When It's Time to Cut the Bootstraps
No one checks their hair when fleeing a burning house, and no one worries too much about legal niceties in the early months of launching a startup. When you're fighting for survival, survival is the only thing that matters.
But just as you'd call your mother as soon as you're safely away from that fire, it's important for start-ups leaving that first frantic stage to sort out their personal and professional finances, warned attorney Emily Chase Smith on Under30CEO.
As part of her business helping start-ups clear up their legal issues, Smith has seen just what can happen if you delay disentangling those personal and professional assets.
Specifically, it breaks her heart when she meets founders who "are facing a personal lawsuit for a commercial space that’s multiple six figures and their homes, their assets and their family’s savings is [sic] on the line," she writes.
So what sort of messes do these founders often make? Chase Smith outlines a few, from putting business expenses on a personal credit card to guaranteeing a lease and borrowing money from family and friends.
If you used your personal cash to help bootstrap the business, that was bold and probably necessary. But even if things go well, those financial ties could stop the sale of your business--or take you down financially if something goes terribly wrong.
So how should you proceed sorting out those questions? Check Chase Smith's post to see her helpful advice.
Are your business and personal finances entangled?