align, close deal. However, if this is an excellent path for the right business. Is your business ripe for outside traditional investors?

Crowdfunding

Crowdfunding is the new bright shiny object in the investment constellation.
Reward-based crowdfunding allows fans and supporters from the Internet to “buy” a reward (the chance to attend an opening; get an autographed product; or just get a free product) as a way to get early financing into a company. Reward-based crowdfunding has been around more than 20 years. But in 2016 the Securities and Exchange commission opened the doors that the 2012 JOBS Act unlocked, and companies could sell equity (stocks) and other securities on the Internet. While it sounds fantastic to be able to just post information about your company and get a lot of people to invest small amounts online – this is still a highly-regulated industry and still requires skill and knowledge to navigate it. Crowdfunding is not a good fit for many businesses, but it can be a boon to others. Feel free to contact me and see if I think it would be helpful for your business.

Selling or Closing

Sell or Close a Business
When you get on a plane, one of the first things the flight attendants do is point out the exits. How you plan on leaving your business can affect everything from choosing the right business form (Corporation vs. LLC), to choosing a name, and drafting your contracts. I firmly believe you can only guess your exit strategy and that the best course is to be prepared for as many options as possible. I can help you position your business to be acquired in a cash sale or merger. I can advise you on what contracts you need to ensure a smooth succession if you die “at the helm.” I’ve seen a great deal of the value of a business go down the tube because of lack of forethought. Even if you’ve not given your exit strategy a moment’s thought, once you are at the point of cashing out of your business, a well thought out contract can ensure that what you bargained for comes to you, not the IRS. Do you have any exit strategies in mind? Have you implemented procedures to maximize what you walk away with when that strategy is implemented? I can help you with this.