How to Get Information on Small Businesses

Something to help both lawyers and business owners. Take a look at Finding Competitive Information for Growing Companies:

All early-stage entrepreneurs must address some basic questions in order to grow their businesses. These questions represent the most common strategic research needs of SMEs.

• Who are my competitors? Who else is in my space and what are their basic offerings (product, service, price, market strategies, delivery method, etc.)? With whom could I partner?
• Who are my target customers? What are their characteristics? Do they want what I have to offer? What will they pay for it? In my customers' eyes, what differentiates me from my competitors? Where can I get lists of potential customers to let them know about my offerings?
• What are the characteristics of my market? How large is it? Is it shrinking or growing? What are the potential niches? How do I get my offerings to the market?
• What are the trends and developments in my industry?

Let's examine sources of information that can address these research needs. This round-up of resources is not exhaustive; rather it is meant to suggest a basic approach and starting point for conducting more in-depth research in each area. The focus is on information available through the Web, but keep in mind that public and university libraries have a wealth of resources that are often available for free to business owners.

FTC Revising its Business Opportunties Rule

If you are selling or buying a business opportunity, take a look at FR Doc E8-13899:

"SUMMARY: In a Federal Register notice published on March 26, 2008,\1\ the FTC requested comment on its Revised Notice of Proposed Rulemaking (``RNPR'' or ``Notice'') in connection with the Business Opportunity Rule. The Notice stated that comments must be submitted on or before May 27, 2008, and that rebuttal comments must be submitted on or before June 16, 2008. In response to a request to extend the rebuttal comment period received on June 5, 2008, the Commission has extended the rebuttal comment period for an additional 15 days."

Blogging Employees - Is Your Company Prepared for Them?

Even if you think you are, you need to read HRTechNews.com's What!? Company liable for employee’s personal blog? :

"An employee at software firm Cisco wrote an anonymous blog, which he used to criticize patent lawyers. He stepped over the line when he wrote particularly disparaging comments about two attorneys involved in a suit against Cisco.

They found out the author’s identity, and they’re suing him for defamation. They’re also suing Cisco, despite the fact that the blog was personal, written from the employee’s home and never mentioned any affiliation with the company.

Why’s the employer being blamed? Allegedly, the employee’s supervisor knew what he was writing, and never told him to stop."

***

Other keys to an effective policy:

• No blogging at work. You can’t control everything employees do, but you can tell them how they’re allowed to use the company’s time and property.
• Harassment rules apply to online communication. If someone would be punished for saying something in person, they can be punished for saying it online, too.
• No leaking confidential information or trade secrets.
• People should not identify themselves as agents of the company or imply that they represent the company’s views. (Cisco wrote a new policy requiring employees who blog to include a disclaimer that their opinions aren’t indicative of the company’s.)

It's Summertime and Time for Small Businesses Checkups

lexisONE(R) reprinted Small Businesses Should Plan Checkup and is worth taking a look at for business owners - although I would bring the business' lawyer as well as accountant for the checkup:

"Accountants and tax professionals say the summer is a good time to take stock of a company and see whether it's meeting its goals and whether there's enough cash on hand for tax payments. It's also time to make decisions about equipment purchases and other capital spending for the second half of the year.

'You want to assess, are you making money or are you losing money,' said Barbara Weltman, a tax attorney in Millwood, N.Y., and author of 'J.K. Lasser's Small Business Taxes.'

This may sound overly simplistic, but tax professionals say many owners really don't know where their companies stand, and those who are losing money need to find that out fast and start making some changes. Companies that are doing well should probably start thinking about their options for example, should the owner or owners withdraw money or leave it with the business to fund its future growth."

Online Resource for Business and Business Lawyers — Turnaround Management Association

I understand the job of turnaround managers to be taking a viable but failing business and getting the business back on its feet. I did not know that turnaround managers had an association: Fact Sheet — Turnaround Management Association:

"The Turnaround Management Association (www.turnaround.org) is the only international nonprofit association dedicated to corporate renewal and turnaround management. It celebrates its 20th anniversary in 2008 and the turnaround management, restructuring and distressed investing industry that TMA helped develop and define. TMA’s international headquarters are at 150 S. Wacker Drive in Chicago."

It does not seem to have any Indiana chapters.

Business Owners Take Heed! Preventive Law

Excuse the bluntness of this statement but in my opinion it is one that is too true: business owners neglect the legal risks to their businesses because they do not want to pay their lawyers until there is a "problem". Which does not explain why they pay their business insurance premiums.

I think the vast majority of business owners are penny-wise and pound foolish. Use the resources available to you. If you do not have a lawyer for your business, find one. If you do not like the lawyer you have, find another. If you have one, use them.

If you are worried that the costs will exceed the benefits, then take a look at my article, A Lawyer for Your Business and How to Afford One.

Preventive law exists. Here are a few resources for preventive law, and please take a look at them:

1. A Business Owner's Guide to Preventive Law
2. healers of conflicts?
3. National Center for Preventive Law
4. PREVENTATIVE LAW:AN OVERVIEW (pdf format)
5. Preventive Law--The Legal Health Audit

Employers, Preventive Law and the Employee Leaving the Business

The best advice I found (lately) is this paragraph from Handle departing employees: When the grass is greener:

There are two lessons from the HISL case: first, listen to your employees when they have good ideas. Second, if you wish to prevent departing employees taking preparatory steps prior to leaving employment to ensure their future income, or competing with you after they have moved on, make sure your contracts of employment are properly drafted.

That last sentence nicely sums up what we lawyers call preventive law. As much as I write about litigation, as much as I do like trial work, preventive law is the best bet for business owners. (Actually, for everyone).

Why most people, businesses, institutions prefer waiting for litigation to hit is something that has puzzled me and has puzzled others. After so many years, I think the reasons are a desire to deny any risk and a desire to save on attorney fees until the lawsuit arrives at the door.

If you look over my articles here on non-compete agreements and trade secrets, you will see my emphasis on preventive law. The article I quoted above dealt with both of those subjects.

New Business Blog and Some Comments on Business Partners

I think some will find RICHDAD interesting reading for business owners and investors even thought it is not a law blog. But as my long time readers know, I like to make mention of business blog that give practical advice and I think RICHDAD's Finding the Right Business Partner has some practical advice:

"Finding a great partner like Ken is similar to finding a great husband or wife -- you have to kiss a lot of frogs before you find the prince or princess of your dreams. I don't know of a magic formula other than to keep kissing."

Selecting a partner cautiously will save on legal fees. And like the post above, I am not using partner in its technical term but in the olloquail sense as having a business with another person or even two more. I do not know how to help potential business owners than with this advice.

Employment Law for Businesses: FirstStep Recordkeeping, Reporting and Notices elaws

The federal Department of Labor put a big effort into publiczing its FirstStep Recordkeeping, Reporting and Notices elaws.

First, a press release (U.S. Department of Labor releases new “elaws” tool to help employers comply with recordkeeping, reporting and notice requirements) with the following:

The new FirstStep Recordkeeping, Reporting and Notices elaws Advisor has been integrated into a FirstStep suite of advisors that also includes the revised and expanded FirstStep Poster Advisor and FirstStep Employment Law Overview Advisor.

"These Internet tools will make it easier for small business employers to learn about and comply with the federal laws that apply to them," said Secretary of Labor Elaine L. Chao.

The elaws advisors are free, Web-based tools designed to help employers and workers understand the department's major employment laws. By asking a series of questions, the advisors simulate a conversation with a Department of Labor expert and guide users to customized information explaining the requirements of each law.

Then, the FirstStep Employment Law Advisor which has three parts:

This Advisor provides three basic starting points depending on your interests and needs:

• FirstStep - Employment Law Overview Advisor provides a short primer on each law's basic provisions as well as any related recordkeeping, reporting and notice requirements.
• FirstStep - Recordkeeping, Reporting, and Notices Advisor provides detailed explanations of each law's recordkeeping, reporting and notice requirements.
• FirstStep - Poster Advisor provides access to short descriptions of DOL poster requirements and links to printable posters.

The federal DOL also has the Compliance Assistance - News Room.

Indiana jurisdiction over out-of-state defendants

How do Indiana courts have jurisdiction over people and businesses not residing Indiana courts? After all, Indiana's civil jurisdiction ends at its borders.

Indiana's Trial Rule sets out how to get jurisdiction. Indiana Trial Rule 4.4 (Service upon persons in actions for acts done in this state or having an effect in this state) sets out the categories of actions by defendants which give Indiana court's jurisdiction over those defendants.
What neither the courts nor out-of-state businesses wants is to be brought into an Indiana court for an inadvertent incursion to Indiana. The law gives weight to the amount of contact an out-of-state defendant has with Indiana. Where defendant's the only contacts are by telephone
and without personal appearance in Indiana and it is the Indiana plaintiff initiating contact, Indiana law makes it very difficult to have jurisdiction over the out-of-state defendant. See Dura-Line Corp. v. Sloan, 487 N.E2d 469 (Ind. Ct App. 1986) and Baseball Card World, Inc. v. Pannette, 583 N.E.2d 753 (Ind. Ct App. 1991), trans. denied..

Indiana businesses need to be careful about dealing with out-of-state persons. Consulting with a lawyer about the problems of operating outside of Indiana is far cheaper than trying to collect a debt in another state.

Indiana Business Opportunity Transactions Act

For those buying or leasing goods from another to start a business, take a look at Indiana's Business Opportunity Transactions Act. The statute came to my attention when I found online a complaint filed by Indiana's Attorney General. The complaint is to be found here.

I have taken the liberty of quoting the most pertinent parts of the definition for "Business opportunity":

(1) involves the sale or lease or offer to sell or lease any goods or services to an investor that are to be used by the investor in beginning or operating a business;
(2) involves an initial payment by the investor of more than five hundred dollars ($500) and an initial cash payment of less than fifty thousand dollars ($50,000); and
(3) involves a solicitation of investors in which the seller represents that:

(A) the investor may or will earn an amount in excess of the initial payment as a result of the investment;
(B) a market exists for any goods to be made or services to be rendered by the investor;
(C) the seller may buy from the investor any goods to be made or services to be rendered by the investor;
(D) the seller or a person referred by the seller to the investor may or will sell, lease, or distribute the goods made or services rendered by the investor; or
(E) the seller may or will pay to the investor the difference between the initial payment and the investor's earnings from the investment.

Businesses can face felony charges, a civil suit, an action by the Attorney General or all of the above.

Starting a Business? Why You Need a Lawyer!

I have written before about why having a lawyer from the beginning is a good thing for a business. Now Michigan Business Law Blog has done a very good job of putting all the reasons into a list of eight. Everything in Why You Should Contact a Lawyer Before Organizing Your New Business applies to Indiana businesses.

If you do not have an attorney and are wanting to start a business in Indiana, please feel free to contact me.

Suing Bloggers - Sort of a Follow up to "Employees and the Internet"

Along the lines of my post Employees and the Internet and extending it a bit further is Enjoining Damaging Web Posts by Former Employees Comes at a Steep Price from Workplace Privacy Counsel:

Employers should view the Bank’s experience as a cautionary tale. What started as a quick agreement and apparent resolution literally, as the saying goes, ended up on the front page of the New York Times. The case also shows how quickly journalists will publicize a story that can be portrayed as “an attack on the First Amendment.” Sometimes filing suit is not the best way for an employer to protect its interest.

Somewhat similar but for now not directly involving employees is the case noted in Jet Maker Subpoenas Blog Critics:

In the latest case of corporation-versus-blog, the manufacturer of a line of "affordable" jets is seeking to uncover the identity of persons who posted critical comments on an aviation industry blog. Eclipse Aviation has served a subpoena on Google Inc. seeking to out the identities of more than two dozen people who have posted anonymous comments to the blog Eclipse Aviation Critic NG, which is hosted on Google's Blogger service.

For employers who may not be aware of these suits, pay attention for this may become common than any of us would like.

Small Business Estate Planning

Some good ideas from TLD's General Counsel Blog:

A buy-sell agreement is one option (which won't be discussed here in this post) and setting up an estate plan is another option often considered. If you set up an estate plan to include a revocable living trust, you can assign or transfer your business interest into your trust and specify what happens to that share of the business interest.

One common approach for married couples is to transfer the business interest to the trust and allow the surviving spouse to manage the interest and upon the death of both spouses, the interest is then transferred to the surviving children either in equal shares or to the child who is most interested in the business interest (for whatever reason). Additional language can be included depending on the type of business interest involved and what your wishes are in case something happens.

Remember that trusts are a tool. I do want anyone to think they are the only tool. Another tool may be the answer in another situation. In other words, one size does not fit all. The important things for business owners to do is to plan for the succession in their business and then take steps for carrying out the plan.

If you have an Indiana business and need legal counsel for estate planning, I am taking on new clients at this time.

Virtual Worlds - Virtual Law?

Going a bit afield for this post, but I decided while reading Virtually Blind's Blawg Review #156 that the future is here. I read William Gibson's cyber-punk novels a long time ago and some of the ideas and news discussed in the blog post seem very familiar. Ten years or so after the dot com bust, I am just as leery as anyone the transforming powers of the Internet. Okay, maybe I am not as leery as some because I do see the potential for business and for trouble in the virtual world. If I did not see this potential for business, I would not highly recommend reading the post from Virtually Blind and adding the blog to your RSS reader.

You may also want to take a look at Second Life DMCA Statement Raises Question: Does Provider Expeditiously Remove Infringing Material?.

Making the Most of Your Lawyer

Thanks to Wilmington North Carolina Business Law and Litigation Attorney Blog for the lead to Getting the Most From Your Attorney from The New York Enterprise Report.

The Wilmington North Carolina Business Law and Litigation Attorney Blog noted the following and I want to add an amen to this statement:

...In the third item on Dan's list is one I always emphasize:

Use lawyers to prevent problems, not just fix them. Many small businesses do not have attorneys until they think they need them. You need to make sure you are proactive in identifying legal issues before they become problems, and problems before they become lawsuits.

I would personally prefer to have my days be filled with short, simple, inexpensive legal work that solves problems and ends them, instead of having them filled with long, complicated, intractable and expensive problems. The latter might ultimately be slightly more lucrative for the attorney, but my view is that both myself and my clients are best served when the problems are handled while they are still small, manageable, easy to handle, and cost little to solve.

I would add something to points 2, 4, and 9 about selecting attorneys. There is a growing trend for outside general counsel. What is this? In-house counsel who are not employees but provide all the services of in-house counsel. I am aware of two companies providing this kind of service: In House Legal and Outside GC. I have been offering this sort of service for several years now. The point is not to select one counsel for a particular matter or networking with lawyers but having a lawyer acting as outside general counsel who has the network in place and knows the business objectives of the client.

Employees and the Internet

Yes, another article on the problems caused by employee access to the Internet. Years ago it was employees and e-mail, then it was employees and blogging . Perhaps with every new Internet development we will see a new article reminding employers of the dangers to their business. The latest is Web 2.0 Can Be a Pandora's Box of Liability from Law.com.

In recent years, millions of employees have joined the world of Web 2.0, which includes social networking sites such as Facebook and LinkedIn, blogs, wikis, podcasts, video sharing sites and RSS feeds. Today, technology allows virtually anyone to easily post a message, picture, audio and/or video to his or her networking page, blog or other Web site. In this constantly changing new world, where individuals have the ability to disseminate information about their employers to a potentially worldwide Internet audience, employers need to evaluate their existing technology policies and, where necessary, implement new policies and strategies.

For those employers lacking any idea of what is Web 2.0, read the whole article.

Employers can break the dangers to the business as employees surfing the web more than working, embarrassing the business (rightly or wrongly), or exposing trade secrets. For employees, they need reminding that they have no privacy rights when using the employer's computers.

I see no reason why any employer with an employee handbook does not spell out its computer/Internet policies in the handbook, or why an employer providing Internet access does not have an employee handbook.

IRS Products for Nothing, but No Free Chicks

Thanks to David Goldman and The Florida Estate Planning Blog for pointing me to five free business products from the Internal Revenue Service. Mr. Goldman lists the products with a brief discussion, so take a look at his blog.

Why Every Business Needs a Certified Public Accountant

Warning: a bit of snarkiness or just plain being a smart Aleck follows but I am deadly serious about the underlying point.

So why does a business need a CPA? Take a look at Please explain why the profits from my LLC is taxed at over 40%? and you will see Exhibit A for why a business needs an accountant (as well as a lawyer).

Article on Financing for New Business

Is there anything more troublesome to a new business than financing? I think not.

I have seen some good businesses go under because they lack finance. I have seen people with good ideas unable to get them off the ground from the lack of finances.

Since my interest lies in my business clients being able to get their business started and/or keep their business running, I pay attention when I see articles like New Business - Trading Equity for Cash.

If you are starting a business, guard your equity at all costs. Selling equity should be a last resort. Try to get loans or trade profit sharing in lieu of selling equity. If you must sell equity, do so only in small percentages. You do not want to the small business person in the example above.

The article contains practical advice on financing problems and is worth the time to read.