Posted on 09 March 2011
While every business is different, business owners share many common traits. As a result, they often make the same mistakes as they work on their business plan. Here is a list of the ten most common mistakes :
- No Plan – It is easy to put off writing a business plan until you have no choice because your banker, investor, or potential landlord requires it. Unfortunately, that is the worst time to try and write a plan.
- No Clear Audience – Why do you need a plan? Are you writing for the banker in hopes of getting a loan, or a potential investors or simply to guide your business. While the outline is the same, the amount of detail required in each section varies depending on the audience.
- Too Much Detail or the Wrong Type of Detail – Can you boil down the description of your business to a simple message without getting bogged down in the details? Limit your product description to an overview, focusing on the problem your product solves and its unique features/ Remember to leave out the jargon and industry slang.
- Poorly Defined Customer – Everyone is not your customer. With a clear, specific definition of your target customer, it is easier to write a clear, specific plan.
- Limited Market Research – Just because you love your product or idea, it does not mean anyone else will. (By “anyone,” I mean anyone other than your mom, spouse, or best friend.) Who are these people, and what will make them buy?
- Underestimating your Competitors – Everyone has a competitor. Even truly innovative products must deal with competing products or services which may or may not solve the same problem, but ultimately will compete for the end customer’s available resources.
- No Meaningful Goals and Milestones – What will you accomplish? Be specific. How long will it take you and how will you measure your progress along the way?
- Activities Not Tied to Goals – Your goals form the basis of other decisions. Use the planning process to eliminate activities which do not move you closer to your goals.
- Unsupported Financial Projections – Unrealistic financial projects with a hockey-stick-shaped growth curve, set up a business for failure when owners spend too much too soon without enough cash reserves to help the business through the startup phase. As you develop financial projections, consider two scenarios: a best case and a worst case.
- Inadequate Consideration of Pitfalls – Stuff happens! Things go wrong. When the worst happens, will you be prepared? Having an adequate assessment of risks is not being negative — it is being prepared.
- Failure to Communicate – I know, I promised a list of the ten most common mistakes, (but don’t you like getting the little extra from time to time? ) While not directly a part of your document, poor communication will have a detrimental affect on your business. As you write your plan, involve others. Seek advice from people you respect. Talk to employees, family members, business partners, and advisers, such as your accountant and lawyer.
Need help getting your plan started? You can download a free copy of my business plan outline
Posted on 15 February 2011
Internet start-ups are a lot like traditional, brick and mortar businesses. The require all of the same things I listed here. There are also some unique matters that must be attended to when starting and operating and Internet Business. Below is a checklist of some of the things every Internet start upshould have.
- A properly organized corporate entity. Just because you are doing business on the Internet does not mean you are free from the liability concerns of traditional businesses. Make sure you form an entity through which to do business and adhere to corporate formalities.
- A plan to protect your intellectual property. This should include proper registrations of copyrights, trademarks and patents. It should also include the use of confidentiality, nondisclosure, and invention assignment agreements. There should also be clear, conspicuous notices of your intellectual property rights.
- If you are an SaaS provider, make sure you SaaS agreement is bullet proof. Don’t try to do this on your own! You not only need to make sure the provisions in the agreement are sound, but you also need to make sure that you have a valid acceptance of the agreement by the end user.
- Make sure you have carefully reviewed any development agreements. Among other things, this needs to be reviewed VERY CAREFULLY to ensure the scope of the project, developer obligations, warranties and most importantly intellectual property ownership are all adequately spelled out in the agreement.
This list is, of course, not inclusive.
Have something to add? Leave it below in the comments!
Posted on 08 February 2011
Most startup ventures are strapped for cash – and most start-up ventures typically require at least some, if not a significant amount, of legal work to help them get the business up and running. One great way for a start-up to save itself some money is to negotiate fixed fees for the transactional legal services it receives. Billable hours have been a cash cow for big law firms for a long time, but most smaller and solo law practices will be more than willing to provide a fixed fee for certain types of work.
Seek out attorneys that are willing to provide fixed fees for your projects – and if you can’t find an attorney that markets him or herself as providing fixed fees – don’t be afraid to ask for fixed fees from an attorney – even if it is an attorney you have used in the past who you have historically paid by the hour. Fixed fees will help you control your costs, and will help you more accurately budget your tight cash flow since you know EXACTLY how much your legal expenses will be.
Posted on 01 September 2010
Many times small business owners get so caught up in the day to day activities of their business that they either ignore the fact that they have poorly planned their estate, or they simply keep putting it off and putting it off. Also, there is a common misperception out there that estate planning is only for people with high net worth. This is NOT true. Estate planning is more than just making sure that your assets, whatever they may be, go to the right people or organizations. It is about making sure your family and loved ones are taken care of, and that your wishes and instructions are followed, in the event or your death or disability. And for the small business owner, it is about making sure that his/her interest in the business is managed and/or passed along in the proper way.
Here are some steps and tips that anyone can take to put a simple estate plan in place:
- Have a will drawn up. Your will should state who you want to inherit your assets when you die. If you are married, make sure that both you and your spouse each have a will. If you have children, you should name a guardian for those children in your will; you may also want to have your will create a contingent trust to hold and distribute assets for your children until they become adults (naming a trustee to administer the trust also). Our Indiana Simple Will allows you to do all of that.
- Get a Durable Power of Attorney. A Durable General Power of Attorney is usually used to allow your attorney-in-fact to handle all of your affairs during a period of time when you are unable to do so. A Durable General Power of Attorney is frequently included as part of an estate plan to make sure that you have covered the possibility that you might need someone to handle your financial affairs if you are unable to do so.
- Consider a Trust. Trusts allow you to put conditions on how and when your assets will be distributed when you die. They also may reduce estate and gift taxes, as well as allow for distribution of assets to your heirs without the cost, delay and publicity of probate court. Some also offer greater protection of your assets from creditors and lawsuits.
- Create Advance Health Care Directives. Healthcare Directives / Advance Directives protect your right to refuse any medical treatment you do not want, or to request any treatment that you do want, in the event that you lose the ability to make decisions for yourself.
- Appoint a Healthcare Power of Attorney / Healthcare Personal Representative. A Healthcare Power of Attorney lets you name someone to make certain decisions (healthcare, financial…etc) on your behalf in the event you are unavailable or not able to speak for yourself. Your can also appoint a “health care representative” – which under Indiana law means that person may make decisions concerning the withdrawal or withholding of health care; without being appointed as your healthcare representative, your attorney-in-fact will not have this power. Our Indiana Healthcare Power of Attorney form allows you to do this.
- File Beneficiary Form for Bank Accounts. Naming a beneficiary for your bank accounts and retirement accounts typically makes those accounts ”payable on death” automatically to your beneficiary – skipping the probate process. Talk to your bank or retirement account administrator.
- Explore Life Insurance. If you have minor children and/or a mortgage, or will have other unpaid debts when you dies, you should consider obtaining a life insurance policy. Here is an excellent post on exploring life insurance options.
- Discuss Your Estate Plans With Your Heirs and People that are Responsible (trustees, executors…etc) under your plan. This will help prevent confusion about inheritance and what your wishes are, regardless of how well they are spelled out in writing. Make your wishes known regarding organ donation whether you desire burial or cremation.
- Plan Ahead for the Succession of Your Business. Make sure your wishes regarding how the ownership passes are known, planned for, and properly documented. If you are not the only owner, make sure you have a buy-sell agreement in place with the other owners.
Posted on 15 November 2009
Indianapolis attorney, Hannah Joseph, recently launched a new blog called FinePrintLawyer.com. The blog takes a stab at an interesting niche – which Hannah describes as “…the legal angles of social media, marketing and advertising…common sense explanation of the tiny writing that clutters up all that nice marketing copy.”
Check it out!
Posted on 12 November 2009
I get questions from friends and clients all the time about what is and isn’t ok to post on a blog in terms of copyrighted and trademarked materials. The answer is not all that easy to explain, but Indianapolis attorney Kenan Farrel has an excellent post on his blog that does a nice job of explaining the issue. You can read the entire post here (A Legal Primer For Bloggers – Intellectual Property), but I have included a few highlights below:
On copyright law, fair use, and transformative use:
Keep in mind that the law favors “transformative” use. In other words, if you’re reposting another person’s original work, it’s more likely to be fair use if you’re using that work in a different manner or for a different purpose than the original. While you may borrow directly from another source, adding your own commentary and content is better than strict copying. Likewise, it’s better to repost only a small portion of someone else’s work than the work in its entirety.
On what to do if someone contacts you to remove their work:
Also, on a practical note, if you’re using someone else’s text or images and they contact you to ask you to remove them, you probably just want to go ahead and do it. After all, there are lots of different ways to express an idea and usually hundreds of equally wonderful pictures to adorn your blog.
On nomative fair use of someone else’s trademark:
…while trademark law prevents you from using someone else’s trademark to sell your competing products, it doesn’t stop you from using the trademark to refer to the trademark owner or its products. That is called “nominative fair use,” and is permitted if using the trademark is necessary to identify the products, services, or company you’re talking about, and you don’t use the mark to suggest the company endorses you.
Again, you can check out the entire post, as well as two other posting in his “Legal Primer for Bloggers” series here.
Posted on 27 August 2009
Limited liability companies (LLCs) can be managed by either their members, or by a board of managers (board of managers is the term used in Indiana – some states differ slightly). This is something that needs to be specified in the articles of organization for the LLC, and although the articles can obviously be amended at any time to change how the LLC is managed, it is an important decision nevertheless.
A member managed LLC is exactly what it sounds like – an LLC with its daily business managed by its members. This is obviously not a big deal if you have one, or even two members. Problems arise when an LLC has multiple members. Typically, except as otherwise spelled out in a written operating agreement, all of the members will have the authority to act on behalf of the LLC (sign checks, execute agreements…etc). This is not an ideal situation.
A manager-managed LLC, on the other hand, has its daily business matters managed by a board of managers. This would be analogous to a board of directors or even officers in a corporation. Members elect the board of managers, and become much more passive in the operation of the LLC. Members, of course, can also serve as managers. The flip side of this, and another advantage to having a manager managed LLC is that you can elect managers that are not members.
Any LLC, regardless of whether it is member managed or manager managed should clearly define the authority of its members and managers in a written operating agreement executed by all the members and the LLC. Check back sometime soon for a follow up post about how this should be handled and what things need to be considered.