Sunday, February 11, 2007

Lesson from Jake Burton: Focus on the Essence of Your Business, and Let Everything Else Fall Into Place

There is a great feature on The Wall Street Journal's website called "journeys", that describes success stories of certain celebrity/entrepreneurs--it's also a great ad piece for the WSJ. The "journeys" concept intrigued me very much because I've been thinking a lot lately about creating my own publication or newsletter that features the inspiring success stories of the people that I meet through my business.

However, what got me to actually log on to was the piece on Jake Burton, founder of Burton Snowboards (I'm a fan and frequent purchaser of Burton gear and apparel).

There was something Mr. Burton said in a video clip on the site that I wanted to point out here. He was commenting about how when he began his business, the focus was all about the money. He said that once he "put the materialistic thing completely behind [him] and got much more focused about the essence of the sport really clear about that, it seemed like the sport looked after [him], and everything else fell into place."

This was a real life example about a principal that I've noticed has been 's been coming up a lot around me from a number of different sources: instead of focusing on revenues in, cash out, and how to maximize the former and minimize the latter, focus more on creating value for your clients or customers, and becoming crystal clear about how you can do so. It seems that by doing so, the money part will work out on its own.

It's a poignant message, and very relevant to my own business. For a number of reasons, for the past year I have been very focused on revenues/expenses, and lost sight about why I ultimately decided to start a firm in 2002 as opposed to getting a job.

The piece about Jake Burton inspired me to make a commitment that now, and in the future, my focus is going to be about fulfilling the vision I had when I started my practice: creating a law firm that can support talented entrepreneurs in their journey to success. I truly believe in this concept and am confident that my experience will be like Jake Burton's, the rest will fall into place.

One more thing, The WSJ has provided readers with an opportunity to tell about their "journeys". Click on the link on the top right corner of this page. I did tonight, and I encourage you to do the same.

Saturday, February 10, 2007

When Raising Investment Cash for Your Biz, Can You Pay a Finder?

My clients regularly ask me whether they can pay a “finder’s fee”, a commission or a bonus to a third party or employee to help them sell shares of their company for the purpose of raising investment capital in their business. One of the biggest myths in the securities industry is that the payment of finder’s fees falls within a “gray area” of the law. In fact, there is no gray area and, in almost every case, the payment of a finder’s fee, a commission or a bonus in connection with a sale of securities to any person who is not a licensed broker or dealer violates State and Federal securities laws.

In years of practice, I have seen nearly every attempt at circumventing this rule, including so-called "consulting arrangements", employee "bonuses", calling the payment of the finder's fee or commission by other names, etc. The reality is, any payment to a person other than a licensed broker or dealer that is contingent upon the successful completion of the sale of securities is illegal.

Both the person AND entity paying the fee (the company and its officers), and the person or entity receiving the fee, will be subject to fines and other serious penalties. Additionally, securities regulators can force the company to offer to its shareholders the right to receive their investment money back (with interest)--which could be a big problem if you've already spent the cash in your business. And, in some cases, the payment of the finder's fee to a non-licensed person can be sufficient basis for a shareholder to sue the company for the return of his or her investment at a later date--a right they might not have otherwise had if you never paid the finder's fee.

For more information, see my article "Can You Accept (or Pay) a Fee for Finding Investors in a Securities Offering?".