Insights

Business owners are busy people.  They often delegate key activities to trusted subordinates.  Everyone is doing the best they can, but sometimes there are skill gaps that create long term unanticipated problems.  One of the most common is "box canyon" strategy.  

A box canyon is a canyon that dead ends at a steep cliff that is unscalable.  The issue is that as you're walking up, the walls on either side of you obscure your predicament.  It's physically impossible to see the problem that you will soon be facing (literally).  

In strategy, here are some box canyons I have seen:

I - Signing an agreement without understanding every word and the scenarios under which that word has power and control.  For example:

a)   a clause that gives the sales person a perpetual right to the revenues from the his or her client (meaning that the revenue stream may be worthless to a future buyer and the sales person has huge influence on your deal)

b).  signing a contract for multiple years of delivery based on quality of product without defining quality (meaning a lawsuit is virtually guaranteed if the product doesn't work).

c).  thinking things will "work themselves out" when the issue raises it's head in five years.  

d).  signing a personal guarantee on a corporate deal because they asked you to.  

II - Rushing to a deal structure 

III - Not understanding the tax position.  

IV - Unperfected collateral.  Many deals are done where each side exchanges items of value, but that means nothing if you can't collect.

And many more.  The advantage of having an external advisor like EAL with you is that sometimes they can see where you're going before you get to the wrong place.