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Dirt + Leaves + Sharks = Lawyers (Or How To Start A Business)

By June 22, 2015October 29th, 2017Podcast, Ralph and Carol Lynn
Dirt + Leaves + Sharks = Lawyers (Or How To Start A Business)

Bags For Women… AND Men!

If you’re a regular listener you know we talk about Tammie Rampley and Tramp Lee Designs often. Carol Lynn has bags made by Tammie, we’ve ordered gifts for our mothers… but it wasn’t until this week that we realized Tammie not only makes bags for women but she makes them for men, too!

A messenger bag showed up at my door last week with my name on it, a Tardis on the outside and bigger on the inside.

So connect with Tammie and find out how she can custom design a bag for exactly what you need.

Three Star Dude Is Not Going To Be Happy

Last week we talked about someone who left us a three star review of our podcast and who complained that we do too much talking and don’t get to the point quickly enough.

After today that review is probably going down to two stars.

Let’s Talk Business

Setting up a business, that is.

If you’re selling a product or service, are you in business for yourself or are you actually running a business?

The difference starts with the paperwork.

It’s a good idea to legally file business incorporation documents, whether that’s as an S Corp or an LLC or something else.

By making it “official” you have legal protections you wouldn’t have otherwise. For example, you have less liability as a business than you would as an individual. If something goes wrong and you’re not incorporated you could lose your home, car or other assets. But if you’re incorporated the business takes that burden.

Profit Sharing Vs. Equity Ownership

Thinking of going into business with a partner? Then you have to figure out how you’re going to split up the equity.

When you give someone a share of profit, that’s nice, but it’s easy to dilute profits with expenses. If you pay yourself a gigantic salary you’re cutting into the profit that your partner expects a cut of.

If you take a lavish trip to Hawaii (for business purposes, of course) you’re cutting into the profit that your partner expects a cut of.

On the other hand, giving someone an actual equity stake in the business means they own a percentage of the business – profits AND losses – and they also get a percentage of the sale of the business.

Put It In Writing

If you plan to “partner up” with someone, don’t expect to do it over a handshake. If it’s not on paper then it doesn’t count.

What if you or your partner gets hit by a bus? What if you or your partner decides you don’t want to be involved in the business anymore?

A legal agreement will protect everyone involved.

Dirt And Leaves And Sharks = Lawyers

If this sounds complicated, don’t worry about it. That’s what God made lawyers for. With a little bit of dirt and leaves and sharks… voila, you’ve got someone on your side who knows all the stuff you don’t. If you know any lawyers who want to sponsor this show, we’re all ears.

Don’t Download Free Legal Forms

You have probably seen ads for cheap legal templates and given the cost of real attorneys it can be tempting to drop a couple of bucks on a template. But a template doesn’t know you or your partners. A template can’t advise you.

Sometimes you don’t know what you don’t know.

Even If You Don’t Have Partners – Incorporate

If you’re a solopreneur and don’t have any partners you still need to be incorporated. As we mentioned earlier, being incorporated affords you certain legal protections.

It can also help you save on taxes, allow you to put money away effectively for retirement and more.

Partners Can Be More Diverse Than You Think

When you think of a partner you may be thinking of someone who can help you produce the product or provide the service you want to offer.

But partners can have completely different skills that contribute to the overall success of your business.

For example, you may want to partner with someone who is an influencer in your niche and who can help you bring your product or service to market a whole lot faster (and more profitably) than you could do on your own.

You may want to partner with an adviser or a financial person who can take on some of the necessary responsibilities where your skills fall short.

The key is to find people who can strengthen your team – without whom your total success would not be possible.

Vesting. It’s Stupid.

It’s not a very common practice but it happens. The premise is that you promise someone equity in the business after they’ve worked in the business for some length of time – usually for free.

It may seem like a good idea to test someone’s commitment but it also devalues their participation. Plus a lot can change during their vesting period. What if you sell the business? They get nothing. What if you take the profits and leave? They get nothing.

Just don’t do it. Value your team members out of the gate.

Your Marketing Action Item

From Carol Lynn: Do you have an idea for a business, product or service but don’t have the skills to execute it? Don’t dismiss your idea! Write it down and then write down the short list of people who have the skills you need who may be able to partner with you. Want to build some great bit of software but don’t have an ounce of programming knowledge? Partnering with the right programmer is all you may need to bring your idea to fruition.

From Ralph: Start with the end in mind. Before you start a business or create a product, think about how you’re going to sell it, who you’re going to sell it to and how much money you think it can make. Put together a spreadsheet of your expenses and the potential revenue based on your target market. Be sure you know who your target market is. You can’t sell to “everyone.” You need to understand the potential reach of your niche and that will help you decide whether it’s worth investing your time, energy and even money in your new venture.

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