Making It Legal:

More naches and brag–this time on the issue of extending credit to customers. See Melanie Lindner’s piece in Forbes.com on “How Much Credit do Customers Deserve?” She and I talked about the changing economic climate (euphemism) and whether it made sense for businesses to extend credit to customers.

Whenever you extend credit (which occurs any time you don’t get paid at or before the time you provide your product or service), you take a risk of not getting paid . . .  at all. It doesn’t take a Harvard MBA to understand the negative impact that has on your cash flow.

One way to lessen the blow is to charge interest or late fees on outstanding balances. However, you can’t do this without letting your clients or customers know in advance–and courts won’t grant you interest (or late fees) unless they’re part of your written contract. So make sure you have this provision in your agreements . . .  and create a system for collecting debts so they don’t fester. The longer it’s outstanding, the less likely you are to collect the money that’s rightfully yours.

Today, I feel vindicated. I just came across Laura Bell’s post, “Business Law Basics,” which reminds me of my apartment after it’s cleaned: neat, fresh and pleasant. Her point, delivered gently, is that too many entrepreneurs do deals without having a written contract. It’s like bringing a knife to a gunfight: You may be prepared for trouble, but not well enough to avoid serious injury.

Bell outlines the elements of a contract (important, if you want to understand when the deal is actually “struck”) and why a cancellation clause is helpful.

Exit strategies (the “how-do-I-get-out-of-this-deal-if-it’s-really-not-working-for-me?” language) are a vital part of any business relationship; otherwise, you risk being stuck in a bad situation with no easy (or inexpensive) way out.

Want a quick an easy way to learn more? Check out my booklet guide, Term$ and Condition$, so you’ll know the highlights of what to put in your agreements.

From the “I-couldn’t-have-said-it-more-thoroughly-myself” department, here is a series of helpful posts from Texas attorney Ryan Roberts (”The Startup Lawyer”) on the ins and outs of leasing office space (and not getting ripped off in the process).

Part 1: Why much of what is in a lease is not boilerplate, despite the microscopic print. Understanding the ways that commercial real estate brokers (whom Roberts refers to as “tenant reps”) can help your business… and when they might not be putting your interests first.

Part 2: Fourteen provisions to consider negotiating before your company signs a commercial lease for office space.

Part 3: Eight of the not-so-obvious terms that can bite you if you don’t address them.

Franchises can be an attractive way to start a business. There’s already a system in place; you know (if you’ve done your due diligence) it’s a proven, profitable model; and the franchisor provides you with ready resources.

But “fools rush in where angels fear to tread,” said English poet Alexander Pope. And franchises can be a particularly thorny business model if you don’t investigate them carefully. They are subject to a lot of regulations, and the fine print (you know, that microscopic text filled with legalese) will hurt you if you are not aware of its provisions. As Iowa business attorney Rush Nigut points out in his post on franchises, “Four Things That Make You Go Hmmm . . . ,” there are some red flags that should make you not only think twice about investing in a particular franchise, but stop in your tracks, turn 180 degrees, and walk the other way. Read on to find out that they are!

This past weekend, my husband and I were putting up the last of the wall hutches for a new home office in our apartment and needed to drill holes in the wall in order to mount them. We sought advice from an expert at the hardware store and followed the advice to the letter. What we didn’t know–an unexpected misfortune–was the thinness of the walls. …in short, we ended up drilling two slightly-smaller-than-quarter-size holes through to our neighbor’s apartment. Yikes! I was mortified! We immediately stopped what we were doing, sought out the superintendent/handyman, explained the situation, and got his help to finish the job. Meanwhile, our neighbor came home to notice the unsightly holes in her wall and rang the bell to tell us about it. She was “loaded for bear,” ready to fume, until we told her of the immediate steps we had taken to rectify the situation and offered our apologies.

I relate this not to let you know about the sad state of my home-improvement skills (actually, the home office is spectacular, and the rest of the wall hutches went up without a hitch) , but to offer a couple of things I learned from this situation that also apply to working with your clients and customers:

1. Deal with the situation immediately. It won’t go away, no more than those quarter-size holes were going to magically disappear from my neighbor’s side of the wall. She was greatly relieved when she heard that we had begun to address the problem even before she brought it to our attention. Ignoring the problem–maybe you missed a deadline, maybe the project wasn’t completed to the client’s satisfaction or maybe you misunderstood what was needed–only makes it worse, because you compound the mistake with a time delay.
2. Take responsiblity. Admitting fault can be a tricky area (legally), but you’ll engender a lot more good will if you make right on what you did wrong–especially if you know you’re in the wrong. Most people (and businesses are run by people) are forgiving and will give you a second chance to get it right (provided you don’t take too long). Listen carefully to where you went off course. This has two benefits: 1. You learn exactly what to do right the next time, and 2. Your client feels that she was treated with the respect and concern she deserves. When you fight your client about the fact that you made a mistake, you lose the opportunity to repair the relationship and to learn from the experience.

Much as I swore I would not begin Chanukah/Christmas shopping before Thanksgiving (I am blessed with Jewish family and Catholic in-laws, so I get it from all sides), I did. The lure of the catalogs I received in the mail, and avoiding the lines, the stress and the rush, were too great. After sifting through dozens of catalogs and circling items, I spent a good few hours online and made all my purchases. I haven’t received everything yet, nor have I wrapped it, but I’m done with shopping already!

So I say now. What happens if something arrives that doesn’t meet my specifications? Or wasn’t what I ordered? Or was broken? Or, contrary to the enticing photo in the catalog, simply wasn’t “all that” in person?

Many large businesses post their return policies on their websites. Many small businesses don’t have one, and therein lies the danger. Massachusetts attorney Michael Goldstein examines what it takes for you, as an “injured” purchaser, to be able to sue an internet retailer in your home state. One significant factor is known in legalese as “jurisdiction.” Has the shabby seller established a business presence in your state? Or made a concerted effort to attract customers from your area? If so, you may be able to haul them into court in your neighborhood.

On the flip side, if you’re the internet retailer, the last thing you want is to get hauled into court in every little town and vale across the country. If someone is going to be so dissatisfied that he or she wants to sue, you want this to happen in your backyard so that you are spared the expense of schlepping all over the place. That’s where having website terms and conditions come into play. They make it clear where disputes will be resolved–it’s a condition of the privilege of purchasing from your site.

Most purchasers don’t even focus on those terms when making a purchase. But they’re there. Usually introduced by language such as: “Welcome to BlahBlahBlah.com. The Company and its affiliates provide their services to you subject to the following conditions. If you visit or shop at BlahBlahBlah.com, you accept these conditions.” If you purchase from that site, you agree to resolve disputes wherever the retailer chooses. Consider the following: Amazon.com (Washington state); Sephora (California); Target (Minnesota); Office Depot (Florida–OK, not exactly for holiday presents… but you get the point).

Why not provide your business with the same leverage and protections? For other website terms that you might want to consider, see my own Words to the Wise newsletter article (just released last week!) at Wise Counsel Press: “‘Attention Internet Shoppers: Your Website Terms and Conditions.” It’s free to subscribe, and you’ll receive a special report, Top 10 Legal Pitfalls, just for doing so!

“What should I charge?” It’s a perennial quandary that crops up for virtually every entrepreneur. It’s also an area where women entrepreneurs tend to undervalue what they offer, so they run into two problems:

1. They don’t adequately convey their value proposition to clients, so they have trouble attracting them in the first place.
2. As they underprice their products or services, they earn less per transaction.

Joe Love provides some helful guidelines in his article, “How to Price What You Sell“–especially the part where he cautions small business owners not to compete on price. That’s often a self-defeating situation. . . entrepreneurs may reduce their prices to such an extent that they end up losing money on each deal.

Whatever you choose to charge, and whatever the reasons you choose for it, be sure to put your prices in writing so that there’s no confusion for your customers!

They say that the key to happy clients is to underpromise and overdeliver.  But I just returned from an absolutely AMAZING 5-day workshop in L.A. given by Peak Potentials, called Train the Trainer 1 (How to Earn $20,000 a Weekend Teaching What You Love), which turns that adage on its head.  Peak’s approach is to “promise big and delier BIGGER” (and I have to say they did just that). 

Customer service is an area where many entrepreneurs slip a bit.  Either they’re vague on what they will do and by when they will do it . . . or they don’t adequately communicate the value of what they provide to their clients.  Or, they’re so overwhelmed by all the other responsibilities of running a small business that they lack a system for follow-through and follow-up. 

So what’s the key to delivering on the expectaions?  Here are a few tips:

1. Have a written agreement.  Contracts make sure that you and your client are, literally, “on the same page.”  This applies to purchase orders, too, where you can include your terms on the “backside.”
2. Share your value proposition.  For example, when I draft a business partnership agreement, I’m not just handing my clients a document.  I’m providing them with a method for determining financial contributions to the company, allocating profits and losses fairly, deciding who can buy (or sell) and interest in the company — and for how much, and protecting company secrets and proprietary information.  That underscores just how important the products/services are to your client.
3. Develop customer service systems and procedures . . . and put them in writing.  There are all kind of things you can do to ensure you meet and exceed client expectations.   What I learned from the Train the Trainer workshop is that, yes, they taught me the information I was seeking, but they did so in a way that was powerfully interactive, and included certain personal development issues as well.  This made it a transformative experience, not merely an educational one.  You can institute regular follow-up calls to check in at 30, 60, and 90 day intervals (or whatever makes sebse for your busienss).  You can offer a free (and unexpected) gift, as I did when I ordered a Holosync meditation CD from Centerpointe Research Institute. 

What have you done that knocked your customers’ socks off?

One of the challenges in owning a closely-held business is that it’s hard to get a day off. That’s come to mind for me as I’m en route to California for the rest of the week to attend Peak Potentials’ Train the Trainer workshop. I’ve been salivating over this program since I registered for it 5 months ago, and now the time has come! Friends of mine who have taken it call it “profound,” “mind-blowing,” and “a complete mind-shift.” They also caution me that “you’ll be going from 9am to midnight” and that “there’s little room for bathroom breaks, let alone time to check for voicemail.”

It’s that latter part that concerns me (although the prospect of long lines for the ladies’ room is not an attractive prospect, either). How can I keep my office functioning — and keep meeting my client obligations — when I’m tied up with other things? Here’s a couple of tips for making sure you stay on top of your client deadlines:

1. Let people know in advance. Yes, you’ll work like a dog before you leave (I just had to reschedule a lunch meeting and a session with my personal trainer because what I needed to get off my plate was going to take longer than the time I had alloted) — and you’ll work like one when you come back. But the sooner people are aware that you won’t be available, you’ll find — almost miraculously! — that their schedules have changed, too. That oh-so-urgent contract that they wanted you to review while you were in the airplane is now being held up another 10 days by the other’s attorney.
2. Cultivate CYA colleagues. Who can handle emergencies for you while you’re away? I’m fortunate to have a business partner who fills that role for me. Certain employees can take that on, if they’re properly trained. Or, if you’re solo, make it a point to develop a close relationship with a similarly-situated colleague so that you can each step in to hold down the fort for the other in the other’s absence. You know the kind: the “can I pick your brain for a minute?” kind of colleagues who will generously give you 30 minutes of their time when you would have been eternally grateful for merely 10.
3. Get wired. If you don’t have anyone in category #2 to fill in for you, it may be a little more difficult for you to detach. Maybe you’ll need to bring the laptop to the beach; maybe you can get away with just the BlackBerry. Either way, make sure your vacation messages are set and that your voice mail gives adequate information about how to reach you — or how often you’ll be checking in.
4. Set boundaries. Whether you’re on vacation or in a workshop (as I’ll be) or just need quiet time with an ailing parent, there’s no reason that technology needs to be intrusive. Set particular times of day that you’ll check and return messages and keep to it. That way, you won’t feel the constant pull of checking in.

Don’t ask me where the time has flown!  My computer crashed on Friday the 7^th, so my trusty tech support, ZEI Ltd., commandeered the machine for the day.  Over the weekend, I celebrated my brother and sister-in-law’s wedding anniversary with them.  Monday was filled with doctor’s appointments, and Tuesday and Wednesday disappeared in a haze of meetings and flurry of client work before I close my office for Jewish New Year, which I observed on Thursday and Friday.  Today, Monday, I received an email asking when I’m planning to post my next item on the blog because, well, it’s been over a week, and I had committed to at least two posts a week.

I recount all of this not to impress you with how busy I am, or to gain sympathy for being duly chastised, but to share with you how important it is to build wiggle room into your deadlines.  Anything can happen.  My week was not filled with anything calamitous, but still, I missed a deadline.  Small business owners have a lot to juggle in their business and, sometimes, the personal things creep in.  Your parents have to be taken to the doctor.  Your babysitter doesn’t show up.  Your spouse/significant other needs your counsel regarding a difficult work situation.  The computer crashes.  The car crashes.  You crash.  All of these are reasons that the project is late, the document can’t get finished on time, the logo design is unfinished. 

What are some of the things you can do to give yourself more leeway?

1.                  At the outset, build in more time to get the project completed.  You may think you can have it finished within 1 week, but you might need more information from the client.  Or the resources you need to get it finished (such as, say, information or materials from third parties) may take longer than you expected.  Rather than commit to a nerve-wracking minimum, allow yourself the luxury of breathing room.  Besides, if you can complete the project sooner, so much the better!

2.                  Keep communication open.  This is where I fell down on the job.  When I saw that I was getting backed up, I should have let people know beforehand.  In most situations, clients are happy to give you more time; they’d rather be in the position of giving permission than having to follow up with you.

3.                  Get the ball rolling.  Check your contracts to see exactly what you committed to do.  It might be that providing a piece of the project is all that’s needed – not the entire thing in finished format.  In my case, I didn’t need to have done all of my blog reading and research before writing a post – there are plenty of issues that come up that I could have written on without having to be a crazy perfectionist about it. 

Do-it-yourself legal sites drive me crazy.  I came across a DIY legal site called Negonation this week – yeah, OK, it’s in Brazil, but the principle is the same.  It touts a “get-your-contract-off-this-site-and-avoid-legal-feesâ€? service.  It claims that “its contracts are legally enforceable in the offline world, even if the parties are in different countries.â€?  That’s quite a bold claim.

Online sites don’t necessarily empower the lawyer in all of us.  What they do is delude many people into thinking that they have an “inner lawyer�.  Not everyone does, and that’s okay.  I don’t have an “inner doctor� –- if I have a medical need (even a regular check-up), I get help.  I don’t have an “inner accountant� – I make sure that I have one on call who can provide guidance as to how I should handle my financial statements and taxes.  I am who I am:  anal, cautious, and detail-oriented (among other things).  That makes me perfectly suited to being a lawyer.  I am not cut out for many other professions, and that suits me just fine.  I’ll leave those areas of specialty to the experts.

What’s dangerous about these sites is the false sense of security that entrepreneurs get from taking legal agreements from the Internet, without having the background or training to fairly evaluate whether what’s in the agreement is in their best interests, or whether there are other things that should be in the agreement that aren’t.  There’s no one affiliated with the sites who will give you the legal advice about your specific situation –- they’re just selling you a product (the agreement).  Take it or leave it.  They don’t take your own needs into account when creating the agreement –- it’s an off-the-shelf product. 

It would be like walking into Bloomingdales and buying a suit without looking at the size.  You know you need a one, but if it doesn’t fit properly, you could end up spending more for alterations than you paid for the suit.  Getting the right legal protections in place for your company isn’t just a matter of one-size-fits-all merchandise. 

Lawyers provide a hybrid:  product and service.  And it’s the service you receive that ensures that the product truly meets your needs.  For more guidance, see my article “What You Should Know Before Copying Contracts from the Internet.� 

Few aspects of marketing are as crucial to a company’s identity than its website.  And fewer marketing vehicles can become as much of a money pit and time suck as . . . a website.  It’s a never-ending process of evolution, a frustrating “work in progress.�  Just when you think you have it figured out, your customer base changes, or your pitch changes, or your business model changes – something always changes.  And heaven forbid your site stay static!   

Websites can be a trap for the unwary . . . but you can easily acquaint yourself with the right questions to ask.  Learn from some of the aggravation that others have endured.  Business Week’s article, “Web Design Horrors: Be sure you get the site you bargained for,� points out several of the key issues such as (1) who registers (owns) the domain name? (2) what details should you spell out? and (3) where does the human being who’s building the site actually work?  Plus, you get the “gossip� from readers who have commented on their own tales of woe.

I, too, ran into web design problems in developing my Wise Counsel Press site, which you can read about in my article, “Playing Ostrich is for the Birds.�  By the time you look at those two sources, you’ll have a solid idea of the kinds of discussions you should have with a web designer well before you plunk down that hard-earned deposit money!