Did you know that the average small business and business owner will be sued at least 3 times during his/her/their business lifetime?
If you’re going to take your offline business online or, start a new business on the digital platforms, there are nine things I think you need to know, understand and do. My recommendations are based on 35 years of practicing law, starting and running my own successful businesses, and helping clients start and litigate issues regarding hundreds of different companies. Many insights and suggestions are also premised around my own experiences relating to our firm’s online presence since 1995.
Before we get started, please remember that although I am a California trial attorney, and a pretty good one at that, I’m not your attorney. This is not legal advice. Also, the laws in each state are different so please contact an experienced attorney in your state to discuss questions, legal needs and options (need help finding a good lawyer? Here’s an easy and inexpensive way that I recommend to help you get legal advice and help in all 50 states)
#1: DO BUSINESS AS A CORPORATION OR LLC
Whether you know it or not, the real question in today’s business world isn’t if you’ll be sued, it’s when will you be sued? According to recent statistics, the average small business and business owner will be sued at least 3 times during his or her business lifetime. Knowing this, I encourage you to please be smart, plan ahead, and take steps to protect yourself and your business before something bad happens.
Corporations and Limited Liability Companies (LLC) allow you to put a protective shield between your business liabilities and personal assets. If you correctly set up, run and manage your company (and that’s a big if), your personal assets will be protected if a claim or lawsuit is ever brought against your business.
Most people don’t set up their corporations and LLCs correctly. Those who do often times drop the ball down the line when it comes to managing the entity. Their are numerous filing, registration, legal, tax and insurance requirements that all must be setup and managed correctly over the long-term. The point of this article is to make you aware of the business entity options and that these requirements exist. An experienced professional in your city and state can hold your hand and make sure you do everything correctly.
One more thing. In my opinion you should never do business as a sole proprietor (an individual) or general partnership. For the above reasons (and many more), there’s just too much liability attached to doing so. Doing business as a sole proprietor is by far the biggest mistake I see people make when doing business online. You are exposing your home, assets and pet dog to judgement creditors and we don’t want that to ever happen.
#2: INTELLECTUAL PROPERTY
Use Intellectual Property (IP) law (copyrights, trade names, trademarks) to protect your products, services and ideas. This is a very complicated area of the law and so if you have something worth protecting, it is important to take the necessary IP steps to protect your legal rights. I’d recommend that you contact an experienced lawyer in your state to discuss options and needs. The US Small Business Administration website offers several good resources you may want to review.
Respect the IP rights of other people and companies. Don’t use a picture, video, or music without written permission. You may be breaking the law and exposing yourself to litigation, injunctions and monetary damages.
There are plenty of resources on the Internet that allow you to use images, videos and songs for your online work via a license or purchase. Either create your own or take advantage of these sites and you’ll never have to worry about an intellectual property claim being filed against you.
#3: PROMOTE YOUR PRODUCT AND SERVICES THROUGH YOUR BUSINESS
When communicating while doing business, make sure your audience knows that you’re doing so on behalf of your business.
By doing this, the protective shield I mentioned above will usually limit the claims against your business and stop them dead in their tracks. Your personal life, assets and bank accounts will not be exposed to your business liabilities.
This needs to be done when sharing all offline and online content. For example, when you’re sharing on social media, creating a video or starting a live video, let your audience know that your content is being presented and shared on behalf of your company and not you personally. You can do this by simply including something like the following in the first 30-60 seconds of your show- “Today’s YouTube show is brought to you by the XYZ Company, a leader in the mobile app community.”
What’s important to remember is to share this fact towards the beginning of your broadcast so that it’s clear that the information, products and services provided are by the XYZ Company. This is easy to do but rarely done. It’s a good idea to repeat this type of message every ten minutes or so to give notice to people who join your presentation sometime after it starts. I know this sounds like a hassle to do but it’s the smart thing to do.
Your websites, blogs and other digital platforms and communications should clearly give notice that your company is a corporation or LLC. This includes all logos, emails and letters.
#4: USE CONTRACTS AND OTHER WRITTEN AGREEMENTS
Almost everything you do online involves contract law. Be smart and communicate and confirm all deals, proposals and agreements in writing. No, a phone call, email or text is not good enough. Life would be a lot simpler if a digital wink is all it takes to create a binding agreement. It isn’t!
Before representing another person or company’s product or service, read all contracts and agreements. Communicate any issues and confirm all agreements in writing.
Influencers need to make sure they are not assuming liability by promoting other people’s products and services. Agreements are available to help you do just that. State and Federal disclosure laws should also be followed. I shared important posts and tips about brand, agency and influencer liability here.
I tell all my clients to always put everything in writing. Take the time and make the effort to do your due diligence before clicking and agreeing to use, promote or sell a new product or service.
#5: EMBRACE TECHNOLOGY
Everything you do in your online business must be focused on providing an excellent product or service in a way that creates an exemplary customer experience. You must develop and maintain a relevant digital footprint. To do so you must embrace technology. If you fail in any of these efforts your existing and potential clients will simply click or swipe and go someplace else.
Today’s consumer expects you to deliver your products and services in a manner that is both familiar and mobile friendly. Creating a digital experience that easily accommodates swiping and tapping will result in smiles and sales. Requiring customers to place orders by phone or via desktop only friendly website will result in lost sales and a short business life.
Creating a transparent and quality customer experience is a requirement and not an option. In fact, your reputation depends on it.
Satisfying this requirement necessarily involves communicating with your customer the way he or she wants to be communicated to. If a customer spends her time on Instagram or WhatsApp and wants to communicate with you using these platforms, then do what you need to do to make this happen. I think one of the most important questions we ask new clients at the end of our initial consultation is, “How would you like us to communicate with you?”
The above mindset and communication approach this will help you build strong and positive long-term relationships. Having said that, every one in awhile you’re going to get a complaint or hater. When this happens, you and everyone else in your company need to learn how to hug your haters. Here’s how you do just that (Jay Baer’s new book “Hug Your Haters”)
I think that if you want to stand out and get noticed, it’s important to be an early user and embrace new digital platforms. Think of each platform as a welcome mat to your business. The more welcome mats you have, the greater the convenience to your potential customers and the greater the opportunity to create relationships and sales.
When all said and done, remember that it doesn’t matter what you want. All that matters is what the customer wants and the experience your customer has with your products and services.
Brian Solis’ books “What’s the Future of Business” and “X: The Experience Where Business Meets Design” do a great job of explaining this philosophy in more detail.
#6: HELP, SHARE AND ADD VALUE
What I’ve noticed over the years is that the people and companies who are dominating online are the very same people and companies who focus on helping others, sharing, and adding massive value to their community.
Everything they do revolves around giving value and creating community. By solving their customers problems with products and solutions, relationships are formed and trust is earned. Sales and business success are natural extensions of all the above.
Several great books on these topics include Jay Baer’s “Youtility” and Bryan Kramer’s “Shareology- How Sharing Powers the Human Economy”
#7: MEDIATION AND ARBITRATION
When individuals and small businesses are setting up and using contracts to support their online efforts, I recommend including a mediation and arbitration provision. Note that the laws in each state vary, so check with local counsel about how to do this correctly.
The fact of the matter is that having mediation and arbitration agreements will increase the chances of you having the opportunity to resolve a dispute with another party without the need for litigation. You’ll also save a great amount of time, aggravation and money avoiding litigation.
#8: ATTORNEY FEES CLAUSE
A good attorney fees clause will do two things. First, it will help eliminate frivolous lawsuits because the winning party will be entitled to have her attorney fees paid by the other side. The end result is that people will think twice before filing a claim or action against you.
Second, a properly drafted attorney fees clause may allow you to retain a good lawyer who you may not otherwise be able to afford. For example, if a client comes into my office with a good case but can’t afford to pay my hourly rate, I may still take the case if there is an attorney fees clause. I know that if I win the case I will get paid by the other side and this is added incentive for me to agree to get involved.
#9: VENUE CLAUSE
A well written venue clause will determine the location where all legal disputes will be filed and resolved. Smart business owners have venue clauses in all their contracts and invoices.
For example, let’s say you have venue clause that states that “all disputes, claims, and litigation will take place in Orange County, California.” A disgruntled New York based customer will need to travel to California to resolve all disputes. If litigation becomes necessary, the New York customer will need to hire California legal counsel to handle its dispute or claim in Orange County.
A good venue clause can be an effective deterrent to frivolous or minor claims. Because you don’t have to travel to the other side of the country to defend yourself, it can also be a good tool to help you keep your litigation expenses to a minimum.
#10 FORCE MAJEURE CLAUSES (Bonus Tip)
I’ve added this extra tip because of what many of my clients experienced during COVID-19. A force majeure clause is common in contracts and it essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, epidemic or sudden legal changes prevents one or both parties from fulfilling their obligations under the contract.
The issue that’s come up over the last year is whether or not a virus like COVID-19 falls under a force majeure provision. People and companies are spending a lot of time and money litigating this issue.
To avoid our clients from going through this, we have updated all of our clients’ contract provisions to include a new force majeure clause that includes COVID-19 and related viruses, and protects our clients by allowing them them to unilaterally decided if they want to move forward with performing pursuant to the terms and conditions of a contract or, terminate the agreement or possibly push the performance date out until it’s safe to move forward.
I enjoy and embrace the Internet, social media, and live streaming and social audio platforms. When it comes to setting up and running a new online business, what once took weeks and even months to accomplish, can now be done in minutes or hours with just a couple of mouse clicks.
Despite the new ease of creating and doing business online, it’s important to remember that speed and ease of use do not translate into safety and long-term security in business. Review and discuss these tips with your business partner, advisor and/or lawyer and see if how you can incorporate these approaches into your everyday online business efforts.
“The Ultimate Guide to Social Media for Business Owners, Professionals and Entrepreneurs” by Mitch Jackson
“Adversaries into Allies: Master the Art of Ultimate Influence” by Bob Burg
“The New Rules of Marketing & PR” by David Meerman Scott
“A Trial Lawyer’s Negotiation Secrets” (45K views) by Mitch Jackson
Jon Mitchell “Mitch” Jackson is an award winning California Trial Lawyer and in 2013 was named one of California’s Litigation Lawyers of the Year. In 2009 he was also recognized as one of Orange County’s Trial Lawyers of the Year.
When he’s not in court trying cases, Mitch enjoys showing professionals, business owners and entrepreneurs how to use social media and live streaming to disrupt, hack and improve their professional relationships, businesses and practices. In fact, Mitch created the digital LegalMinds Mastermind that helps professionals do all this and more.
Connect with Mitch on Twitter @MitchJackson and at his law firm JacksonandWilson.com. Many of his daily and weekly social media posts including social audio and live video can be found here Streaming. Lawyer.
One thought on “9 Legal, Business and Entrepreneurial Tips to Help You Start, Build and Protect Your Online Business”
This is a real gift Mitch. People need to print this sucker out and keep it handy. What a valuable primer. Bravo!