The 7 Deadly Sins that Will Sink Your Internet Business

The 7 Deadly Sins that Will Sink Your Internet Business

38945707_sAs a lawyer, I see my clients make a lot of mistakes on pretty much a daily basis. And frankly, I hate that. I want my clients to succeed with their online business. So as their lawyer, I consider it my obligation to educate my clients and share with them what they should be doing in their business, and what they definitely should NOT be doing in their business.

Lawyers get a bad rap for telling clients what they shouldn't do. But in the case of the 7 deadly sins I've listed below, I consider it just plain bad business sense if you are committing any of the following acts of misconduct.

Read on, and ignore this list at your peril!

1. Failing to do a proper name search of your proposed brand

Sometimes I feel like a broken record. I've said this one so many times my head is going to explode. But yet, here it is. I see so many clients that come to me with proposed names that they are already selling branded products under, but yet they never did a proper name search to see if the product was available.

We live in a Google and Amazon world, and the US Patent and Trademark Office has a huge database of trademarks that you can easily search for free. There is literally no excuse for NOT completing a name search and clearing the name that you want to use.

2. Failure to keep your business affairs separate from your personal affairs

I totally get this. You are an entrepreneur and you are starting a business. Funds are tight. You have little to no income coming in. You are living off savings from your last job, or the income from your day job.

It is easy in these situations to use the wrong credit card at the grocery store. But remember one thing – you are building a business, so you need to treat it as such. If you had a credit card from an employer, would you use it to buy groceries? I doubt it (at least if you wanted to keep your job for any period of time). So why would you cheat your own business by commingling funds?

You shouldn't.

If you use your business account as your personal checking account, then what's the point of having a “business” anyway? You might as well toss the idea of “limited liability” out the window. By commingling business and personal funds, anyone that wants to sue you can use the fact that you aren't operating as a true business as evidence against you to  “pierce the corporate veil”. This could subject you to unlimited personal liability for the debts and negligence of your business.

3. Failure to include a proper Privacy Policy and Terms of Service on your website

There are two pages that you absolutely, positively, must have on your website. They are a Privacy Policy and a Terms of Service page.

The privacy policy tells the visitors to your website what information you collect about them, how you store it, and what you do with it. This page is especially important if you plan on advertising your products or services with paid advertisements (such as Google or Facebook Ads), as these services will shut down your ads if you fail to include a privacy policy on your website.

Click here for more information about the do's and dont's of privacy policies.

The second type of page you absolutely must have is a terms of service page. The terms of service is essentially a legal contract between your business and the visitors to your site. It tells them what they can and can't do while they are on your site, and should include specific terms regarding your business or professional licenses (especially important for lawyers), how you will use material they submit to your site (think comments), protect your intellectual property, and provide choice of law provisions, among other things.

But don't just copy and paste any old terms of service you find online – recognize that this is a legally valid and enforceable contract. You need to make sure that the terms of service you use is valid for your business and provides the customized terms that you need to properly protect yourself.

We are in the process of rolling out some free and paid templates that you can use in your business, including sample privacy policies and terms of use statements.

4. Failure to hire qualified staff before you need it

One of the biggest problems holding most entrepreneurs back is something Chris Ducker first called “superhero syndrome“. This is the idea that you, as business owner, can do everything on your own. The financials, the marketing, the product development, everything.

Unfortunately, you are one person and starting a business is not only a huge deal, but it takes a tremendous amount of time and work. When you are first starting out, you can do a lot yourself, but in order to truly grow and build something remarkable, you will need to hire help.

As the entrepreneur, you are the visionary for your company. You are the one who has to make high-level decisions, not do $10 an hour work. As soon as you possibly can – hire some help.

Hire your first staff sooner than you are ready… you'll be glad you did.

5. Failure to get all your agreements with clients, contractors, employees and vendors in writing

I wish I had a nickel for each time I talk to a client that does work without a contract, or with some free template they found online. No matter what type of business you are in, you will need some contracts that you can use over and over again when forming new business relationships. Each and every business dealing you have needs to be reduced to writing.

So whether you are doing consulting work for clients, hiring your own independent contractors, dealing with vendors that have strict delivery schedules, or even when dealing with employees, you need to have a contract in place that discusses what money will change hands for what work, when, and what happens in the event that someone breaches that contract.

Contracts can also help you to protect your intellectual property, keep certain trade secrets confidential, and keep vendors from hiring away your employees, among many other things.

6. Failure to keep good books

Real businesses don't use spreadsheets to track their income and expenses. Real businesses use accounting software, or better yet, hire an accountant or bookkeeper to manage their income and expenses for them.

If you are using a spreadsheet to track your expenses right now – that's ok, but you need to transition to a legitimate accounting system sooner rather than later.

Both Quickbooks and Xero offer affordable and easy to use cloud-based solutions. Check them out and pick one today that works for you.

7. Failure to hire a lawyer to protect your intellectual property

This one might seem a little self-serving, but the truth is, you really do need legal counsel in your corner to keep you from tripping up in your business. There are lots of potential legal landmines that can derail your business before you even get started. Here are just a few of the things that a business and intellectual property lawyer can do for your business:

  • Help you evaluate and protect your intellectual property
  • Counsel you on the proper business entity choice for your goals
  • Keep track of important legal deadlines for your business
  • Assist you in drafting and reviewing contracts
  • Preparing cease and desist letters as appropriate to shut down competitors that are infringing on your intellectual property
  • Help you with trademark searches and registrations
  • Conduct an audit of your website and make sure your privacy policies and terms and conditions are appropriate for your business
  • Answer any legal questions you may have as they arise through periodic and regular phone/skype calls

Am I a little biased? Yes, probably. But the most successful businesses all have one thing in common – they have a lawyer on retainer to assist them with their legal needs and to consult with as necessary.

What's Next?

Go through these huge mistakes that many online businesses make and insure that you are not violating any of them. When you are ready, click the button below to schedule a paid strategy call with our office.

Schedule your strategy call today!

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