Sh*t You Shouldn't Do When You Start a Business

Sh*t You Shouldn’t Do When You Start a Business

In this episode of Startup Hustle, Matt DeCoursey and Tricia Meyer, Founder and Managing Attorney of Meyer Law talk about all the stuff you shouldn’t do when you first start a business.

Covered In This Episode

Starting a business is no simple walk in the park. There is usually a lot at stake, especially considering many of these early decisions can support your future path to success or failure. Lucky for most, especially if you subscribe to the Startup Hustle podcast, you can find informative insights out there to help you along in your journey. Enjoy meeting Tricia Meyer of Meyer Law and The Clever Baby as she shares her wisdom and knowledge on what an aspiring entrepreneur should not do when starting a business.

Learn what it takes to build a business with Startup Hustle Podcast

Highlights

  • The Clever Baby (2:19)
  • Meyer Law (3:22)
  • Business Structure: protecting your personal assets (6:42)
  • Involving friends and family in business (13:29)
  • Contracts and agreements (16:35)
  • Protecting intellectual property and confidential information (20:04)
  • Founders agreement (26:55)
  • Misclassifying your employees (34:30)
  • Too aggressive and optimistic with financial projections and timelines (35:34)

Key Quotes

You don’t want to take on personal liability when you are going to be running a business so setting up that business entity is key and making sure that you’re following any formalities required by that particular structure is key. Because you do want to protect your personal assets.

Contracts are not optional, that is for sure. Nor are they one-size-fits-all. Sometimes people will find things online and just tweak them a little bit for their own company, but every company is different. Every company has different relationships, different risk tolerances, and those things all need to be accounted for in different contracts. And I think people overlook that a lot. And they end up cleaning up a costly mistake that they probably could have avoided had they just done it right in the beginning.

It’s easier to get rid of your husband, wife, or partner than it is to get rid of your business partner.

Make sure to listen to this episode to hear all the stories and suggestions on how to start your own business.

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Rough Transcript

Following is an auto-generated text transcript of this episode.

00:00.00

Matt DeCoursey

And we’re back for another episode of Startup Hustle. Matt DeCoursey here to have another conversation, I’m hoping, helps your business grow all right. Look, whether you’ve started a new business, you want to start a new business, or you’ve been in business for a long time. You’re gonna find that there’s a whole lot of shit. You shouldn’t do when you start a business now. It’s a lot easier to understand what that is when you’ve done it a couple times and it’s really hard to understand what it is when you haven’t done it at all I even wrote a book on the subject if you want to check out Million Dollar Bedroom, it is pretty much a story of all the things we did right and more things that we did wrong and what we learned from that. And that’s what we’re going to get into today. Before I mentioned who I’ll be having a conversation with today quick question. Are you thinking about starting a new business or expanding a current one? If you are then it’s important to get set up and maintain properly. That’s exactly what the folks at universal registered agents. Do they do LLC’s, S-corp, C-corps, or nonprofits, no problem. Learn more by clicking the Universal Registered Agents link in the show notes. Now as usual I have someone here to— Well today to talk about the shit. You don’t do when you shouldn’t do when you start a new business I’ve got someone that’s super qualified for a number of different reasons with me today. I’ve got Tricia Meyer and she is the co-founder of The Clever Baby. Honestly, I don’t know what a Clever Baby is but I hope that I like anything that’s clever and she is also the founder and managing attorney at Myer law. So we’re going to get a perspective of a founder and an attorney who knows that might bring the world to a stop and it also might provide us with a lot of really. Useful and interesting information. Let’s go ahead and just say Tricia welcome to Startup Hustle. I like to go ahead and let whoever I’m having a conversation with kind of set the pace by.

01:49.97

Tricia Meyer

Thank you so much. I’m so excited to be here.

02:01.25

Matt DeCoursey

Give us a little bit of backstory. So you’ve got two things here. You’ve got The Clever Baby and I’d like to hear more about well what makes a baby clever and then also what is the business and then also a little bit about Meyer Law. I believe one of your associates was on a different episode with me recently and let’s go ahead and hear all about that.

02:19.23

Tricia Meyer

That’s right? Awesome! Okay, great. So The Clever Baby. We recently launched our first product called Jet it is the first one-of-a-kind product that is basically a baby food feeder medicine dispenser in tether in one and it’s in the shape of an airplane and it is adorable. So when you’re feeding your baby with a spoon. You know how messy it can be, more ends up all over them than actually in them and so this allows you to know how much your baby’s getting. Makes it less mess and it’s super perfect for those parents that are on the go and need to kind of feed as they’re moving around or going from 1 place to another so it makes it really easy for parents and really fun for your baby.

03:03.65

Matt DeCoursey

Okay, so then also as an attorney at Meyer Law and all this stuff’s going on in the Chicago Illinois vicinity I should have mentioned that but. Ah, you know then you’re also managing partner and founder at Meyer law, where you guys do a lot of work with startups and early-stage businesses if I’m correct.

03:22.89

Tricia Meyer

Yeah, that’s correct so I started the firm over twelve years ago now after working um at large corporations working on technology deals I started the firm twelve years ago focused on helping tech companies because that’s really what I knew and so. We help tech companies from early-stage startups all the way to legal departments at large companies with six main areas: corporate, contracts, employment, protection of IP, fundraising, and privacy. We are different than most law firms in that I am an entrepreneur at heart but a lawyer by trade and so we do run the firm in a different way. Um, we offer a lot of fixed-fee packages for those early-stage companies and we’re also rolling out a new membership program and on-demand courses to help educate. I love to hear that you wrote a book on ah you know the shit that you shouldn’t do when you start a business in other terms because you know we’re all going to help you if we all help each other. We’ll get much further more quickly and so I love that you’re highlighting those things I think that there is a perception out there. Ah, that entrepreneurship is glamorized and so giving any nuggets of information or wisdom of a realistic look at what it takes to start and scale a business I just love I love it. Mystery.

04:41.93

Matt DeCoursey

And that’s been the whole premise of this podcast actually was the idea that when Matt Watson and I started it, which is now four and a half years ago, it’s crazy to think it’s been out that long and you know this will be around the eight hundred and fiftieth episode. But we said, I said Matt, we should start a podcast and he said, “about what?” And I said, “oh no,” He said, “what shouldn’t be about us being successful.” And I said, “Let’s tell the real story of entrepreneurship like the realist point of view like we’re going to start the, well episode one’s Welcome to Startup Hustle. Episode two is titled Getting Funded Sucks.” So we have definitely come out with the gloves off and wanting to tell the story of this. Now you know so much about starting a new business is setting it up properly. Now I should have mentioned that you know, during the month of May for my guest episodes and, we’ve got a bit of a series here. So you know last week, if you’re following, you got to listen to setting up a business entity that was with Melody Ashby. And this is kind of a follow-up to that talking about you know so some of that that was a lot more structural like and honestly. On some levels. It’s going to be a little more boring than some of the stuff we’ll talk about today because some of it was mechanical. You know like what it, well what is an LLC and why should you do that. But you know and then we’re going to you know next week we’ve got an episode That’s a new business checklist.

05:52.47

Tricia Meyer

Um, right.

06:03.66

Matt DeCoursey

Um, and then you know moving on past that to talk about how to easily incorporate your business and then protecting your time effort, and data and actually my business partner co-host Matt Watson is going to be on the fifth part of that now and I believe that you’ve. Published some videos recently about business structures and stuff like that now we did talk a lot about that last week with melody but I believe that it would probably be a good idea to get your brief overview on some of that before we get into like so it was the first thing not to do. To ignore what a business structure is or not care about it.

06:42.47

Tricia Meyer

That’s correct I mean you don’t want to take on personal liability when you are going to be running a business so setting up that business entity is key and making sure that you’re following any formalities required by that particular structure is key. Um, because you do want to protect your personal assets.

06:59.33

Matt DeCoursey

And you know so just to go back like by default when you start any kind of business or venture. You’re a sole proprietor which is honestly the worst setup possible because I talk about this A Million Dollar Bedroom about knowing that the moment that I knew that. Business that we ended up starting was going to be a business I needed to actually make it its own thing and you know you want to separate your life from your business even though, which it sounds like an oxymoron because as an entrepreneur your business is in many ways. It’s going to still be your life.

07:23.16

Tricia Meyer

Correct.

07:32.83

Matt DeCoursey

If things don’t go well, I think any Attorney will tell you that you need to plan for sunny days and rainy days. So just separating your business and letting it be its own thing and not commingling it with every part of your life is not. It’s going to make things a lot easier. And like, so shit that you shouldn’t do when you start a new business commingle it with your personal finances. Um, it’s just not. It’s an accounting nightmare. It’s not the right way to do it and a business needs to be separate from your basic checking account is that a fair statement.

07:53.95

Tricia Meyer

Correct.

08:04.24

Tricia Meyer

Yes, a hundred percent right you don’t want to Commingle assets if you do then actually it could put you on the hook for taking on personal liability which is the whole purpose for setting up that separate legal entity from yourself. So yeah, you do not want to commingle.

08:18.95

Matt DeCoursey

Well and if you have partners or you want to have partners or investors too. Then that’s even worse idea. Yeah, okay so one of the things that I hear a lot from founders and they’ll reach out or like they’ll say.

08:23.97

Tricia Meyer

Correct. Yeah, I agree. I agree.

08:35.47

Matt DeCoursey

So I really just don’t know how much equity to give the other partner and I find that people give away way too much before they know anything at all like I mean what’s your experience with that. Maybe as an attorney or as an entrepreneur and like how do you like I think that’s like pretty high on the list of shit you shouldn’t do.

08:43.65

Tricia Meyer

Um, of.

08:53.25

Tricia Meyer

Um, hundred percent right

08:55.80

Matt DeCoursey

Like they’re like oh this person’s going to work with me So I’ll give them 50% of the company. Did you guys have the idea together? Do you have an equal vested interest in it and then literally what a lot of people find is that another person they bring in was nowhere near as passionate about finding the answers in the business as they were. And the next thing you know you’re in this really, you’re in a shitty spot because someone might own a whole lot of your business and you gave it to them without setting up some basic parameters as to how when where, or why they should actually be a shareholder.

09:24.75

Tricia Meyer

Exactly I think that oftentimes especially at an early stage people might not have the capital to put towards their business and so instead they’ll grant equity and they won’t document it properly or they’ll promise over an email what they’re going to be granting and. They don’t make it subject to any restrictions or any clear triggers and so then they’re stuck in business with this person that’s not performing because I can tell you on day one and day thirty, sixty, ninety. You know a year later, people are different and you want to make sure.

09:56.23

Matt DeCoursey

Oh yeah, oh yeah.

10:00.48

Tricia Meyer

That they are going to rise to the occasion and to your expectations and to the duties and the obligations which they are jumping onto your team to help serve and so you absolutely want to document it properly and you. 99.9 of the time you absolutely want to make sure that if you are granting equity in your company to somebody else that you’re making it subject to vesting and whether that be certain dates portions get triggered or certain Milestones You can be creative and it doesn’t It’s not the same you know company to company. Ah, but you definitely want to document that properly and make sure that everybody is clear on that.

10:39.30

Matt DeCoursey

So let’s ah because I’m super useful Tricia I googled vesting while you were talking. So um, the conveying to an employee of an unconditional entitlement to a share and a pension fund is one now. That’s if you’re an employee somewhere you may. Invest into your four zero one k or its match or something like that and but really like when it comes to like investing in a partnership with what Patricia means is like saying. Okay, so if I bring you on so I have this idea to build this awesome tech because all the tech I build is awesome right.

11:12.80

Tricia Meyer

Right? right.

11:16.35

Matt DeCoursey

Now with that, I’m a non-technical founder so I need someone awesome. That’s technical. There are a couple of things that I see people make mistakes they like oh that’s my co-founder is it because you need to think about like I always look at replacement value like what could you go hire a developer for now I’m in that business. So I’ve got I employed 250 software developers. Go to fullscale.io we can help you find that person. So what’s the replacement value of it I see people give away like 25% of the company to someone just because they can write code now that that’s and that’s different because.

11:46.63

Tricia Meyer

Right.

11:51.75

Matt DeCoursey

You know you look later if you get things going and now if you’re company say, you get a million-dollar valuation later is that that’s two hundred and fifty thousand dollars worth of your million dollars did that person produce that much like could you know now. Maybe you don’t have the money at all.

12:06.19

Tricia Meyer

Yeah, yeah.

12:08.24

Matt DeCoursey

And maybe that’s what occurs, but those are the kind of setups that people run into I Also see people do this with friends and family a lot I do not recommend going into business with your friends or family because if you yeah yeah, yeah, oh my God Yeah yeah, yeah.

12:13.31

Tricia Meyer

Oh, all this part a hundred percent I couldn’t agree more I’m so happy to hear you say that it’s a tough thing though to explain to people who are you know. Who who are down that path but it can ruin relationships. I’ve seen it happen time and time again and ah, you know on that end with founders co-founders. That’s another area that I see where people just don’t get a founder’s agreement in place. It is so necessary when you’re starting a business with somebody because.

12:44.71

Matt DeCoursey

Yep.

12:47.78

Tricia Meyer

Circumstances change people have varying definitions of what strong work ethic looks like and you need to have a process in place as to how you will handle those situations if somebody needs to leave the company. How are you going to handle it who can they transfer their interest to how are you going to value? It. You know. All of those things to figure out early On. It’s just so important.

13:12.40

Matt DeCoursey

Sunny days and rainy days any contract agreement plan any of that needs if it doesn’t have consideration for things going well or not going. Well, it is incomplete it is not.

13:13.90

Tricia Meyer

Right.

13:26.36

Tricia Meyer

Yes.

13:29.74

Matt DeCoursey

Doesn’t have what you need. So let’s talk a little bit about the friends and family thing so all right? So I actually proved that so my wife worked with me in The Million Dollar Bedroom business for six straight years and she was an integral part of our success and over the years so many people said to me like they.

13:38.65

Tricia Meyer

I.

13:47.94

Matt DeCoursey

They’re basically we were an anomaly, right? like 9 out of 10 situations, people are like, “dude I try to work with my husband, and fuck that” you know yeah right.

13:49.40

Tricia Meyer

Yeah.

13:55.50

Tricia Meyer

Yeah, my husband and I work together. So I have to qualify what I said with that because my husband has been starting businesses and running businesses for the last ah twenty almost twenty years together

14:09.77

Matt DeCoursey

Yeah, it’s just not advisable just know what you’re getting into because the thing is, like, if you get if you especially if it’s your spouse or your partner whomever.

14:11.30

Tricia Meyer

So I say people shouldn’t start a business with their husband. But here I am exactly.

14:23.29

Matt DeCoursey

Like the thing is you’re going to work with that person all day and then like it becomes very difficult to like draw a line between like what’s work and what isn’t and also for the Million Dollar Bedroom business which was a high-volume turned into a very high-volume event ticket brokerage that was in the house too. So there really was no separation.

14:40.20

Tricia Meyer

In here.

14:42.47

Matt DeCoursey

Ah, now you know Jill and I did well with it because we were both good. We have different personality types, which is actually good and she was good at a lot of the stuff that I wasn’t good at now but there were times, there were days.

14:49.90

Tricia Meyer

Yeah.

14:59.39

Matt DeCoursey

Where you’re like, hey so this is where it’s a problem. It’s like Tricia, we’ll just pretend we’re virtual spouses here. Tricia, I needed you to do a better job at this. And you’re like, you’re always telling me what to do and now you’re like you know now and if an employee tells you that.

15:06.86

Tricia Meyer

Right.

15:15.52

Matt DeCoursey

Enough you can just fire the employee and bring someone else in, a little bit harder to do that with your partner. So yeah and the same thing with family members. You’re just going to find like, Okay, so if you’re the key driver at the venture.

15:16.45

Tricia Meyer

Right? yeah. Correct.

15:32.60

Matt DeCoursey

You’re passionate about the business and hopefully about the problem that you’re solving because if either one of the— if you’re not passionate about both those, you’re probably not going to do that well but the people that you bring in with you likely aren’t. So you know the problem is I think that if you end up with your brother, Sister, Uncle, someone

15:34.44

Tricia Meyer

Yeah.

15:41.82

Tricia Meyer

Right.

15:51.17

Matt DeCoursey

And they’re not doing a good job and you have to make a change. It’s gonna you’re gonna see that person at like family stuff and it can be very uncomfortable. It can be really uncomfortable and it also makes it a lot harder in my opinion to have that tough conversation of like, hey I gotta let you go.

15:55.19

Tricia Meyer

Um, it’s hard. Yeah.

16:08.27

Tricia Meyer

Yeah, I agree right.

16:11.40

Matt DeCoursey

You’re not, You’re not good at so which you know hanging on to that for too long can really okay. So obviously you oh yeah, totally yeah yeah, and.

16:17.14

Tricia Meyer

Yeah, it can impact the company, that’s where you’re going with it. Yeah, right? because it’s not fair to everybody else that’s working so hard or whatever the case may be wherever that person’s not pulling their weight.

16:29.77

Matt DeCoursey

Okay, so are decent contracts and agreements the way to solve these things.

16:35.12

Tricia Meyer

Ah yes, contracts are not optional that is for sure nor are they one-size-fits-all you know sometimes people will find things online and just tweak them a little bit for their own company. But every company is different. Every company has different relationships. Different risk tolerances and those things all need to be accounted for in different contracts and I think people um, overlook that a lot, and then they try they end up cleaning up a costly mistake that they probably could have avoided had they just done it right in the beginning.

17:09.47

Matt DeCoursey

I’ve been there and done that. I even wrote about it and Million Dollar Bedroom and the struggle’s real by the way. The last comment on investing. There’s ah a past guest in a really cool app called Slicing Pie. You know https://slicingpie.com/ yeah Mike. Yes so he’s figured this.

17:22.49

Tricia Meyer

Um, yes Mike Moyer yes we know before it. Yeah.

17:29.00

Matt DeCoursey

He figured out this problem and yeah, he’s from Chicago too. That’s right? So but what it is is a platform that tracks like the vesting of sweat equity essentially and.

17:38.70

Tricia Meyer

Correct.

17:41.52

Matt DeCoursey

So and it’ll help like really determine what amount of effort, what amount of time turn into what amount of shares and stuff like that. So I have no vested interest in you using his vesting software. I just think that it’s ah a cool thing that someone and he has really thought a lot of that out. So.

17:57.96

Tricia Meyer

And I’ll see it. Yeah, I’ll say this we mentored incubators and accelerators across the U.S. It’s part of our you know we’re very mission-driven and passionate about that and we always tell the other founders who ask us, you know how do I divide up the equity. We always.

18:00.16

Matt DeCoursey

All right? So before we.

18:15.21

Tricia Meyer

I recommend Mike Moyer’s book slicing pie because it gives them a guideline and a baseline. Okay yeah, right.

18:17.67

Matt DeCoursey

it’s like twenty bucks a month yeah yeah and it’s like twenty bucks a month it’s like you’re really not out a whole lot. Yeah, it’s not expensive. So or before we head into the second half of today’s episode setting up a new business and maintaining compliance isn’t easy. That’s why it’s important to have expert help along the way and that’s exactly what you’ll find when you visit http://universalregisteredagents.com for all of your business setup and maintenance needs that can help you set up an LLC, a corporation, or a non-profit, wherever you are located in addition to helping you create the right kind of entity. Http://universalregisteredagents.com can also help you with registered agent services and a wide variety of corporate services as well as helping to meet the needs of independent directors. Now you know this is. There’s okay. It’s easy to want to like go to these little things online that are like hey $500 set up your business every time I’ve tried one of those I ended up having to hire either a service like that or an attorney to actually finish it so you end up with like a boilerplate template of documents.

19:18.66

Tricia Meyer

Yeah, no, you are absolutely right.

19:25.66

Matt DeCoursey

That isn’t customized to anything you need they will at those little basic kits will maybe register you at the state. But then they kind of leave you like you I don’t know like I don’t recommend them. I recommend getting experts like Universal Registered Agents dot Com. That’s like all they do or an attorney or someone that knows what. They’re doing and has thought about has seen failure and arguments and depositions and lawsuits and stuff and from other people that didn’t do it right? and talk about how to fix it. So. Okay, well I’m going to just kind of leave What what? what is on your list of shit you shouldn’t do when you start a new business?

20:04.91

Tricia Meyer

So another thing is you want to make sure that you’re protecting your two most valuable assets and that are intellectual property and confidential information. So to the extent, you’re going to be sharing your confidential information with someone make sure that they are signing a confidentiality agreement that includes a clear purpose. Broad enough definition of confidential information and most importantly, you want to make sure that the obligations extend past the term of the agreement you don’t want it to be limited to a short duration of time you want to expand that to as long as you can with respect to the.

20:41.74

Matt DeCoursey

And if you want to work with me on any level like at Full Scale or any of the companies we’re associated with, I’ve got an and NDA and I have a confidentiality agreement that says that the things we talk about, enter around the business, they stay there.

20:44.40

Tricia Meyer

Oh sorry, go ahead.

21:00.35

Matt DeCoursey

Um, and that you can’t share them at other things too. Is it even has like non-disparagement because when you have to break up with someone they go from being often will go from being your biggest advocate to your biggest hater and it’s real easy to put those kind of things in there and another thing, too, is you talked about intellectual property control.

21:03.63

Tricia Meyer

Right.

21:13.48

Tricia Meyer

Rife.

21:20.37

Matt DeCoursey

That’s part of why we started Full Scale. So Full Scale, we build tech teams for tech companies and a lot of these companies. There’s like these freelance marketplaces and stuff like that and they go and they’re like yeah but it says I have IP control I’m like okay well this dude’s in Bangladesh and good luck facing that down if you don’t have.

21:33.33

Tricia Meyer

Um, right right.

21:39.60

Matt DeCoursey

Don’t have recourse they could be like yeah we have an agreement with the people in our marketplace. Okay, cool now what happens if they break that agreement. How are you going to you know and some of those things like I don’t know I mean I’m not going to mention the service but I had used a freelance marketplace many many years ago and

21:45.82

Tricia Meyer

Right.

21:57.40

Matt DeCoursey

Ended up with a service contractor trying to blackmail me for my codebase. Yeah and know that’s part of what made me want to start Fullsca because you know like the people that we build teams for we have agreements all the way down the line like we fully vetted like they are our employees. They aren’t just contractors and they.

21:58.77

Tricia Meyer

Ah, oh Wow interested. Yeah.

22:15.68

Matt DeCoursey

And there is recourse if they run off with the keys to the castle and we’ve never had it happen because we have a well-set-up arrangement. We find the right people but you know I think you’re kind of inconous to what you’re saying is also know who you’re in business with.

22:17.39

Tricia Meyer

Um, yeah.

22:23.90

Tricia Meyer

Yes.

22:30.52

Matt DeCoursey

You know like it’s not difficult to do a background check on someone. It’s not difficult to pick up the phone and call someone and say how was your relationship working with or around this person.

22:32.95

Tricia Meyer

A.

22:40.13

Tricia Meyer

Right? Absolutely and I think where a lot of early-stage companies go wrong is they hire folks to do things for them. But they don’t have a contract in place and the default under the law is whomever creates it owns it. And so if you don’t have a contract that’s stating that they are transferring those ownership rights to you. Then you don’t even own the intellectual property that’s been created and so you know I think that’s one huge mistake that early-stage companies make and then if you are giving people access to your intellectual property like on the client-side or um with referral partners, maybe, or whatever the case may be. Have to put restrictions and rights and parameters around how they can use your intellectual property. So. It’s not only important for those that are creating it for you. But Also if you are sharing it with anybody that you are making sure that you have the right protections in place for that because. I mean, that is one of your most valuable assets of your business, especially if you’re going to raise money or anything like that. You know the investors will look at the integrity of your intellectual property to make sure that it’s okay and you’ll be making representations and warranties to that effect too and so it’s important to just do it right. Then to have to clean it up on the back end.

23:52.10

Matt DeCoursey

I have that conversation all the time with prospects that want to use Full Scale and you know we’re obviously a pretty big company at this point but that protection of intellectual property is important at all levels. So I’ll get on the phone with someone and they’ll be like. You’re a little more expensive than this freelance Marketplace I’m like I’m not in the business of cheap I’m in the business of delivering you exactly what you need to be able to get funded to be able to grow to be able to protect your Ip all of that and that and that requires more effort and.

24:20.48

Tricia Meyer

Um, yeah.

24:23.50

Matt DeCoursey

So one of the things that Tricia is talking about is if you piece, if you cobble together a software platform with a bunch of freelancers that are all over the world. Technically your intellectual property’s everywhere you don’t have and that’s the thing that’ll come up. They’ll say how do you, How are you going to keep this? How are you going to protect this? And they’re like oh well I have agreements with these people you know and someone’s in Bangladesh and other persons in Singapore someone else is in Kenya and you’re like but you get back? The question is what’s your recourse? How are you? Who do you know? who do you know that’s going to go.

24:51.77

Tricia Meyer

Um, right.

24:57.59

Matt DeCoursey

Chase that down here’s the thing is after that leaks or gets out and that’s already out there. Damage is already done in a lot of the cases so you have to protect that from happening and you know think about the different steps and like okay so.

25:02.12

Tricia Meyer

Um, right.

25:12.30

Matt DeCoursey

Don’t have any investors in Full Scale but everything we still do when we move forward with all that we do is always set up in a way of a “what if,” you know, so these things aren’t hard. You just have to think about them and just like be committed to like understanding that that is actually important.

25:18.12

Tricia Meyer

Um, right.

25:28.39

Tricia Meyer

Yeah.

25:30.55

Matt DeCoursey

So and I think with IP and also like a non-compete like if you’re going to have co-founders and I want to talk about founders agreements here in a minute but you know if you started business with someone. You should have a non-compete agreement with them that prohibits them from like. At 1 moment you disagree. They just walk across the street and duplicate the business and next thing you know you’re fighting over clients and all this other stuff and if you don’t have a simple agreement in there that says you can’t do that then they can do that.

25:48.82

Tricia Meyer

Yeah, yeah.

25:59.33

Tricia Meyer

Yep, that’s absolutely true. Another important point about intellectual property is understanding what third-party products or services that you’re using that may be embedded into the products you’re using because there are terms. Associated with that that you need to abide by and sometimes you need to flow that down to your clients or users or you know, depending on the type of the business you have so just having a full scope and understanding of what IP is yours, versus what IP of others that you’re using is super important.

26:28.95

Matt DeCoursey

Yeah, so our clients at Full Scale like we literally were that was one of the first things we knew we had to tackle So like that agreement says basically it says anything you bring and anything that you build with our folks is yours now and forever. It’s that simple like but and that means.

26:43.68

Tricia Meyer

Yeah, yep.

26:47.82

Matt DeCoursey

We can’t duplicate what you’re doing and reuse it somewhere else and I mean that’s important because yeah you know shit happens all right? So what’s a founders agreement.

26:55.51

Tricia Meyer

So, a founders agreement depending on the type of entity you have would be like a shareholders agreement for a corporation or an operating agreement for an LLC and it sets forth. Everybody’s kind of roles and responsibilities talks about you know if somebody needs to leave the company whom can they transfer their interest to how will it be valued. Um, it also talks a lot about voting rights and you know Thresholds in certain instances. You might want a higher voting threshold for certain decisions and in others, you know, maybe you don’t need as high of a threshold. So. Going through that really understanding what everybody’s roles, responsibilities are um I think founders go wrong. Co-founders go wrong. Also with the vision, not understanding the vision. How they’re going to get from point A to point B in, disagreements occur. So the more you. And have these challenging discussions early on and document it in a founders agreement the better off, you’re going to be.

27:53.96

Matt DeCoursey

So I have notes here that literally say map, not from Webster’s dictionary definition, from the school of hard knocks. So it says a Founders agreement is like a roadmap explaining how you will handle certain situations. And includes everything about everybody’s percentage ownership. The rights, the responsibilities, and the protections over things that might happen. Let me give you an example. So Matt Watson and I own Full Scale 50-50, what happens if I die, right? So my wife would inherit those shares but there are both of our wives had to.

28:22.82

Tricia Meyer

Right.

28:31.52

Matt DeCoursey

Signed agreements stating how that would be handled like the company gets the option of buying the shares back first and it sets the price because here’s the thing is like as morbid as that is like.

28:34.35

Tricia Meyer

Yeah. Right.

28:46.43

Matt DeCoursey

You know like it’s not fair to suddenly make someone have to be a business partner with your spouse so or or put that person or the business in a spot of being held hostage for like I don’t think it’s worth this I Think it’s worth this.

28:50.83

Tricia Meyer

Right.

28:59.91

Tricia Meyer

Right.

29:02.30

Matt DeCoursey

And you know like that could be those could be really key or clutch shares so in that part of the founders’ agreement along with um the kind of can’t remember the name of that the marital Joinder agreement. Um, and yeah there we go. So.

29:12.16

Tricia Meyer

And to join her.

29:17.84

Matt DeCoursey

Um, but with that, it defines Also the order of operations in which that it could still end up being that person’s ownership but it defines the process in which it would go through sets of values makes it very clear and concise and that’s also important, too because if you want to bring in investors like.

29:32.60

Tricia Meyer

Um, yeah.

29:35.23

Matt DeCoursey

They don’t want. They don’t want to find out that your ex-wife may end up owning 40% of the company if you get hit with a bus. So.

29:40.59

Tricia Meyer

Right? right? No, That’s true and I think though even more common is that circumstances change people don’t understand the level of effort it takes to start and grow a business and so. They might need to get out. They might need to make you know wage that they can live on. They might have a family to support you know and so I think you know that’s more common. Um, it’s hard to talk about death and disability and all those things of course. But I think talking about those more common scenarios is really important early on too because, you know, everybody is— their head is in the clouds when they’re starting a business in a way, right? They wouldn’t be starting the business. Yes.

30:20.59

Matt DeCoursey

Well, they always think of sunny day. They’re like, hey everything’s we’re aboutre. Let’s put the horn on because we’re unicorns ready and like nothing’s going to fail and everything’s going to be great. Guess what the opposite’s probably going to occur and then you’re hoping for the sunny days.

30:27.64

Tricia Meyer

Um, yeah, white right? Yeah right, right? right? Even with I mean you’re always going to run into roadblocks with a business even with a Clever Baby. We just ran into so many roadblocks. Before we were able to get it launched and it’s going to happen but some of those roadblocks might discourage certain people depending on how they are and they might need to get out of the business and so having a good founder’s agreement in place is key.

30:55.20

Matt DeCoursey

Yeah, and other things so like in that. So for example, when we started Full Scale, Matt was still—the other Matt, Matt Watson—was still um, the founder and CEO of Stackify, which means he didn’t have the ability capacity to work full time at Full Scale which isn’t fair to me. Wouldn’t have been fair to me to not let me collect some wage for being the CEO and running the company. So. That’s that stuff is just described and laid out and also other things, too. You talk about things change. So.

31:16.74

Tricia Meyer

Um, yeah.

31:26.90

Matt DeCoursey

For example, if one of us wanted to sell our share any of our shares to another party we have to offer them to the other person at the same price first right? So just giving you like because we’re a private company. We’re not. You know you don’t go in the Robinhood app and buy shares of Full Scale yet. But.

31:31.97

Tricia Meyer

Right? exactly.

31:39.72

Tricia Meyer

Right? yeah.

31:44.32

Matt DeCoursey

But with that you know that’s part of what being a private company is and just like this look. There are people and professionals that are that have thought look you go sit down with an attorney or like Universal Registered Agents or these people and like these folks have thought this stuff out. They have already thought of like 47 things

31:59.76

Tricia Meyer

Um, that’s right.

32:01.81

Matt DeCoursey

That are on the shit you shouldn’t do when you start a new business list and that’s why and so okay so I mentioned before we hit record that I grew up around a family of attorneys and sometimes people are like I don’t want to call the attorney. It’s $500 an hour look. You’re not paying for that hour you’re paying for all the hours prior to that.

32:14.31

Tricia Meyer

Um, right.

32:21.62

Matt DeCoursey

That person learned everything that they learned so they can blow it all out for you in 90 minutes and you know like save you a lot of issues and problems so find get the best advice and specialists when.

32:26.49

Tricia Meyer

Yes.

32:35.49

Matt DeCoursey

And where you can now with that once again, a big thank you to today’s episode sponsor Universal Registered Agents set up your new business and maintain all aspects of your business compliance. Their goal is to make your job easier so you can focus on what you need to do best which is running your business. Connect with them by visiting the universalregisteredagents.com link in the show notes you know so there’s something else I want to talk about here and that’s getting your accounting and financial practices off on the right foot.

33:05.98

Tricia Meyer

Very important and a lot of people just don’t know where to go or what to do so finding? Yeah, right right? something.

33:13.50

Matt DeCoursey

So start with Quickbooks something track your track the payments you collect and the money you spend and start there but find you know, find someone that can help you with this because you know I’m mentioning here talking about business compliance.

33:22.35

Tricia Meyer

Right.

33:28.91

Tricia Meyer

For her.

33:31.33

Matt DeCoursey

There are the goofiest things that like so in the state of Kansas every year I get the stupid document that if I don’t fill it out I’m not compliant and it’s like ah it’s a stupid survey that I don’t even know what they do with the answers and then I got to send a check for like $25 back right.

33:44.62

Tricia Meyer

Right? right? right? Yeah no I found a little thing.

33:48.36

Matt DeCoursey

But if I don’t do that, it can trigger like nine other things that build penalties and other stuff and.

33:55.93

Tricia Meyer

Yeah.

33:58.11

Matt DeCoursey

It’s easy to like miss that stuff or not know what to do with it or in some cases you get super busy. So you put that you put the envelope over to the side. Next thing you know five months later you’re like uh-oh.

34:06.13

Tricia Meyer

Yeah, and I think it’s so important to work with people who’ve been there and done that people who can help guide you help show you the way help you avoid from running into those roadblocks they’re gonna get much furthermore quickly and you know less heartache and pain.

34:22.53

Matt DeCoursey

So I think we have— do you have another item on your shit to not do list I know.

34:30.15

Tricia Meyer

There are so many when you’re hiring. You know when you’re hiring make sure you’re not misclassifying your folks, your team. You want to make sure that you’re classifying them properly as an independent contract or an employee and then making sure you have solid documentation around that hire.

34:45.60

Matt DeCoursey

I think having a standard business insurance policy is part of that you yeah.

34:49.10

Tricia Meyer

Hundred yes, you definitely need people don’t realize that when they start a business. They need a banker a lawyer, an accountant, and insurance broker. Those four people are key in the beginning.

35:01.80

Matt DeCoursey

Yep, I’m going to add a payroll processor to that list because you shouldn’t be doing that yourself either like yeah.

35:05.88

Tricia Meyer

True. That’s true, but you would have your accountant run the breakdowns for you and then process it on your own if you wanted to.

35:13.94

Matt DeCoursey

Yeah, most accountants will tell you they don’t want to do the payroll either. There’s things like we’ve had past sponsorship from http://gusso.com and stuff like that that streamline a lot of that you know. I think one of the things that you know is we kind of go through a little rapid-fire stuff here. Um.

35:23.76

Tricia Meyer

Yeah.

35:34.90

Matt DeCoursey

Mistakes that I see people make are they are too aggressive and optimistic with their financial projections and timelines they think that they’re going to make money and gain revenue or market share way faster than they do which is I’d rather see you put that way out like assume you’re going to make no money for twice as long as you thought you might.

35:39.53

Tricia Meyer

Um, yeah.

35:51.67

Tricia Meyer

Hundred percent power

35:53.76

Matt DeCoursey

Um, another thing, too is as I’ve gotten older and yeah, so you want to hear something crazy. So I just hired my two hundred and fiftieth employee and I am the second oldest person at the whole company at 46. I’m like “wow!” But so when I speak from experience I don’t even feel like I’m that old. But.

35:59.55

Tricia Meyer

What.

36:05.50

Tricia Meyer

Um, yeah.

36:12.87

Matt DeCoursey

as I’ve as I have gained more experience as I’ve also created projections and different stuff I make three of them, I do a good, better, best you know like I do one that’s like…the everything went wrong version. I did one that’s like the conservative like hey this is okay. And then I do one aggressive.

36:18.96

Tricia Meyer

Um, yeah. Um, yeah, yeah, yeah.

36:31.29

Matt DeCoursey

You know because here’s the thing is not doing that. Okay, so if I’m going to hire 50 new people to work at Full Scale next month that means I’m going to have to buy $100000 worth of computers I have that opportunity to do that am I going to be constrained my buy something as.

36:39.25

Tricia Meyer

Right.

36:47.91

Matt DeCoursey

As straightforward as not being able to purchase equipment and then you also look at things like okay we’re in the midst of a global chip shortage. So like we have distributors for equipment that we buy stuff from and they had they put they put caps and limits. So so what we had to do is instead. We.

36:53.20

Tricia Meyer

Right.

37:05.64

Matt DeCoursey

And having 1 distributor that would let us buy 5 laptops a month when we’re hiring 20 people a month we found 10 that we could get 5 a month for because our most aggressive projections said we could hire up to 50 people in a month

37:18.99

Tricia Meyer

Yeah.

37:21.38

Matt DeCoursey

So other things, too, is even stockpiling that equipment because we knew we were going to grow or later like it’s okay to stockpile the things you know you’re going to use you know like if it mean on some levels I mean I’m not saying by the computers you need in 3 years now but like I mentioned.

37:27.65

Tricia Meyer

Right? Yeah, maybe.

37:34.70

Tricia Meyer

Right.

37:37.89

Matt DeCoursey

It’s and it’s really heartbreaking when you can’t grow or capitalize on an opportunity because you didn’t just simply prepare. You know it’s easy to to get an AmEx card or like a lot of different things that’ll help you flex some short-term credit and I mean there’s a lot of stuff in there but it does require— I don’t know I think there are so many things in business that you’re so much better off to have and not need than the other way around.

38:00.50

Tricia Meyer

Yeah, right? Absolutely you know one other point I would bring up is another you know shit you shouldn’t do when you start a business is failing to protect your brand. It is so important to protect your brand because it increases.

38:12.60

Matt DeCoursey

M.

38:18.55

Tricia Meyer

The value of your business.

38:19.00

Matt DeCoursey

Yeah, well when we talk about the brand just meaning like there’s so we’re pretty specific about that and so one of the things here’s a real-life example. So I could take in like like 5 times more clients than I do but a lot of the client. Potential clients. We talked to quite honestly aret gonna be successful because they don’t have that’s where we and you interview to be a client at full scale and in many ways and that we just see a lot of people that they don’t have the background. They don’t have the resources. They don’t have the understanding or experience and that means they’re.

38:42.50

Tricia Meyer

Bright.

38:53.96

Matt DeCoursey

They’re likely to fail and sometimes they honestly just have a shitty idea and you know so with that I don’t want to contribute to you draining all your cash on something that’s bound to fail like and I had a guy that’s like I’ve got an idea that’s going to take down Amazon and I literally said I don’t even want to hear about it.

38:55.84

Tricia Meyer

Yeah.

39:10.30

Tricia Meyer

Oh I’ve heard it all.

39:12.55

Matt DeCoursey

Like what do you mean? you don’t want to hear about it and I said I don’t because you’re not going to depose one of the world’s biggest companies and if you do you have a very very long road at doing that and I don’t think I have time for that. So in certain cases though you know you can if you can do an amazing job.

39:25.16

Tricia Meyer

Um, yeah.

39:31.61

Matt DeCoursey

Like a brilliant job in the wrong situation and that person’s going to come out of that like spitting hate about you publicly and you know so you find the places where you can win and you feel comfortable or at least be really transparent about it. You know, saying like hey like.

39:38.51

Tricia Meyer

Um, yeah.

39:49.80

Matt DeCoursey

I did have a startup founder that you know so we don’t always work with day one startups and sometimes they’re on the cusp and I’ll say hey look you’re on the cusp like you’re actually the kind of client that I say no to more than not and this is why and they said you know what? that’s really good input I think we can fix that give me a shot. I Said all right I mean if you’re open you know and it really just has to do with leadership or having the right people now speaking of leadership. Let’s be leaders by preparing for the founders’ freestyle and you know I’m not the I say that’s how I end my shows but I’m not the only host of Startup Hustle. So You know you can tune in.

40:09.52

Tricia Meyer

Um, yeah.

40:26.58

Matt DeCoursey

Every week and you join Andrew Morgans talk about Amazon and e-commerce and Lauren Conaway the founder of InnovateHer who talks about pretty much all the stuff that I’m not brave enough to speak about on a global level and you can also join Matt Watson’s new weekly show. That’s right, we’ve— We finally gave Mr. Watson his own weekly show and those have been being published quite a bit. So for those of you that wants to see what it’s like when we throw Watson into the host seat rather than the co-host seat. But but. Tricia for us. It’s you and me here together today talking about shit that you shouldn’t do and you start a new business. So with the founder’s freestyle you know I’ve had people rap poetry ramble on for way too long, but mainly. Go through a list any list of things that they may have forgotten to say or I always like talking about the things that really stood out during the episode but it’s your freestyle someone lets you do whatever you want.

41:21.99

Tricia Meyer

Yeah, um I mean I’m happy to talk about whatever you think stood out or I can just go through high level. Ah oh okay, got it. Got it all right? So top tips here for all of you early stage.

41:27.41

Matt DeCoursey

No, it’s your freestyle I can’t do it for you girl you gotta do it on your own. You gotta do it on your own. Yeah.

41:40.46

Tricia Meyer

Founders out there would be if you’re starting business with somebody else. Make sure you’re getting a cofounders agreement in place. Make sure you’re getting solid contracts in place for all aspects of your business. Don’t borrow one that you find online and if you do make sure you’re having an attorney review it to make sure that it fits your business. And then lastly make sure that you’re protecting your intellectual property and confidential information because they’re two of your most valuable assets and if you fail to protect it then you are going to be screwed.

42:11.80

Matt DeCoursey

I think that’s a very good way to put it. You know I think when when I look back at this episode and you know really if we. Okay, if you said Matt what’s the shit I shouldn’t do when I start a new business I would say hold my beer and I could like go on for days. Like literally like trying to squeeze this into 45 minutes or an hour is difficult because there’s just 10000000 iterations of you can fail at any and every point of the process I think that when it comes to starting a new business. This is not You’re not the first one like sorry you’re not the pioneer of opening a new business like there have been millions that have been done before it and there are people that specialize in this like universal register days. It’s you Meyer Law like yeah I mean they’re like there’s a ton of guidance. You can get out there and.

42:49.51

Tricia Meyer

Um, right.

43:05.74

Matt DeCoursey

A little bit of thought upfront can save you a world of heartache on the backend now look a lot of businesses get started because you have someone that’s passionate about creating some kind of solution like in fact, I believe that most small businesses are actually actually accidental. Like you know someone decided they liked blowing glass and someone else like oh I Really like your art and so they start buying it next thing you know someone’s got this glassblowing business and it’s Easy. So The problem is is, you’re an artist at that point you’re not necessarily a business person so you either need to find the advice the input. And the structure for people to do that So you can focus on the art or you need to find a business partner. That’s really good at that stuff so they can focus on that and you could focus on the art or whatever and then and then the last thing is you know I Just really want to tell everyone out there like.

43:47.10

Tricia Meyer

Yeah.

43:53.84

Matt DeCoursey

It’s easy, I do recommend having partners and cofounders. I didn’t always feel that way, I really do now, but choose them carefully because as I mentioned in Million Dollar Bedroom, It’s easier to get rid of your husband, wife, or partner than it is to get rid of your business partner like you can literally like I mean like it really is more difficult.

44:05.74

Tricia Meyer

Or her.

44:13.41

Matt DeCoursey

Get ready your business partner then your life partner. So know that going into it and you know use tools like Slicing Pie or just like you know, just you know good fences make good neighbors and you know you assign the sign the agreement as well like put yourself in the exact same. Situation is the people you’re doing business with and just you know give some consideration to that. Remember sunny day and rainy day, any plan, any outlook, any projection, anything from that is all about— that’s a plan for the good plan for the bad.

44:49.50

Tricia Meyer

Um, step.

44:51.80

Matt DeCoursey

And you know and and look these aren’t the most exciting things to talk about what happens if we fail, give some consideration to it because like you were saying earlier like situations change and someone might want to leave your business. They might might get 6 to twelve months into it and and be like you know what I thought this was for me. It’s not.

45:08.90

Tricia Meyer

Um, right.

45:10.17

Matt DeCoursey

And so now what and you know these these things these balls of rubber bands are are best. Best undone when they’re never built in the first place. So overall I think that’s that’s what I’ve got and hopefully many of you listening learned but I just like saying shit.

45:29.43

Tricia Meyer

Suffering. Yeah.

45:29.75

Matt DeCoursey

Honestly, so being able to say shit you shouldn’t do. It’s also why we Mark every episode explicit. We’ve had people that are like hey why is this marked explicit. We didn’t cuss we’re like, yeah but we probably should have so yeah, it happens? Well thanks for joining me Tricia I’ll catch up with you down the road.

45:38.54

Tricia Meyer

Um, ah, awesome. Thanks for having me.

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