A legal contract that spells out the responsibilities and relationships of partners in a business venture protects the interests of all parties involved, and it can guard against the messy disputes that can potentially sever friendships and family ties when an entrepreneur relies on friends and relatives to be his initial investors or workers and things don’t turn out as expected.
A term sheet can serve as a template and preliminary document for such a contract. Commonly used by professional investors when negotiating their involvement in a business venture, a term sheet can also be used by small-business owners to start discussions of investment and responsibility terms with family members. Continue reading