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VLOG #1: https://www.youtube.com/watch?v=GCmHOv8YMXM
VLOG #2: https://www.youtube.com/watch?v=d7KmPLfrf7s
VLOG #3: https://www.youtube.com/watch?v=0ulb7gZwLOM
VLOG #4: https://www.youtube.com/watch?v=tuly1DJmSac
Welcome back to the Tiege Hanley Starting the Business and Building a Brand VLOG. This VLOG #5.
In regard to the progress with Tiege Hanley, the chemist is developing the product, and the partners are starting to get the legal paperwork taken care of. For 2 hours, Tiege Hanley had a conference and consultation through Skype about legal planning.
You have to decide the entity as well what happens in certain scenarios. Some of these things are tough to talk about and are uncomfortable. It’s like a prenuptial agreement. If you don’t have this spelled out and solid, your company could potentially be ruined if someone wants out.
VALUE
How are you going to value the company? Tons of formulas are out there. On a side note, Shark Tank is a great show from which to learn about business and entrepreneurship; however, the way Shark Tank values a company is not the right way with no projections or accounts receivable.
As a team, you need to set the value and then every so often, reassess and revalue. In the agreement, an exit agreement needs to contain each person’s equity at that specific time.
VESTING
When you are in a partnership, you are given or earn equity. For this example, the equity is 30% and vests over a 3year period. If you complete a year, you’re 10% vested. After a 2nd year, you are 20% vested. By the 3rd year, you’re fully vested. Vesting must be discussed and decided.
You have to be protected in the beginning before cash starts flowing! You also have to be in agreement and aligned with your partners in case dynamics change down the road. Take care of legal things now so you don’t run into trouble in the future. An ounce of prevention is worth a pound of cure.
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