Making It Legal:

What caught my eye was an employee wage and hour webinar (which I missed) given by the National Federation of Independent Business, a lobbying organization dedicated to promoting the interests of small, independent businesses. But having reached the site, it turns out that NFIB.org has a number of handy resources and tips on employment and other legal issues. Check out the Small Business Toolbox. You’ll find information on labor laws and regulations, immigration issues, employees vs. independent contractors and more.

From our own Entrepreneur.com comes this handy article by Sean Melvin, Esq. on what to look for in a small business loan package. As Melvin points out, the package usually “comprises three documents, including a loan agreement, a promissory note, and some form of guarantee and surety agreement.” Briefly,

1. The loan agreement contains the “representations and warranties” of the borrower. These are your promises to the bank that you’ve complied with certain conditions.
2. The promissory note details the principal and interest amounts owed and when payments are due, and it outlines the events that would allow the bank to declare your loan in default.
3. The guarantee/surety agreement is your promise to the bank that, if your business fails and can’t pay the money back, you’ll pay back the loan with your personal holdings.

The consequences of default on a loan can be serious–to both your business and personal credit. So make sure you review them with an attorney to fully understand the risks involved.

We all know how exciting it is to see our words in print. What’s not so exciting (and inspires that sick-to-your-stomach feeling) is when we see our words on someone else’s site, or under someone else’s byline. What can you do to protect your online content?

It’s not easy, but here’s a great article (in two parts) by Jennifer Schiff in eCommerce-Guide.com on protecting your website and your online content from plagiarism. Yes–full disclosure–she’s a college friend, but she happens to be an excellent writer who makes a lot of the Web 2.0 mumbo-jumbo very clear.

While you’re at it, check out her personal blog–which always gives me an opportunity to snort or chuckle.

From the department of “Oh, why not just put a stake through my heart?” came an inquiry from a reader who’s working with her boyfriend in his business.

Ugh. Need I say more?

It goes on: He’s having cash-flow problems.

[Something tells me she isn't getting paid for her efforts]

He’s run the business for 15 years by himself [Nu? After all these years, he can't hire staff?] and is not prepared to take on a partner [Hmmph].

She’s been helping him with marketing materials, communications with alliance partners and clients, creating e-courses and organizing the website revamp [In other words, helping create valuable intellectual property for his company].

She’s confident in her talents and abilities . . . and that he’ll compensate her fairly [Double hmmph].

The $64,000 question: Should she ask him to “put something in writing”?

What do you think?

[You've probably guessed what I think!]

In response to my June 24 post, “Protecting an Idea . . . Like Grasping Smoke?” I was pleased to hear from a reader of this blog, Jason Small, who told me a bit about his experience trying to protect an idea, and what worked and what didn’t for him. With his permission, I’m sharing his thoughts below:

“I read your article this morning and it brought back a lot of struggle over my past 14 months. I conceptualized a reality show in April of 2007 and felt I had (and still have) an incredible concept that is going to be a great hit. The problem was, how do I get anyone to listen to me if I don’t want to let the proverbial ‘cat out of the bag?’

“Well, I have done my very best to use an NDA whenever possible and to stick to contacts through personal references (this is what opened the door), so I at least knew there was some level of trust.

“Fortunately, it paid off and I signed an agreement with Steven Matty, producer of ‘The Bachelor,’ in September of 2007. He helped me take the concept to a well-known production company and, as of this past Monday, we have finally reached a verbal agreement on the show. The actual execution of the contract should be coming in the next two weeks and, from there, they have six months to produce and license the content.

“I can completely appreciate the struggle to protect your idea, and in my experience it was a matter of balancing risk vs. potential reward, and it worked out for me. Hopefully it works for most entrepreneurs.”

From tech lawyer Mark Grossman comes this instructive article about e-mail etiquette. Read it! It’s more than just Emily Post-like admonitions NOT TO SCREAM IN YOUR E-MAIL BY USING ALL CAPS, or “crying wolf” by using the words “important” or “urgent” in your subject line . . . when the matter really isn’t.

There can be legal implications to your e-mail, dashed off in haste but never forgotten in cyber-caches. You could irreparably damage business relationships because you were not as diplomatic in your written words as you should have been under the circumstances. There’s a world of difference between “You’re an idiot for doing X” and “I invite you to consider there might have been alternatives to doing X.”

Just as “diamonds are forever” (thank you, James Bond), so is e-mail. As Grossman wisely points out:

“If you think that e-mail is ephemeral like a phone call, you’re wrong. It’s more like a virus that you can’t cure. A court’s ability to subpoena your e-mail is but one way that you may find your e-mail shared with the world. Ask Oliver North and Bill Gates, who are some of the more prominent victims of their own e-mail.”

Damaged corneas were probably not what Victoria’s Secret had in mind when it designed its cheeky (ha, ha) little “low-rise v-string” (part of the “Sexy Little Thing” line). According to a lawsuit brought by a California woman last month (see Today show interview), the thong flew apart and struck her in the eye. She declined to state her damages, but her attorney declares, “It’s a matter of consumer protection.”

When you have stopped snickering and snorting (hey . . . I sure did), realize there is a lesson here. When placing products in the stream of commerce, you never know when you’re going to hit a rock. All the more reason to make sure you have the right insurance in place and that you’ve shielded yourself by operating as a corporation, LLC or other limited liability entity.

Just when you thought it was safe to use your business credit card to buffer the not-quite-robust-cash-flow experience you’ve been having, check again. This recent article from the Wall Street Journal online indicates that companies such as American Express are slashing credit lines–even for solid customers–when they are deemed a “credit risk.”

If you check your credit terms, you’ll probably find a “fine print” provision that allows the credit card issuer to make changes at any time. If you think you’ll have a need to rely on your credit cards or credit lines a little more than usual over the next few months, it might be worth confirming the amount of your credit lines with your credit card issuers.

The significance of the July Fourth holiday tends to get lost amid travel plans, a short work week and the desperate need for relaxation in our increasingly frenetic world.

Our Founding Fathers also felt a need to be released from tyranny . . . of a different sort. They wrote:

When in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness . . . .

Just as a wedding is a declaration of the feelings and relationship that two people have developed for and with each other, The Declaration of Independence was a declaration of the political feelings the American Colonies had developed about the system of government they had to endure. They weren’t happy–not by a long shot–and took their lives in their hands when they declared themselves “Free and Independent States” and that “all political connection between them and the State of Great Britain, is and ought to be totally dissolved.” The rest–and the chain of events that unfolded thereafter–is history.

56 people signed the Declaration of Independence, including two future presidents.

There’s more to doing business with your nonprofit organization than just the disclosure required for “interested transactions” and avoiding a conflict of interest when making decisions on the organization’s behalf.

As a board member, your status is similar to a trustee. The organization’s money is not yours to spend as you please. You are a “steward” for the organization. You must make prudent financial decisions. And generally, you must use a higher level of care and caution than you do with your own business. Your board will also want to make sure that the membership doesn’t feel excluded from any paying contract opportunities that arise (remember, they’re not illegal; you just have to handle them carefully).

These issues are referred to as “arm’s length transactions” and “procedures.” Hopefully these scenarios will illuminate them:

1. Board member “A” submits a proposal to draft a strategic plan for organization XYZ. She prices the proposal at $500,000. (Most people with her experience level in the industry would charge $50,000.) “A” discloses that her firm would receive the funds. She recuses herself from the room for voting. The board votes in favor.

There’s no violation of the conflict of interest (some would say) because of the disclosure. However, XYZ was not given a reasonable, fair price for the project, such as would be given by an outside third party. So this was not handled as an “arm’s length transaction.” In addition, given the enormously inflated price tag, the board members might (if anyone got wind of the full story) be accused by membership (or donors) as squandering XYZ’s money and could find themselves on the wrong end of a lawsuit for mismanagement of organization funds.

2. Same as above, but “A” prices her proposal at $50,000. It’s a fair price for the industry. She discloses the financial gain. She recuses herself from voting. The board votes in favor. They’ve avoided the conflict of interest and the transaction is arm’s length–no better and no worse than working with an outsider. Membership gets wind of this. Every member who’s in the same industry as “A” goes bananas because he or she wasn’t given an opportunity to be considered, and there was no open/transparent RFP process. The board is accused of cronyism and favoritism, and membership falls precipitously.