There are literally thousands of books and articles which you can find which have been written on the subject of starting a small business. It is the American dream and we have glorified small business ownership and in particular, entrepreneurship as part of our modern American business culture. We celebrate the successes of the captains of industry and assume that if we just follow the steps in the magazine articles, we too will be gracing the cover of Fortune magazine. Yet, truth be told, statistically, most people will never see a meteoritical rise to success and in fact many people are not so happy after starting and/ or several years after owning their own business, often finding that it isn’t all it was cracked up to be. They long for the days where they just had a job and a steady paycheck and where they could just sleep again at night without worrying about how to meet expenses. This usually occurs sometime after the entrepreneur sinks every last dime which they were able to beg, borrow or steal in to their business plan for the creation of the ultimate widget (or in some cases in to a franchised business for those with had less imagination). It is right about then, usually a few years in to the plan, that it dawns on them that they are actually completely miserable, that they will not be the next Bill Gates or Steve Jobs, or even the next successful dry cleaner down the block and that that they are barely surviving and just working for a paycheck. It is at this moment that the thought first occurs to them, “How do I get out?”
This is not an easy question to answer but there are at least a couple of reasons why if you hired a skilled attorney in the beginning, he or she may turn out to be worth his or her weight in gold in the end. For example, if your family lawyer is not familiar with the nuances of commercial leasing, you may find yourself in big trouble when you go to sell your business if your lawyer wasn’t astute enough to structure your real estate lease with the appropriate language to be able to sell your business and assign your real estate lease to the next (new) owner. Not all real estate leases are transferable to the next owner. You own your business but your landlord owns the real estate. If the lease has a prohibition on assignment, your restaurant may not be able to be sold to the next guy. Another problem is a personal guaranty which continues even after you sell you business. And my personal favorite, the partnership situation where there is no written agreement between the partners and one wants out and one wants to stay. Spending $3500 to create a well thought out partnership agreement at the time of business formation may end up saving $50,000 when a partnership dispute arises.
The time to think about your “exit strategy” is when you get in to your business, not when it is time to get out. A skilled and experienced business lawyer can help you plan for the day when you want to leave your business. Make sure to engage one before you start!
- Gary C. Angiuli, Esq.