Definitive Business Plan, Second Edition, The

The contract

Experienced and professional lenders and investors will want to use their own legal agreements setting out the terms of the funding, security and repayment if appropriate, and obligations on both parties.

Newcomers to the game – including but not limited to family, friends and angels – usually go over the top. Often, they retain a lawyer who has not done this before either, who attempts to earn a fat fee by drafting the world's longest agreement. Try to keep it short and simple (as well as professional and legally effective).

Make absolutely sure that you review any agreement before signing. Check that the terms and conditions are acceptable. Almost certainly have a trained corporate-finance lawyer make sure that there are no traps. ...