Entrepreneurship Attorneys in Salt Lake City, Utah
Successful entrepreneurs are a special breed of people. They need to be good at doing many things, and they must have enough confidence in their abilities to take the risks necessary to start with an abstract business idea, refine it into a workable business plan, and convert that plan into a profitable business. Unfortunately, no one is really good at doing everything. Smart entrepreneurs know when to reach out to subject – matter experts to help them fill in the gaps in their own skill sets. That’s where we come in.
At J.D. Milliner & Associates, our Utah business lawyers can help entrepreneurs with virtually every step in the business process, from cradle to grave. Call us at 801-505-5600 to see what we can do for you.
Entity Selection, Formation and Governance:
There are many types of business entities. The most common are: Sole Proprietorship, Partnership, Limited Partnership, Limited Liability Company (or “LLC”), and the so-called “S” and “C” Corporations. Each business form has different rules for personal liability, tax liability and internal governance. For reasons we can explain during our initial consultation, we believe that the LLC, the “S” Corporation or the “C” Corporation are the best choices for the vast majority of businesses. Once you have selected the proper form for your new business, in addition to drafting, signing and filing articles of organization (for an LLC) or articles of incorporation (for a corporation), you probably should also have an operating agreement (for an LLC) or bylaws (for a corporation) to govern how your company is run – especially if there will be more than one owner. You may also want a member agreement (for an LLC) or a shareholder agreement (for a corporation) to govern how major owners will conduct themselves when significant events happen. As Business Lawyers in Salt Lake City, Utah, we can assist you with negotiating, drafting, properly executing and implementing these important documents. We can also assist you with understanding and complying with the on-going governance rules that apply to your business entity.
Start-up Capital: Every business needs at least some money to start up and grow. However, the number one killer of new businesses is having to cover too much overhead, which includes required debt service. As a result, your safest bet is to start small and, to the extent you are able, get your seed capital from your own pocket. The next best place to look for initial financing is from family members and/or close friends who know you, believe in your product or service, and can afford to lose a little money if the whole thing goes south. Next in line come the so-called “angel” investors. Think of them as a rich uncle who can afford to speculate a bit on your venture, but who wants to be well rewarded for his risk if things turn out, and who wants to hedge his bets by making sure that you’re going about things the right way. The Utah business lawyers at J.D. Milliner & Associates can help you properly structure and document these small private money loans and/or equity stakes that you need to launch your business. We may even be able to introduce you to some angel investors who might be interested in helping you get started.
Expansion Capital: Once your business is a going concern with one or more well-defined products and/or services, an identified target market, and, hopefully, some revenues from sales, you will probably need additional capital to expand your operations to achieve economies of scale from higher-volume production and really start to profit from your ideas and hard work. The safest place to get expansion capital is from the profits of the very business that you’re trying to expand. That, however, is not always sufficient in order to get you where you need to be in the time that you need to get there. When you find yourself in this situation, it is often best to seek expansion capital from venture capital firms. Think of venture capital firms as the big brothers of angel investors. They usually have more money available to invest, also want to be well rewarded for the risk they take with their money, and hedge their bets by usually waiting to wade in until after there is a more-clearly defined business model that they can analyze. Venture capital firms often do separate rounds of financing as the business reaches different milestones in its development. At J.D. Milliner & Associates, our business lawyers in Salt Lake City, Utah can help locate venture capital firms that may have an interest in your business, and structure your rounds of venture capital financing to best serve your interests.
SBA Loans: Another form of expansion capital is the so-called SBA (Small Business Administration) loan. While the SBA loan has its place (which we believe is primarily to finance the acquisition of real property in connection with the expansion of a small business), because of the requirement that SBA loans be personally guaranteed by the owner(s) of the business, and because SBA loans are almost impossible to discharge in bankruptcy if things don’t go as planned, at J.D. Milliner & Associates we believe that SBA loans should be used sparingly, if at all, and only when no better source of funds is available.
Private and Public Offerings: While private offerings of equity (usually stock) to so-called “accredited investors” have their place in obtaining expansion capital for small and growing businesses (angel investors and venture capitalists are virtually the definition of “accredited investors”), the real payoff for the entrepreneur, angel investor and, especially, venture capitalist has traditionally come from the “public offering” where the stock of the company begins to be sold to the investing public and starts trading on the open market – usually on the so-called over-the-counter “pink sheets,” or the NASDQ Bulletin Board (mini-NASDQ), but sometimes on the NASDQ itself. Today, however, especially with the significant growth of the so-called hedge funds, many entrepreneurs are cashing in by “going private” rather than “going public.” Although most of the stock held by entrepreneurs, angel investors and venture capitalists is usually restricted from publicly trading for a period of time to allow the market to stabilize (and to help make sure that the company actually turns out to be as represented in the prospectus that must be given to all public investors), the public offering remains the ultimate opportunity to take profits from one’s investment in a start-up company. The Utah business lawyers at J.D. Milliner & Associates can also help guide you through this process.
For more information about how our business law attorneys in Salt Lake City, Utah can help you, call: 801-505-5616.