The signature that follows you home.

Nobody tells you what a personal guarantee actually costs. So let me. (Also: the votes are in.

Hey y’all,

I’m sitting on my couch tonight contemplating what to write, and so many things come to mind. My recent time in California. The World Cup match I got to attend in Houston. The business rollercoaster this week has been (trying to acquire another company is as frustratingly exhausting as it is exhilarating). But what keeps rising to the top is gratitude…. because of a panel I got to speak on this week.

A friend reached out a couple of times about getting me on it. And while I’m always excited for the opportunity to speak, as it got closer I caught myself frustrated with ME for saying yes to another thing. Then the event was executed beautifully, and I was so grateful for the invite.

What’s even crazier, and what still humbles me: the number of people who reached out afterward. They appreciated my story. They wanted coaching or mentoring. They’d been watching for a while and wanted to volunteer. You name it. I think I got five different direct reach-outs from fifteen minutes of talking.

So that’s the inspiration for tonight…. to keep pouring into what I said my why was: making it easier for the next generation of entrepreneurs. Which brings us right back to something I put on the list a couple issues back…

Personal guarantees. Welcome to Done Dumber Things #2.

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What we signed

Here’s the thing: what my partner and I did wasn’t necessarily dumb. What was dumb was not fully understanding what I was signing and how it could impact me down the road.

By that point I’d already signed a personal guarantee on an equipment loan. (There’s a long story behind that one; it’s actually part of the reason my former business partner is no longer my current partner. I’ll save it for the larger story.) The point is, I had a decent amount of debt attached to my name, and I didn’t realize how those guarantees were quietly making everything else harder for me financially.

Fast forward to one of my business partners and me signing our first lease together, and we had to personally guarantee it. In the moment? Exciting. New location, let’s go.

Then you look back and realize what you actually did: you committed yourselves, personally, to paying that lease in such a way that even if the business failed, he and I were still on the hook. Not the company. Us.

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What nobody tells you

Almost every landlord and lender asks for this now, and most entrepreneurs don’t know there are other ways. Three, at least:

1. You don’t always have to sign it. A personal guarantee is a negotiation, not a law of nature. Sometimes pushing back works.

2. A corporate guarantee. The business guarantees itself. What they don’t tell you: you need real company maturity and solid financials; nearly impossible as a startup, but it’s where you’re headed. We don’t personally guarantee leases anymore, though getting away from them at the bank is still almost impossible until the company is a little bigger.

3. Leverage an investor. Have them guarantee the lease or loan. They’re far more likely to do it for a loan backed by collateral (equipment, real estate) than a lease. But it’s a legitimate tactic to bring to the table.

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The part that follows you home

Here’s what I really didn’t understand then: it wasn’t just a bigger commitment than I realized. It compounds.

Every loan we’ve signed with a personal guarantee, plus that lease, adds up; and the bank sees the total when it sizes up our fiscal responsibility. Every new thing we try to do carries the weight of every old thing we signed.

And it doesn’t stay at the office. It can make it harder to buy a home. I watched that happen up close: one of my business partners recently had to purchase his house primarily through his wife…. for this exact reason.

Beyond the financial complications (and even the legal ones down the road), there’s a layer of mental stress that comes with knowing that if your business doesn’t work, you can’t just walk away. You’re responsible for your financial obligations, your payroll, your employees, your own personal finances; and you may be personally liable for the debts and leases on top of it. It’s a sobering weight if you’re not ready for it, and if you don’t understand what you’ve committed to and what the plan is for making sure your personal guarantee is never actually needed.

I’m not saying never do it. I’m saying it’s complicated. And you deserve to know that going in.

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Some news (okay, two pieces of news)

I promised to help you through issues like these based on my own past mistakes and learnings. That’s a big reason I moved to Substack. This newsletter is always going to be free, and I’m going to keep putting free resources out there. But I’m now also offering a paid subscription at two levels, and I’ll be stocking a VAULT with things I’d love for you to have: my operating agreement checklist, my personal guarantee audit (it drops with this issue), plus plenty more I’m building to make your lives easier.

And the second piece: enough of you voted. It’s official. We’ve moved from Still Going to Done Dumber Things.

My dumber things are your gain as I keep building a vault of entrepreneurial resources that help you take it to the next level without making the same mistakes I did.

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Your turn

I’ve compiled a list of every question that’s come in so far, and over the next couple of issues I’m going to start answering each one. So tell me: what else do you want to know? Entrepreneurship, startups, building a business, fatherhood, dealing with life in general…. I’m here for all of it.

Hit reply. I read every single one, and I love the thoughts you guys share with me every week.

Keep building. Keep going. None of us are quite there yet.

Talk soon,
Ryan
Not Quite There Yet Guy
CEO & Co-Founder, Knowledge Perk | Chair, Gravity Center Foundation | EO Charlotte