Making It Legal:

Inspirational, thought-provoking and handy is this list of 101 Tips from 50 Small Business Bloggers, compiled by Gregory Go.  I particularly liked fellow attorney Anthony Cerminaro’s comment:  “If you don’t like what you’re doing, try something else.”  Kinda reminds me of the comedian Henny Youngman’s comments:  “If at first you don’t succeed … so much for skydiving.”

 When the going gets tough, the tough take a close look at how they handle their clients and customers. Who’s generating a less-than-fair fee for you? Who makes you cringe when you hear their voice on the other end of the line? Who’s always finding a way to drag out the payments? Yes, there is something worse than having no work to do. It’s working your butt off for someone who doesn’t appreciate your talent and stiffs you for the fee.

But the problem isn’t just with the annoying client. As the old cartoon character Pogo famously said, “we have met the enemy and he is us.”  Where can we take some responsibility for how we’re handling our clients?

We can start by looking at where some of our client relationships went awry.  As I mention in my article, “Isn’t It Time You Kept 100% of Your Fee . . . Every Time?” on WomenandBiz.com, make the time to write down all the different causes of client dissatisfaction.  This could include:

• The price being higher expected
• The project becoming more involved than expected
• The client not getting the desired results
• Your lacking the right expertise for the assignment
• Snags in communication, as when dealing with more than one representative of a client
• Lack of clarity about the payment terms (e.g., if you are working on an hourly rate)

If you can identify what’s broken, you can take steps to fix it.  Yes, even in this economy.

Want to choose the right business partner and change your business from tailspin to steady?  I will be sharing one of the imperative and significant areas YOU MUST KNOW to be sure you’re on the right path with your business partner (whether current or intended). This call will be jam-packed with info you can use right away. Plus, right on the call I will be offering a special bonus, just for you!   Register at: http://bit.ly/prenup_teleclass

Why open yourself up to personal liability when you don’t need to?  Today’s query comes from someone wanting to know that fundamental first question: “What form of business should I be?”

Q.:  I’m wondering what kind of company you would recommend for me to register under for a clothing company. I was thinking going Limited Liability because I would not be personally responsible if companies came after me for some reasons and couldn’t take my personal assets. Which one would you recommend because I don’t really know how much money I’m going to make in the first year.

A.:  For all but a v-e-r-y few situations, I recommend that entrepreneurs form either a corporation or a limited liability company.  There are simply too many variables and pitfalls in starting and running a business . . . so why leave your personal assets exposed? 

Which form of limited liability entity you choose, though, depends on a number of factors:

• Where the business will be located
•  How many people will own the business
• The nationality of the business owners
• Whether you will involve passive investors in the company, or want to take the business public
• The federal, state, and local taxes that may be levied against the entity
• The costs of formation
• Your exit strategy and what you want to get out of the business

Before you take the step of forming the business, make sure you’ve taken the time to calculate the kind of financial investment you’ll have to make in startup and ongoing costs.  While 1st year’s revenue will be guesswork, you can have a more solid sense of what’s involved with the right financial planning.  It will also help you decide whether the venture will be worth the risk and financial investment.

This economy has certainly battered my business around a bit. There are times I’ve felt like a ship in a storm-tossed sea. But I have been able to stay on a relatively even keel and keep my sights set on my destination, thanks to my advisory team.

“Advisory team.”  It’s a highfalutin’ term for what some people consider good friends who will be a sounding board for you in a pinch. Whether you pay them or you don’t, have formal arrangements with them or not, they are crucial in one major respect: You can’t build a successful business without them. 

I’ve learned from personal experience that I really flourish when I have others helping me keep my eyes above the dashboard, making sure I keep working toward my strategic goals. Without them, I’ve gotten stuck in my own mishegaas, like a dog chasing its tail. I have people I’m accountable to (other than me, my own worst taskmaster). People to keep me focused so that I don’t spread myself too thin. People to share the victories with. Two who come to mind are Dawn Fotopulos of SmallBusinessHow2.com (”simplify, focus and leverage” is her mantra for me) and Rochelle Lisner of DynamicBusinessGrowth.com (who reminds me to “speak in stories” not “information dumps”). And there are more!  I wouldn’t be where I am without them.

You can build a dream team of your own, too! For tips on how to do that, sign up for a complimentary copy of my Entrepreneur’s Business Law Primer, available at GreatBusinessLawResources.com/bizlaw. It includes an audio clip on “how to choose an advisory team” that I think you’ll find helpful.  Let me know if you do!

You may have plenty of opportunities to get it (legally) right . . . but not as many to hear me speak on the subject! 

For those of you near Brooklyn, N.Y., on July 15, stop by the Brooklyn Creative League, where I’ll be talking about everything you need to know about business law in 90 minutes.  (Well, not quite . . . but close!)  In this entertaining and lively session, I’ll provide entrepreneurs with an overview of the most common legal issues they will face as they start and build their businesses.  I’ll touch on:

• How to choose the right form of business
• Working with business partners
• What to look out for in your commercial leases
• How clear contracts make for happy clients/customers
• Intellectual property: what to protect and how to protect it
• Choosing the right attorney/advisory team

RSVP: Contact the Brooklyn Creative League at info@BrooklynCreativeLeague.com or (718) 576-2104.

Date:  Wednesday, July 15, 2009
Time:  9:30 to 11 a.m.
Location: Brooklyn Creative League, 540 President Street (between 3rd and 4th avenues)
(Take N/R Subway to Union Street)
Price:  Free for members; $10 non-members

What are the odds?  Is your business primed for success, financially?

If you’d like to know (and “knowledge is good“), then check out StartUp Nation’s “Success Calculator.”  Perhaps the most important question is “timeframe.”  It gets you to think about your real goals for your company and where you want to be in one to five years’ time.

Remember, the results don’t have to be a predictor–if you don’t like what you see, now’s the time to tweak to ensure you’ll reach your goals!

One of the key components of a strong business is making sure you always have “stuff” in the pipeline. As we move into summer and the (theoretically) warmer weather, there are lots of delicious options for networking. Outdoor terraces, harbor cruises, events in public parks–they’re a wonderful way to enjoy a bit of natural beauty in a more relaxed setting, while keeping your foot on the gas, so to speak.

Especially while the economy is a little shaky, networking intelligently can ensure that people remain interested in you.

How can you do that? According to Liz Lynch, author of Smart Networking and the Smart Networking Blog, people will be interested in you when you tell then what’s in it for them.

Let face it: As human beings, we’re hard-wired for survival. And we love stories. As Lynch points out, if you’re able to combine the benefits of what you do (which enhances the other person’s “survival”) and can do so with examples (stories), you’ll go a long way to making–and keeping–solid connections.

As a lawyer, I’m always dealing with companies’ confidential information. So keeping secrets is a core part of my business. You may be surprised to find that it’s part of yours, too.  They may be buried in various places–or dug up by your employees or independent contractors.  And if exposed without permission, you can find yourself in hot water.

Consider including confidentiality provisions in the following kinds of scenarios:

• You use an independent graphic artist to help design a client’s annual report and provider her with sensitive client information.

• You don’t want an employee tweeting about a client product launch before its time.

• You want to avoid employee blogging about a company takeover.

• You’re sharing crucial market research with a strategic partner, but don’t want it to use the information for any purpose outside your partnership.

• You’ve hired a broker or finder for a business opportunity and don’t want your company information shared for an unauthorized purpose.

• You’ve taken on a business partner and don’t want her to misuse company information after she retires (or resigns).

And, of course, get it in writing.

Wille Faler writes, “There are two qualities that are necessary for an entrepreneur if he is to rely on anything but blind luck: being able to be brutally honest with himself and others, and being able to judiciously manage risk.”

I liked that because I find that entrepreneurs like to talk about the risks they are taking, and not so much about the risks they are managing.

What kind of chances are you taking with your company? Are you protecting yourself? Is doing business with Wal-Mart** (see my note, below) really worth it when it can hold up paying your invoice for 90, 120, 180 days? What will that do to your cash flow? Can you afford to stay in business?  After all, as Faler notes,

Given the riskiness and high stakes of new ventures, living to fight another day and give it another try may in fact be a more valuable asset than hitting any one individual milestone.

Let me know if you agree.

***  Author’s note (6-16-09):  It’s come to my attention that I may have raised the blood pressure of some businesses who actually deal with Wal-Mart by mentioning the company and a long payment cycle within the same sentence.  Mea culpa.  I don’t have the inside track on whether Wal-Mart is paying promptly, nor did I mean to insinuate that they aren’t.  I should have said (more artfully and accurately) to beware of being lulled into a false sense of security that you’ll be paid promptly simply because you’re doing business with a large corporation . . . as they can become late-payers, too.  The larger the order, the harder the hit to your cash flow, if delinquent.  

As those of us employees-turned-entrepreneurs know, life is full of risk. Yes, we could have stayed at our (theoretically) secure jobs, continued to make predictable sums of money (again, theoretically) and known what was expected of us. The risk, though, was that we would stagnate–as workers, people, souls. Or get laid off and thrown back into a predictable world.

So we took the leap of faith and started our own companies. We faced more risk–financial risks, legal risks–but we felt the trade-off was worth it. As we make changes to our business, different risks will arise. Some we can anticipate. Some we’ll evaluate as too remote to worry about. When you start to expand your business–such as with strategic alliances–new issues will arise. Can you withstand the risk?

As in the Three Little Pigs fable, you want to be sure your business has a strong legal foundation so that if a “wolf” (disgruntled customer, irate business partner) huffs and puffs, your house won’t blow in. What are some of the things that could blow your “house” in, if not handled properly?

• Operating as sole proprietor in the face of a lawsuit
• Not having a written agreement with your business partners–whether in your company or in an alliance
• Doing business on a handshake
• Inadequately protecting your company information or intellectual property
• Insufficient insurance (especially if you have employees)

There are many areas that can leave your company vulnerable . . . many of which can be easily rectified. For more guidance on the potential risks to keep an eye on, I’ve created a handy tool, Is Your Business Legally Healthy?, available through my GreatBusinessLawResources.com site. It’s an easy-to-follow questionnaire. Because it’s self-scoring, you’ll know right away if your company is thriving or slowly succumbing to an unidentified illness.

Any time you want to delve into areas of health or health care, it’s wise to consult a local attorney who’s familiar with those regulations. Otherwise, you could be found to be practicing medicine without a license . . . which gets you into a world of hurt.

Q.: “I am a licensed practical nurse and want to start a business as a nurse entrepreneur in the area of patient advocacy. I will not necessarily be giving medical advice but will act as a “go-between” or liaison between patients, their families, doctors and insurance companies to help patients negotiate the health-care system. I also will act as an educator so that people understand their choices and be able to clear up misunderstandings about care and their health. I also want to do this online.”

A.: There are several steps to investigate.

First, business formation. It’s very state-specific, as are special licenses and permissions for patient advocacy/education work. A local attorney could help determine the exact permissions needed. Look for one with experience dealing with professional (medical) practices or patient advocacy businesses, as he or she will be familiar with the rules and nuances of the medical profession. My program, How to Choose and Use Attorneys, can give you a lot of guidance about how to find the lawyer who’s right for your business situation.

Second, business insurance. A business insurance professional should be able to identify whether some form of malpractice insurance will be needed if you’re providing medical “education” without actually practicing medicine. This could help protect against any personal liability for advice given (so that unhappy clients can’t do an end run around the business entity).

Finally, business planning. How to charge for these services? Is it the kind of service that will be covered by insurance? If not, will people be willing to pay for it? How much? Will that be enough to 1. meet business expenses, 2. meet personal expenses and 3. have the growth potential to build a company? A savvy accountant can help get a clear handle on personal and business budgets to know what target numbers to reach–and by when.