Posts Tagged ‘Entrepreneurship’

SmallBiz Funding, Part 4: The Line of Credit

Wednesday, December 9th, 2009


We’ve been going through options for small business funding for a few posts now — from the old do-it-yourself funding method to a variety of loans you might want to consider. But what if it’s less about startup capital and more about month-to-month liquidity? What if you need access to “just in case” money — a cash-flow cushion, if you will? That’s when it’s time to look into a bank-backed line of credit.

What is a line of credit?
A line of credit is a lot like the “overdraft protection” you might have on your personal checking account. A pre-determined sum of money sits, at the ready, awaiting your business needs. If it goes untouched, nothing happens — it’s only when you actually tap this reserve that you’ll need to pay interest to the bank — just like a credit card. When you do use money from the account, you’ll need to pay it back with interest beginning the next month — just like a credit card. So wait — why not just use a credit card?

How is a line of credit different from a credit card?
It’s a matter of decimal points — lots of money. Depending on your personal credit history, business credit history and other factors, a line of credit can be secured for tens, even hundreds of thousands of dollars or more. Major corporations operate on lines of credit to secure their payroll and day-to-day expenses.

Where’s the catch?
As with any funding source, there are a few “hoops” to jump through. To obtain a line of credit, you’ll have to put your own neck on the line — guaranteeing payments personally, and suffering the consequences for late payments through your own personal credit. Certainly, it’s no free ride. But if you’re reasonably confident in the continued success of your business and your ability to keep an eye on your cash-flow, a line of credit might be the next step in helping your small biz blossom.

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SmallBiz Funding, Part 2: Cash In on Connections

Wednesday, November 18th, 2009

In our first post in the series, we looked at why you should give serious consideration to bankrolling your startup from your own personal funds. It’s an option that’s often overlooked, but obviously not for everyone. This time, we’ll talk about your next easiest option — have a little help from your friends.

Who are they?
Broadly, we’re talking about your personal network — acquaintances close and not-so-close. Overall, we could refer to this as “family, friends and fools.” (A “fool” in this case isn’t at all witless, they’re just willing to invest on instinct and trust). Aside from being a phone call away, all of these sources have a few things in common that make them strong possibilities for obtaining your startup capital.

Confidence
Banks, lenders and other professional funding sources are in the business of making sure they get their money back with interest. To give them confidence, they may ask for credit scores, collateral and a concrete business plan. But with your personal network, lender confidence could come down to leveraging a single asset — your reputation.

Personal Investment
When a bank writes a loan, it’s all business. Money out to get money coming in. But when a friend or family member gives you a hand up, they’ll often measure their return on investment in your personal success. Business advice and emotional support just might be an unspoken bonus in signing a loan with them. In short, an investor that trusts and believes in you as a person is valuable beyond the money they lend.

Mutual Gain
It’s important to remember that a loan creates opportunities for both sides. If you’re starting a business you believe in, giving your personal network a chance to invest gives them a chance to share in the rewards. Whether they’re earning a fixed-percentage interest, a portion of profits or a piece of your business, funding through a friend can provide considerable benefits for all parties involved.

Considerations
As with any funding option, this route is not without precautions. Before engaging in a loan with a personal connection, you’ll want to make sure of the following:

+ You’re confident in the business — your lender is taking your judgment as collateral; don’t give them a fake.
+ The acquaintance can truly afford the loan — don’t let your family risk their own livelihood to help.
+ A legal agreement should be put in place — careful verbiage will give both parties the ability to make the agreement as stringent or lax as they’d like, but it’s imperative to document your agreement — not just for legal and tax purposes, but to preserve your valuable friendship.

If it’s done right, a loan from “family, friends or fools” might be the best option at your disposal. It’s simple, supportive and in the end — it just might make you both rich.

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3 Advantages of Custom-Tailored Contracts

Wednesday, October 28th, 2009

In today’s age of the do-it-yourself entrepreneur, downloadable contract templates are more popular than ever. “Just click, customize and print.” But can you really protect your business with a one-size-fits-all solution? It turns out contracts are a lot like suits — not lawsuits, mind you, but business suits — the basics of the professional wardrobe.

No Two are Exactly the Same
The job of the tailor will exist as long as people keep living in bodies and caring about looks. An experienced needle-smith can assess the exact size and shape of your body and craft each seam of your suit to fit your dimensions precisely. The same goes for a lawyer writing a business contract — he analyzes the unique attributes of your company to maximize your protection with every line of the document. The better the lawyer, the more precise his adjustments. With no lawyer at all, you’re just buying a suit of the shelf — buckling waist, dangling sleeves, and all.

It Makes YOU Look Good
The suit you purchase off the rack gives you the basics. It’s up to the tailor to make it YOURS. To get the most out of your business contracts, you’ll want your small business lawyer to make them yours — to write them so YOU get the edge. Wherever there are rules of engagement, there’s a distinct advantage in being the writer of the rules. When you choose to work from a neutral, templated contract, you’re throwing this opportunity — and your tailor’s expertise — right out of the window.

The Rules Change Over Time
A great tailor combines timeless knowledge with an acute sense of today’s trends. He’ll help you make the right calls for this year, this season, and the exact occasion you’re dressing for. When it comes to writing business contracts, your small business lawyer can keep your documents up to date with statuses, case law and the course of your business. Last year’s suit could make you look out of place. Last year’s contract could be virtually useless in the courts.

Every business professional should have a well-tailored suit. It polishes your presence, enhances your image and inspires confidence in ways an off-the-rack solution never will. And when it comes to business relationships, a custom-crafted contract from an experienced lawyer will have just the same impact. In either case, you might pay a little extra up front, but the results can pay back a lifetime of dividends.

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5 Must-Have Contracts to Protect Your Biz

Thursday, October 22nd, 2009

Without contracts, anything is possible. People change, things happen, and anything that can go wrong just might. With contracts, anything is STILL possible, but the expected limitations are clear and the consequences are governed by law. Trust is still one of the most important factors in any business relationship, but without a contract, it’s nothing more than a feeling. 
 
Confidentiality Agreement: Because nobody likes keeping secrets.
Every secret we have isolates a small part of us from the outside world. That’s why keeping a secret is such a lonely experience, and it’s also why a secret is so important to a business. When you communicate your trade secrets to a new partner — written, verbal, or otherwise — you’re sharing more than a valuable idea; you’re also sharing a burden of responsibility. The Confidentiality Agreement is a business contract that provides legal recourse in the event that a partner’s personal need for expression surpasses their respect for your secret information.
 
Non Compete Agreement: Because everyone’s an entrepreneur.
Remember the entrepreneurial urge that led you to start a business in the first place? Any one of your employees might have those same feelings now — but that’s not necessarily a bad thing. With a well-structured Non Compete Agreement contract, your employees will have extra incentive to grow their segment within your company, instead of becoming your cross-town rival. When properly written, a non compete agreement inhibits an employee from competing in the same industry within a reasonable time frame and geographic area of their former employer.
 
Non Solicitation Agreement: Because they’re YOUR clients.
Who owns the relationships with your clients? Whether you’ve got a sales staff, a new business director, or neither, you’ll likely gain client relationships through your employees at some point. The key is to make sure they don’t leave through those same doors. A Non Solicitation Agreement is a business contract that restricts your current and former employees from courting and signing your clients outside of your company — consider it your valve for client retention.
 
Non Disparagement Agreement: Because break-ups can be brutal. 
Emotions run wild when a relationship goes sour — and a business relationship is no exception. A terminated employee, or even a dissatisfied one, can ruin your good name with their ill will. A Non Disparagement Agreement is a business contract that will make them think twice — it discourages current and former employees from making negative comments about your business in the public forum.
 
Employment Agreement: Because uniforms aren’t so uniform anymore.
With the variance in policies from one company to the next now wider than ever, how will your employees know what your company expects? An Employment Agreement is a business contract that can cover pay, vacation time, terms of employment and many of the agreements mentioned above. With all of the rules in writing and signed in one document, both employer and employee know what to expect before the rookie’s first day on the job.
 
A business owner should never feel bad about requiring a contract for a business relationship. It’s nothing personal — in fact, it’s pure business. With the right contracts in place to formalize your agreements, you can make sure that no matter how personal feelings might change, the terms of your business relationships never will.

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Entourage-Building for Entrepreneurs

Friday, October 16th, 2009

“ONE MAN…” might be a great way to start a movie preview, but it’s no way to start a business. Far fewer American dreams are built on a single pair of shoulders than the movie industry might have you believe. In the long run, more often than not, it’s the great team-builders that rule the day. In other words, when your small business starts facing big decisions, your most important choice might be the company you keep.

Small Business Lawyer
Incorporating a business isn’t just the first step toward legally operating your company — it’s your first opportunity to seek out a long-term legal partner. As your business grows, you’ll want a well-rounded attorney who can meet your various small business needs as they arise, so don’t take this decision lightly. You’ll want to fill this role before your business even gets off the ground.

Banker
For legal and financial purposes, you’ll want to begin treating your business as a separate entity from yourself (even if you’re a sole proprietor) right from the beginning. Once you’re equipped with a state-issued Tax ID number, you’ll want to talk to a Banker to get your corporate accounts in the books. These may include loans, checking, and credit card accounts, depending on the specifics of your business.

Accountant/CPA
Tax season might only come once a year, but the task you’ll face in properly managing and tracking your finances is a year-round responsibility. Since the decisions you make in the way you manage your money can drastically effect your tax premium, you’ll want to connect with an experienced Certified Public Accountant (CPA) as soon as possible. Try to seek one out within your first month of running the business.

Insurance Agent
The incorporation process can protect you as an individual, but your business needs its own safety net to stand up to the elements. Your insurance agent will make it their mission to cover your assets — with policies in general liability, worker’s comp, key man insurance, business disruption and more. Just as it is for the other important things in your life, a good insurance plan for your business can be the key to a good night’s sleep. — so the sooner you meet your agent, the better.

Business Consultant
It’s dangerous to steer the ship alone when you’re caught in the eye of the storm. To ensure you stay on course for success, you’ll want a strong business consultant watching over your operations from outside the organization. By combining an outside perspective with a wide array of business knowledge, a good business consultant can help you set your goals, plan your business, maintain your focus and realign as necessary along the way.

Marketing Consultant
Many entrepreneurs make the mistake of viewing marketing as an expense — the fact is, it’s an investment. From the foundational elements that establish your brand to the overall strategy for finding and engaging your target audience, a good marketing agency or consultant will act as an extension of your company — using their expertise to help you reach your business goals.

Running a business isn’t easy, but a trusted group of advisers can make it a lot less overwhelming. Just remember, you can answer every question the world will ever throw at you — all you’ve got to know is who to ask.

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SmallBizLaw: An Entrepreneur’s Dream

Wednesday, September 30th, 2009

A lot of entrepreneurs ask us why we started SmallBizLaw. The truth is, we did it for the same reason YOU’RE starting a business — we had a dream. With a background in both law and entrepreneurship, we saw a considerable disconnect between two worlds. There were no legal outfits specifically equipped to serve the unique needs of Florida entrepreneurship law. Our dream was for that problem to go away, so we developed a solution — and we named it SmallBizLaw.

Bigger Isn’t Always Better
The larger corporate law firms are geared toward major corporate clients — towering office buildings, scores of attorneys and massive conference rooms. And if all of that’s not enough to scare away a first-time entrepreneur, the services are priced to match. So what’s a small biz to do?

Do It Yourself: Good for Oil Changes, Not for Law
Some first-time business owners turn to the BYOL approach — Be Your Own Lawyer. Unfortunately, whether you’re guessing from scratch, reverse engineering legal documents from your last employer, or downloading templates online, there’s a good chance “do it yourself” will be doing yourself more harm than good. From incorporating a business to everything that comes after, you’ll want to make sure you’re doing the right thing for YOUR business. The legal system doesn’t force you into templates; it’s built to be customized to your needs. In practically every aspect of business law, there are classifications, considerations and alterations to be explained, discussed and declared to make sure your legal standing is sound. There’s absolutely no substitute for personal, one-on-one contact with a Florida-licensed attorney.

Where We Come In
It almost sounds like a “can’t live with ‘em, can’t live without ‘em” scenario, doesn’t it? That’s why SmallBizLaw was founded. We provide the best of both worlds: affordable legal services for entrepreneurs and small business owners with one-on-one, personal consultation. We keep our rates low by limiting our overhead — providing our services 100% online. We connect with our clients with all today’s technology — offering contact via email, phone and even live Skype video conferencing. And beyond our legal offerings, we bring a wealth of business advice to the table. Just because it’s legal, doesn’t mean it’s good for business. We’ll make sure you’re on the right side of the law, but we’ll also help you get to the right side of the balance sheet.

Fulfilling the Dream
Today, SmallBizLaw offers affordable legal services throughout the state of Florida, all through one easy-to-use website. We’re the nation’s first e-law firm, and we’re proud to say we see our services making entrepreneurship law easier every day. Put simply, we offer the custom law services an entrepreneur deserves at the price they can afford to pay. Because just like you, we’ve got a dream. But OUR dream is making YOURS come true.

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LLC vs. INC: Your Biz Future in 3 Letters

Wednesday, September 23rd, 2009

If you’ve made the decision to incorporate your business, you’re off to a great start (More on that in our last blog). But before you can even move forward with THAT, you’ve got another big decision to make — whether to incorporate as an LLC or INC. This “starting a business” thing isn’t going to be easy, is it?

We’ll do what we can to help. Let’s talk about how to choose one of these three-letter designations, and how that decision will impact your business in the long run.

First, the basics. INC is just what it sounds like — an abbreviation for Incorporation. So what does LLC stand for? That’s a “Limited Liability Corporation.” If you’re familiar with the advantages of “incorporating” (a general term that covers both the LLC and the INC), that may sound redundant, as the primary purpose of any incorporation process is to reduce the liability on the shoulders of the business owners. It’s true — in fact, the INC was once the only viable option provided by the State for designating a separate legal entity from the individual people running the business. But the LLC goes a step further — it’s set up to make things simpler, particularly for small businesses.

Here’s a few of the ways your decision between an INC and an LLC will impact your business:

Who calls the shots?
An LLC has Members and Managers. An INC has Shareholders, a Board of Directors and Officers. The greater hierarchy in the INC means more paperwork, but more possibility for varying levels of company ownership.

What do the rules look like?
An LLC is controlled by an Operating Agreement. An INC runs according to Bylaws + Minutes. An “operating agreement” is a simple series of declarations that clarify certain possibilities that may arise as the company grows and changes. Bylaws and minutes go to extra lengths to ensure a series of checks and balances can be carried out by all levels of ownership.

How do you file your taxes?
An INC can be filed as an S-Election or a C-Election. An LLC can be filed as either of these, but also adds the options for filing as a Sole Proprietorship (for one owner) or a Partnership (for more than one owner).

Who’s got skin in the game?
With an LLC, the employees are just that — they don’t have a stake in the company unless they are or become “Partner”. In an INC, on the other hand, there’s room for any number of Passive Investors to join your ranks, as well as numerous Partners at varying levels of control and ownership.

These are just a few of the many differences between an LLC and an INC. As you can see, this is a decision that will have a lasting impact on the way the government looks at your company and the way you do business. So take your time. Talk to your business partners. Get an outside perspective.

And finally — as always — don’t hesitate to consult a legal professional for expert advice.

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Incorporation: Your Small Biz Superpower

Wednesday, September 16th, 2009

Incorporation: Your Small Biz Superpower

When it comes to starting a business, your first question is probably “Why do I need to incorporate?” You might be surprised to find out it goes well beyond registering a name or putting your corporate flag in the ground. At its heart, incorporating a business is all about securing you and your loved ones. It’s kind of like creating an alter-ego in the name of your business — by day you’re a mild-mannered individual, but when you incorporate? Cue the fanfare! (more…)

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New Biz Beginnings: Build Up or Buy-Out?

Monday, August 3rd, 2009

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So you’ve decided you’re ready to run your own business.

That’s a tough enough call for most, but for you, it’s just the first of many. With every step down the road of entrepreneurship, you’ll face dilemmas that could break the average 9-5er. Now here’s a prime example. Would you rather:

a) put your blood, sweat and tears into starting your own business, or
b) take the risk of investing in one that’s already up and running?

“Starting a business” sounds as easy as flipping a switch, but it might be the hardest endeavor you ever undertake. Building a name, a client base, and a company will take unimaginable efforts. You’ll use time you never knew you had, money you never dreamed you’d see and skills you never thought you’d learn. But you’ll never be at the mercy of someone else’s past. At the end of the day, you can look back on it all and say what Sinatra said, “I did it my way.”

You might not be considering a buy-out for what sounds like a sensible enough reason — you don’t have the cash. But the fault in that logic is an important one — this business is bigger than you. It’ll take much more than just your own time, toil and money to make your business grow and thrive, and that starts at the beginning. A venture capitalist or angel investor might be one of the first and most valuable members of the entourage you’ll have to build around yourself to succeed. Also consider that though it may cost less initially, starting your own business is by no means cheap, and will likely meet or exceed the cost of a buy-out before you reach your goals.

With the challenge of the initial investment aside, buying a previously-owned business can be an attractive option — but make sure the business is a good buy. Are you buying into a solid foundation? A brand with equity? A great team? If the answers to these questions are yes, then this might be your best bet. There’s much less risk involved with buying an already great organization than trying to form your own — despite how dreamy it might sound to “do your own thing.” Dropping that ego might be a multi-million dollar move.

No matter which option you choose, the fundamental rules of running a great business are still the same. Plan thoroughly; it’s closest thing to predicting the future. Be ready to change your company to meet the changes around it; Darwinism works here — evolve or die. And always strive for perfection; you might just end up with excellence.

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