By Matt Formeller, Founding Member and LWCN's SME on Law

As a corporate attorney, I see my fair share of business owners and partnerships trying to manage every aspect of their respective businesses. I understand starting lean and operating with an intent to keep your margins wide. However, all business owners share a common problem: we don’t know what we don’t know.

Sometimes relationships are conceptually straightforward; sometimes agreements with third parties aren’t complicated in theory. Yet it’s important to make sure that those agreements and relationships are properly memorialized.

A now retired corporate attorney used to often tell me, “we don’t draft contracts for the good times.”  When parties have a disagreement about who was supposed to do what we look to the plain language of the relevant contract. If the agreement isn’t properly memorialized in a written agreement - we are compelled to interpret the agreement (i.e., what the parties thought the agreement was at the time the deal was made). This can lead to undesired outcomes, large expenditures of time and resources, and broken relationships. 

A simple case study

Take, for example, George and Sheila. George started a membership-oriented business. Sheila approached him with an offer; she wanted to provide him with $150,000 in exchange for 20% of the company’s common stock (a valuation of $750,000) which George viewed as undesirable as he had previously accepted $300,000 from two previous investors in exchange for 10% of the company’s common stock (a valuation of $3 million).

Sheila reframed her offer: she didn’t want to simply sit as a passive investor like the other two; she wanted to be an active participant in the business’ operations. This made the offer much more enticing to George. The parties came to an agreement and decided to draft their own agreement, sans attorneys, whereby Sheila was to pay her capital contribution according to a simple schedule.  They agreed the additional expenses of attorneys didn't need to be incurred since the agreement was uncomplicated and they trusted each other.

After some time, Sheila stopped paying George, leaving around $50,000 of her capital contribution unpaid. She also informed George that she no longer desired to assist in running operations in any capacity. She claimed that her $100,000 should entitle her to 13.3% of the company’s equity because she paid 2/3 of her capital contribution.

Pay me now, or pay me later

While Sheila's contention seems unfair and incorrect – her position will likely win out should it be tested in court. The contract wasn’t properly drafted, it didn’t mention Sheila’s obligation to perform services to the business, and it didn’t contemplate the foreseeable scenarios in which Sheila would not hold up her end of the deal. Now, George needs to retain an attorney to untangle the mess and attempt to resolve it. Had the parties invested in legal counsel from the start, the transaction documents would have been properly drafted and the parties wouldn’t be stressing about a potentially escalating (and costly) legal dispute.

The hard learned lesson

If you’re navigating through a minefield with a blindfold on, wouldn’t you rather take a field guide’s hand who knows where all of the mines are located?  

Matt Formeller is a partner and co-founder of Formeller & Formeller, a corporate law practice in Chicago.  For the fifth year in a row, he has been named an “Emerging Lawyer” in Illinois for Closely & Privately Held Business Representation as well as Commercial Litigation, a recognition earned by the top 2% of attorneys in Illinois under 40 years old in their areas of practice. Matt received his Bachelor’s Degree in Business Administration from Illinois Wesleyan University and his Juris Doctor from DePaul University College of Law.  

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• By Nancy Fox, Founding Member and LWCN's SME on Connections and Business Development

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• If two years ago I had declared that face-to-face networking would be practically non-existent, you would have thought I had lost my marbles.

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• Well, friends, I am reminded of the prophetic words of my ninth-grade English teacher who gleefully announced each time he pop-quizzed us:

  “Always expect the unexpected.”

  The impact of Covid-19 on our planet and business, could never have been predicted.

  Everything is different, especially our perspective.

  In the past, our hardcore belief was that face-to-face in person networking was the best way to network, preferable to anything using technology. Face to face was so much more human and effective than virtual conversations.

  That belief has been firmly blown up. We now know, with 100% certainty, that wonderful new relationships can cultivated online, can flourish, and result in a lot of new business.

  This new direction does call for us making important adjustments, of course – first and foremost in our mindsets, the way we embrace and use technology, and even practicing new techniques.

  As a networking ninja who loves a great live networking party and event, I have made the transition to online networking and have fallen deeply in love.

  Here are five ways online networking has become a major advantage in expanding the quantity and quality of leads, business relationships, and tangible results for my business and how it can elevate yours too:

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• • Efficiency – How wonderful not to have to battle the morning traffic, worry about parking, or train schedules. Online networking – whether in group or one-to-one has been so much more efficient. Group attendance has never been more consistent. Not only that, but this has been much better for my waistline – no required breakfasts, lunches, dinners, or cocktails. 

  • Quality of relationships – It has been so terrific to find qualified connections on Linked In. With the right strategies and mindset, I am able to form high-caliber relationships with new people each week. I have also been reconnecting with long-lost colleagues too! Using LinkedIn profiles, I can quickly familiarize myself with each person in advance and develop rapport quickly.

  • Accountability – Online networking over Zoom or Google Meet connects all calendars and connection events. With links and reminders pre-loaded, it is so much easier to show up and hold myself accountable. In my research, I’ve asked networking group leaders how attendance has been affected by virtual meetings. Almost all have said that attendance rates are significantly higher at virtual meetings. Convenience seems to elevate accountability.

  • Fun – Meeting people from all over the country and the world is fun! I do not have to buy a plane ticket to visit people in NYC or Chicago, or even London! It is fun to make friends and colleagues in new cities and have friends to visit all over the world. We can also share screens, bring our pets, and chat links to innovative ideas, books, tools, and solutions during meetings. Online allows us to be so prolific with each other.

  • Focus – When you are meeting with people in a designated group or one-to-one, and you are on camera with each other, it requires you to focus and really listen, pay attention to what other people are saying, read their faces. This focus and listening ups the depth of the relationship.
• • You also do not have to worry about breaking into an ongoing conversation with others or scan the room looking for the next person to network with.
• • Focus appears to positively impact ROI as well, in new leads, opportunities to speak publicly, or with new clients. The tangible outcomes are baked right into this mode of networking.

Without a doubt, there are pros and cons to each mode of networking. Also, without a doubt, the assumption that live in-person networking is the best way has forever been challenged.

Fortunately for us, we have advanced virtual tools to aid us in meeting and engaging with each other easily, fluidly, cost-effectively.

As more and more professionals embrace online networking as a fact of life, the results will only improve.

 

Nancy Fox is the President of The Business Fox in Los Angeles.  She’s a former corporate exec, turned passionate career and business coach for female professionals, who are ready to rev up their careers to extraordinary new levels!  For the past 20 years, she’s helped hundreds of high-performing women execs and professionals have career breakthroughs, gain greater recognition and income, equipping them to break free of career blocks and command their worth™!

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• By Darren Gleeman, Founding Member and LWCN's SME on Employee Stock Ownership Plans (ESOPs) and Exit Strategies

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• One word – AWARENESS.
  

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• Most people have a pre-conceived notion of what an ESOP is all about. They have no idea how great or powerful ESOPs can be.

  Many advisors don’t understand why an ESOP is a great succession tool for their clients.

  Bottom line.  It’s because of the huge tax incentives and tax subsidies given out by the government.

  With an ESOP, an owner sells the company to their employees via a trust, and it’s paid for by government subsidies. This does not cost the employees any money. It is a gift to them.

  Here are the benefits in a nutshell:

Be sure to ask your team of advisors about the feasibility of creating and selling the company to an Employee Stock Ownership Plan (ESOP). 

Darren Gleeman is the managing partner of MBO Ventures.  The firm provides ESOP expertise and will invest its capital alongside company owners. MBO Ventures implements exit strategies, whether it's for family succession, a management buy-out, or a 100% sale to employees.  Learn more about Darren by clicking here.

By Fred Siegman, Founding Member and LWCN's SME on Strategic Relationship Building

You became your CSMO, Chief Self-Marketing Officer the day you were born. Everything you have ever said or done has contributed to your personal brand. So now that you know you have this responsibility and authority, what can you do to add to your success?

Start with some basics like how you dress, talk, and your everyday actions. These items make the first impression of you. You may like wearing jeans, a t-shirt, showing your tattoos and piercings but that may not always work for meeting new people. The words you use, your style of talking, body language, and things like manners influence how people think of you.

Think of organizations. They include professional, business, civic, fraternal, religious, and cause related. Your involvement will contribute to your reputation and lead to new relationships.

What meetings and events have you decided to attend? Who will be attending those meetings that you want to meet? When you go to a social gathering, the people you meet will give you opportunities to build your personal brand. Every interaction has some brand impact from small to large.

Have you ever done public speaking? You can do it solo, part of a panel, or serve as a moderator. Your audiences can range from a few people to a very large group. If you feel uncomfortable, think small. Invite a few people to a group and lead the discussion. Another option, you can ask someone you know who you find interesting to be your featured speaker, invite others to attend, and then you interview the speaker.

Last, but not least, people often consider writers to be experts. Writing includes social media and blog posts, newsletter articles, perhaps a book, any place where people will read your words. Some hire people or companies to write for them because they may be too busy or just feel uncomfortable writing their own content.

They key to making everything work, strategy! Identify your goal and then create a plan to make it happen.

Fred Siegman founded Siegman Consulting Services, Chicago in 1996.  A lifelong Serial Connector®, his practice focuses on helping diverse clients seek corporate board of directors positions.  Fred received an MBA from Chicago Booth and a B.S. from the University of Illinois Chicago. Learn more about Fred by clicking here.