All in the family?
Jessica Eaves Mathews is America’s Advocate for Women in Business™, business lawyer and leading authority on helping women entrepreneurs and women business owners step into their power and create a brilliant business and a brilliant life on their own terms.
Jessica is a seasoned business lawyer, advisor and advocate for women business owners and women entrepreneurs. She is also a multi-passionate entrepreneur herself, having launched a number of successful ventures of her own throughout the past 15 years.
Jessica has spent her legal career representing businesses and business owners, from solopreneurs, to mom and pop stores and restaurants, to professional service-providers, to Fortune 500 companies and some of the most successful entrepreneurs in the world. She was the head of litigation and compliance for Paul Allen, the co-founder of Microsoft. She has been there in every phase of the business life cycle from start-up on.
Through her Business Brilliance™ brand, Jessica guides women entrepreneurs through the emotional and practical steps toward a rock solid business that empowers and liberates women to have a brilliant business and brilliant life on their own terms.
Jessica has now launched an incredible new e-learning center for entrepreneurs, the Business Brilliance University™, where they can create a solid legal foundation for their business quickly, inexpensively and painlessly. Most importantly, anyone will be able to do it without the huge expense and inconvenience of having to hire a business lawyer. For more information, visit http://www.businessbrillianceuniversity.com
Jessica’s professional activities include:
· Expert blogger for StartupNation (www.startupnation.com)
· Radio/podcast host on Entrepreneurial Podcast Network, Foundations for Business Brilliance. (http://epodcastnetworkd.com/category/legal-corner),
· Adjunct faculty member for the Smart Women’s Institute of Entrepreneurial Learning (http://www.sherimcconnell.com/faculty),
· An eLearning expert for MOMeo, the online community for mompreneurs (http://www.momeostore.com/index.html),
· A business and start-up expert on the up-coming reality life makeover show for women on the Oxygen network, 180: Life and Style Makeovers,
· Author of the soon-to-be-released book, Brilliant Business, Brilliant Life: A Woman’s Handbook to Having it All! (release date: August 2010).
She also has a successful golf clothing line for women called Grace & Game Golf, www.graceandgame.com.
In her free time, Jessica loves spending time in her Corrales, New Mexico home with her daughter, where they ride and show their Arabian and Quarter horses, play with their three, silly, large doggies, and enjoy the New Mexico sun.
Jessica loves being a part of the Startup Nation community!
Latest posts by Jessica Eaves Mathews (see all)
- Is Your Business in Violation of The New Affiliate Nexus Tax Rules? - July 6, 2011
- Copyright dangers lurking in your staff’s work product - March 29, 2011
- Ladies: Getting Your Legal Foundation in Place is Sexy! - July 13, 2010
Are you starting a business with a family member or a close friend?
I know, I know. You are incredibly excited. You have a winning, million-dollar idea, and you are pursuing it with one of your favorite people. What could go wrong?
Well, unfortunately, much can go wrong and sometimes it happens very quickly and unexpectedly. Let me play the heavy here and give you a strong dose of advice you can’t afford to ignore. Even if you have total faith that love conquers all, blood is thicker than water, no one understands you like your college roommate or your favorite Aunt Edna…the reality is that if you want to preserve your own interests and also preserve the relationship, you must heed my advice.
Yes, okay, I’ll get on with it.
I am begging you, for the love of chocolate and all that is good, at least to do the following:
1. Have a written Partnership Agreement, LLC Operating Agreement or fully fleshed out Articles of Incorporation and Bylaws (if you are going to incorporate). Merely forming the entity with the state is not enough. And if you are pursuing a partnership, which doesn’t necessarily require the formation of a formal entity with your state, this point is even more critical, since the only evidence of your intentions going into the business is the partnership agreement.
2. Hire separate (this point is so important, I will say it again: separate) lawyers to negotiate and draft those agreements/documents. This will cost you a bit of money on the front end, but it will ensure that you (and each of your business partners) have someone dedicated to thinking about how the business should be structured and operated so that your interests are protected. The harsh reality is that there could be a moment in time when what is best for you is not best for your business partner. This is called a conflict of interest, and it exists merely because of the potential for a future divergence in interests among or between the business partners. Now, one lawyer can certainly represent all parties as they enter into an agreement that governs their new business. But, if you choose to use one lawyer, make sure that lawyer explains the conflict of interest to each of you and has you sign what is called a “Conflict Waiver.” The point of this is to make sure that each person represented by the same lawyer understands the risk she faces by not having her own lawyer dedicated to thinking only about her best interests.
3. Make sure the agreement/documents deal specifically with how you will divide assets or sell your interests if you want out or if the business goes under. The key to this is determining percentages of ownership, and then how those interests and how the company assets will be valued and then distributed or purchased by the other partner. You must also decide now how you will determine who owns the rights to your company’s intellectual property, brand and trademark. As for valuing the assets or interests, there are specific valuation formulas you can choose from, and a good business lawyer or CPA can assist you with which one is best for you.
4. Make sure the agreement deals with succession issues. Who gets your shares/interests if you die or become incapacitated? Do you want your kids or spouse to take over the business once you are gone? Not fun to contemplate, but critical to think it through now while you have a clear head that is full of optimism. Don’t leave that mess for your loved ones to figure out after the fact. The very best time to come up with creative and effective solutions is when everyone is happy and hopeful for the future of the business.
5. Actually sign the agreement and date it. You can’t imagine how many people forget to do this. I’ve seen more problems with my own clients come from this one issue. Clients come to me already in a dispute with a business partner, and while they intended to get the partnership or LLC Operating Agreement in place before they started operating, they only succeeded in getting the entity formed with the state, but forgot/put off/couldn’t get the agreement fleshed out and finalized. Now, they are fighting with their once beloved partner and there are no clear rules on how to resolve the dispute. A well crafted LLC Operating Agreement or Partnership Agreement will provide the rulebook that would govern how most disputes are to be resolved. Without that rulebook, the parties will spend a huge amount of money hashing out a resolution in negotiations or litigation, or one will eventually decide to swallow their losses and walk away frustrated and/or broke. This scenario can be almost entirely avoided with good, separate representation and a commitment by all parties to get the paperwork in order and signed before you begin operating.
Okay, so I’ve oversimplified a lot here, but I want to make it as simple as possible so you will follow my advice. Once you do, your newly hired, fabulous and experienced business lawyer and/or CPA will be able to point out that there are even more details to attend to before you launch, but they will be in the best position to know what details are critical to your specific situation and business.