Business Deal Points by Bill Hubbard

Entrepreneurs: A Philosophy

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Entrepreneurs: A Philosophy

Entrepreneurs—from start-ups to successful middle market multi-generational family businesses—have a common problem: access to capital.  I know.  I’ve been a business and deal legal counsel to them for 30 years.


Before continuing this first blog, a frame of reference: mine.


Each entrepreneur seeks financial security; few find it.  And even the minority that (in my opinion) have it, most either feel they don’t or fear they won’t.  I can, from hard-learned first-hand experience, speak to fears and desires of—and the realities facing—business owners. Ones that own start-ups. Ones that own small middle-market companies.  Ones that own parts of each.  Ones with no money.  Ones who had money and lost it.  Ones who made tens of millions and have kept it.

It is the entrepreneur, whether in the Chicago, Beijing, Sao Paulo, Lagos, Augsburg, Manila or elsewhere, who risks her or his family’s financial survival and who makes sacrifices and takes risks.  Note that I speak here about the ethical ones, not ones who take undue advantage over those whose financial life they control (for that is another class entirely).

These entrepreneurs—even if their ethics and judgments sometimes fail—are to be admired.  They built this country, are foundations of many others. Progress—and its rate—rests on their collective shoulders.  If they’re forced to shrug or the load becomes yet more staggering, decline will follow.

Entrepreneurs embrace a passion for progress.  To make something better.  To invent or commercialize something new and useful.  To provide solutions.  To take away pains. To uplift themselves, their families and mankind.

While they each desire financial security, without providing something of value they have no chance of succeeding.  And even when providing goods or services of value, the prospects for failure over time always outweigh those of success.

Their strife is to survive and grow and eventually exit their day-to-day role in relative financial security.


So what today are the realities of their landscape?


As Philip K. Howard of pointed out in his WSJ quoted article, the U.S. landscape is defined by, “140 million words of binding federal statutes and regulations, and states and municipalities add several billion more.”

I am convinced that not one lawyer or one firm in the Am Law 100 or even 1000 firms acting as a collective intelligence could coherently stay on top of all these regulations and laws much less try to distill them into meaningful and practical business legal advice.  Even—even—if they could, no firm, regardless of market cap or technological sophistication (think a Google or an Apple or a Microsoft) can afford it and yet remain in business.  And no set of talented and motivated leaders, managers, and workers could both assimilate and implement even a significant fraction of all mandated actions even if they knew what they all were.

To further quote Howard, “the unfortunate side effect [of making the regulatory codes self-executing] has been to preclude good judgment.”

So it is the blind—or the less blind—leading  those that are more blind across a landscape which has not even a  square inch where treading would not—if all the actions or inactions were known—result in  jail, fine, firing, or failing.

For the Entrepreneur, it is, despite the good intentions of this landscape’s creators, a no-return Kafkaesque gulag of a web of International, Federal, State, and local administrative and/or judicial laws, rules, and systems and the behaviors of those who enforce them.

And yet.

Whether for the uplift of mankind or some less noble purpose, the betterment of this country—and all countries—depend upon these entrepreneurial endeavors.


So with what perspective should entrepreneurs view this landscape and these billions of words regulating their every action and inaction?


Google, in its approach, adopted an analog of the physicians, “First, do not harm the patient.”  Yet an entrepreneur always hurts someone:  a group; a competitor or potential competitor; a customer; a supplier; an employee; an investor.  Progress, though, requires harm to someone.

My answer:

You ethically try to do the best you can with the resources you have.  And if you blow it, as long as you in good faith tried to use your best judgment and reasonable resources to comply with the law, odds are in your favor that despite the maxim, “Ignorance of the law is no excuse” you’ll  be far better off than if your head was stuck in the sand—or elsewhere.

As to profits:

Entrepreneurs should not attempt to maximize profits—or the selling price of their business. Rather they should optimize their investment and returns, taking into account, as best they can and whether with or without advisors: the better moral course,  the relative risks and rewards over time keeping in mind their duties and the effects of their courses of action on affected stakeholders and other parties.

In short, entrepreneurs should—and do usually—adopt what science and sophisticated analysis cannot yet provide:  optimization.

And finally (more of this in the next blog), capital.


Capital, preferably invested not borrowed capital, is the other essential ingredient for success. It is, as I began this blog, a major problem for most entrepreneurs.

Two new capital tools soon become available. July 4, 2012 and January 2013 are the two start dates.  Almost any Entrepreneur may have a reasonable chance to get capital.  I could go on for pages about all the dangers and the risks and potential problems. I won’t.  I’ll simply say this is big, really big.

The first (July 4 2012) is to permit entrepreneurs to generally solicit to wealthy investors; you cannot right now.  It’s new; it’s important.

The second (January 2013) Investment Crowdfunding, provides, finally, a true and new opportunity for all ethical entrepreneurs, no matter education, age, ethnicity, or country of origin,  a reasonable shot at accessing capital.

Whether you are an individual just thinking of starting a business or own or work for a $30 million in sales business that needs up to an additional $1 million in equity or debt, Investment Crowdfunding may be just the tool you need.    January 2013 will mark the first time since early 1933 such Entrepreneurs across the U.S.  (and from outside the U.S. if a U.S. based corporate type entity is used) will have a realistic way to access needed capital from Investors across the fifty states—and beyond.  Entrepreneurs will be able to access this capital through what is known as Investment Crowdfunding.  The process will require an investment of time, money, and commitment to successfully pursue it.  But it may be well worth it. A whole new Crowdfunding industry is being developed to support it and, over time, make it less costly, less risky, and more efficient.

You’ll find more information on Crowdfunding and general solicitation—and how you or your company might benefit—in my next entry.

(Reminder: This blog simply contains my own perspectives and information which I believe useful to entrepreneurs—and others. It isn’t my legal advice.)




About the Author:

Bill Hubbard has over 30 years of experience helping businesses and their owners. He established Hubbard Business Counsel in 1997, after previously having been a partner in two of the largest Chicago law firms. He graduated from West Point (B.S., 1973), and the Illinois Institute of Technology/Chicago-Kent College of Law (J.D., with high honors,1978) and also obtained an Illinois Certified Public Accountant certificate. He served as an airborne and ranger trained infantry officer for the U.S. Army Judge Advocate Corps prosecutor and Officer-In-Charge in Berlin and as an Army prosecutor in Augsburg, Germany. He is admitted to practice law in the State of Illinois and is a member of the ABA Business Law Committees or Sub-committees (e.g. Mergers and Acquisitions, Securities, Private Equity, Business Law, Taxation, Limited Liability Companies, and Middle Market and Small Business Committees) and Chicago Bar Association Sub-committees (Mergers and Acquisition, Securities, Taxation),he American Institute of CPAs, the Illinois CPA Society, the Association for Corporate Growth, Alliance of M & A Advisors, and the Midwest Business Brokers and Intermediaries Association. He is a former Director and Past President of the West Point Society of Chicago. Bill lives in the Lincoln Park neighborhood of Chicago.