Most small businesses will enter into a contract or business deal from time to time.  Some agreements may be simple while others may require the skills of a contract or business attorney.  In either case, you will want to feel comfortable that you have negotiated your best deal possible.  The following are five basic suggestions for negotiating the best terms for your next business contract:

  1. Set out your goals before you start.  The process of writing down your goals in the negotiation helps you clarify what you intend to do, understand the importance of significant issues, and commit yourself to making it happen.
  2. Do your homework.  You should know the law, relevant facts and figures.
  3. Decide what you really need and what areas are "throw aways".  Be prepared to trade something to get something important to you. 
  4. Build trust and listen to the other party.  A recent post from Brett Rogers sets out the importance of listening.  You learn far more in a negotiation from listening than you do from talking.
  5. Manage your emotions.  Resolutions rarely occur when parties lose their temper or become irrational.   

Mike Sansone pointed out a great new small business resource today in his post on IowaBiz.com.  Small Business Link is a new offering from the Wall Street Journal Online.  Each month the Small Business Link will focus on one particular issue facing small business owners.  From there, readers will be able to participate in conversations with others, including the people featured, on the various topics.

The first month featured Employee Benefits and this month’s feature is IT Outsourcing.

Be sure to check this resource out.  It looks to be very helpful.  Thanks to Mike for the great find.

In my last post on franchising I discussed some available franchise due diligence resources for prospective franchisees.  And while I know due diligence is critical before buying a franchise, I cannot help but remember an email I received from a non-client franchisee in response to a different franchise due diligence post I wrote after the Franchise 500 issue of Entrepreneur hit the news stands:

The most difficult information to obtain and verify is franchisee profitability.  The profitability of the franchisor and the franchisees is not always related.  Sometimes those selling franchises make money while the franchisees do not.  And it is not always due to lack of due diligence on the part of the franchisee.  It may be because of inaccurate information supplied by the seller or franchise support that was promised but never delivered.

The reality is that franchisors are required to make only limited disclosures about profitability and many will make no earnings claims of any type.  The number one reason listed to not buy a franchise according to Nolo is questionable profitability.  So what is a prospective franchisee to do?

Franchise lawyer Richard Solomon of Houston, Texas says you should consider conducting the ulitimate due diligence by going to work for someone in that franchise business for a year.  In buying your franchise you may be asked to make a substantial investment of $150,000 to $1 million.  Solomon believes that even if you made minimum wage for a year you will be much better off than risking your liquidity on an investment you know a lot less about because you were in a hurry. 

Risk is inherent in any business venture.  You are taking a chance and a leap of faith.  But actually working in a franchise business before you buy would allow you to find out whether you want to stake your life savings on the opportunity.  Taking a chance with maximum information is not random chance but a calculated risk – and that could make all the difference.

*I originally wrote this post forthe Iowa business law section of IowaBiz.com.

Earlier this week Larry McLellan and I spoke to a group of clients concerning employment law.  Larry gave a fascinating talk on conflict in the workplace.  I took two main things away from Larry’s talk.  First, not all conflict is negative.  There can be constructive conflict in the workplace.  Second, people who have good conflict management skills spend less time dealing with unproductive conflict.  Employees who are trained in conflict management can manage conflict so that it creates positive results instead of tension and stress.  And this is important because unproductive conflict in the workplace often leads to litigation.

Well, a cure for workplace conflict may just be a new book written by Timothy Johnson called GUST – The "Tale" Wind of Office Politics.  Like Larry suggests, Timothy shows us that office politics are not necessarily negative.  The key, however, is identifying the strategies to deal with the various office politicians including the Snake, Ostrich and Bear.  What are those strategies?  Well, I strongly suggest you buy the book.  It is a business fable and a quick read.  I know it can help you develop skills to spend less time dealing with unproductive conflict in the workplace and to create positive results.  It is available on Amazon.com. 

The continued success of the Central Iowa Bloggers continues to amaze me.  This week both Timothy Johnson of Carpe Factum and Matt and Nathan Owen of U.S. Rodeo Supply were featured in Des Moines Register articles.  That means, according to my recollection, at least 11 Central Iowa Bloggers have been featured in either the Des Moines Register or The Business Record over the last six months.  An amazing feat indeed.

Of course it is one thing to gain publicity but many skeptics ask do you actually get hired because of your blog?  Recently a new client told me that he loved the fact I had a blog.  He said it was helpful to read information on topics of interest before he made the decision to call a lawyer.  He told me the blog helped convinced him that I was an authority on the subject while other lawyers he researched did not make the same showing.  And if you wonder about the quality of clients you attract, experience has told me these clients are well-educated and successful.  The client referenced here runs a multi-million dollar company.  Many of the other clients who have contacted me because of the blog are transitioning from a corporate career to an entrepreneurial career.  These people are using the Internet (and specifically blogs) as a search tool for finding a business lawyer. 

It always nice to get high rankings and accolades but nothing beats making a positive impact and helping prospective or current clients.  The lawyers I know who are successful bloggers have a deep devotion to assisting the public and are willing to give before they receive.  It helps to reach out to other lawyers and assist them in promoting their blogs and providing additional resources for your prospective or current clients.  I think some lawyers worry that if you send the reader to another site they will never come back.  To the contrary, my theory is that if you act as a resource hub for your readers they will come back again and again and again.  Be sure to link out to other lawyers.  Acknowledging others for their work is a great way to see your law blog grow.

One other thing:  my experience tells me you don’t have to be flamboyant or catchy.  What people really want is information!  The most basic posts on this blog are by far the most popular.   

If you are a lawyer in the Midwest interested in finding out more about law blogs and other legal technology issues you do not want to miss an upcoming seminar Brett Trout and I have planned for July.  We should have the date confirmed by early next week and we anticipate one of the world’s most prolific law bloggers will be on hand to present. No, I don’t mean Brett – although having the guy who has the sixth best law blog in the world present at your seminar isn’t too shabby.  Stay tuned for our announcement on LAWpportunities next week for the exciting news. 

Are you interested in a business franchise opportunity?  It seems as though more and more Iowans are choosing franchises as an option rather than starting businesses on their own.  It is extremely to important to conduct due diligence and check out franchisors thoroughly. 

Inc.com has an excellent Guide on Buying a Franchise.  Topics covered include:

and much more.

You should also check out my podcast with Joe Cooney of Frannet which covers some basics of buying a franchise.  Joe also has a list of questions to ask franchisors.  But remember, when conducting franchise due diligence there is no substitute for digging in and working hard.  Above all, always interview as many franchisees as possible to get a better sense of how the franchisees themselves are performing.   

* I originally wrote this post for IowaBiz.com.

Every blogger should take a look at the post "12 Important U.S. Laws Every Blogger Should Know" on the Directory Aviva.  (Thanks to Liz Strauss for pointing out her "Great Find").  Overall, it is an excellent post and I wish the author was disclosed.  I particularly like the "How to Stay Out of Trouble" section of each post.  However, I have a few comments about No. 10 – Limited Liability Laws and Incorporating since that is one of my main areas of legal practice.

Here’s how the post says to stay out of trouble and my comments about each:

1.  Never mix your company funds and your personal funds if you want to preserve your limited liability protection. 

My response:  So true.  Business owners always need to make sure to keep their company funds and personal funds separate.  It is important to set up a company bank account and do not pay your personal bills and other personal expenses directly from your company account.  And you also need to watch personal guarantees which are often required of new business owners for loans and other expenditures.  You also should use your LLC or corporate name on all documentation and sign any documents using your name and title, i.e. "John Smith, Member or John Smith, President".  This helps make it clear you are acting in a company capacity as opposed to an individual capacity.  Also if you form an LLC or corporation for an existing business be sure to assign any contracts to the new business entity.  You will also want to follow your state corporate or LLC formalities along with drafting minutes of director, shareholder or member meetings.  Articles of interest on this site may include:

2. Always form an LLC rather than a corporation (Inc.) unless there are very specific reasons which apply to your unique case.

My response:  Small businesses may indeed benefit from forming an LLC because in general that form of business entity may have less formalties than the corporate form of business.  But it is important to realize that each business person may have different circumstances and therefore one entity may be better than the other for that individual.  I believe it is a bit of an overstatement to say that the formation of an LLC is the way to go for almost every single blogger.  In many instances, the S corporation form of business may be a better way to go.  Further, the decision does vary greatly on state laws.  Some states may not even allow single member LLCs.  Getting the advice of a small business lawyer and accountant is key in making the decision on which entity to form.  Articles of interest on this site may include:

3.  Consider the state you form your LLC in determines the law and to some degree the state taxes that apply to your company.  The vast majority of LLC’s are formed in Delaware or Nevada because of the strong legal entity caselaw in those states which tends to favor companies over individuals in lawsuits, but at a minimum creates a set of clear laws for companies to use if something goes wrong.

My response:  Many Iowa entrepreneurs have asked me where they should incorporate or form their LLC.  The question used to surprise me but given the number of advertisements on the Internet touting Delaware and Nevada corporations and LLCs, it is no longer a surprising question.  But in general, most small businesses will likely want to incorporate or form an LLC in their home state for a variety of reasons including convenience and cost savings.  Articles of interest on this site include:

Overall, I believe the Directoy Aviva post is helpful but I do recommend you get the advice of a business lawyer and accountant before you make a decision on which type of business entity to form and where to form it.  The article warned about the application of unique circumstances and those just might apply to you.  It is best to be fully informed before you move ahead.   

In October of 2006 I posted about an Iowa Association of Business and Industry survey regarding how Iowa business leaders perceived the legal climate in Iowa.  The survey stated that many business leaders are dissatisfied with Iowa’s legal climate and believe it is costing the state jobs because of competition with other states.

That survey seemed to contradict the U.S. Chamber of Commerce survey which said Iowa ranks fourth in the country for judicial fairness.  Iowa has ranked in the top five for each of the last four years. 

So, which is it?  Well, we may have the answer.  Jim Carney, Legislative Counsel for the Iowa State Bar Association, says that Iowa’s civil trials are on a downward trend.  In the latest addition of the Iowa Lawyer Carney pointed out that there has been a 17.5 percent reduction over the last five years in civil jury trials relating to tort law.  Moreover, the number of civil jury trials in Iowa continues on a downward trend.  There were a total of 262 civil jury trial in the entire state during 2006.  But even more important Carney says is the fact there has been a 44 percent decline in the total number of jury trials (civil and criminal) from 1994 to 2006.  In 2006, 37 counties in Iowa reported no civil jury trials while 21 counties reported one civil jury trial, 18 counties reported two and 7 counties reported three civil jury trials.  All in all, an astonishing 83 counties reported three or less civil jury trials.

Why the downward trend?  One of the major reasons for the decrease in civil jury trials is the increased use of mediation as an alternative to taking cases to court.  Overall, my experience with business clients leads me to believe that Iowa’s judicial system is just as good as any state.  There are always ways to improve our Iowa’s business climate but it just doesn’t appear the facts support the notion that Iowa’s legal system is a problem.   

*This was originally written by me for IowaBiz.com.

Ordinarily people say only two things are certain – death and taxes.  Well, there is one other thing.  If I schedule a baseball practice for my little league teams it will rain.

But it’s also raining law blogs in Iowa.  The law firm of Huber Book Cortese Happe and Lanz has four new law blogs in their infancy including:

Another blog includes the personal injury and workers’ compensation blog by Corey Walker on his impressive injurediowan.com Web site.  And you’ll notice that rather than feature corn stalks Corey has decided to emphasize the mountain range somewhere around Newton.  (If that were only the view from the Iowa Speedway).  But seriously it looks like Corey will have valuable information for injured iowans on his blog in addition to the special reports he features on his site.

Barb Diment has also just started her law blog.  She will focus on personal injury and workers’ compensation as well.  It’s nice to see Barb isn’t afraid to give kudos to other lawyers as her intial post congratulates Roxanne Conlin on her big settlement with Microsoft.

Good luck to all these new Iowa law bloggers.  I hope you will reach out and join the conversation with other law bloggers out there.  Also, stay tuned for an upcoming law blog and technology seminar through Lawpportunities.  It would be great to see everyone there.  We expect to schedule it in July.

Brett Rogers of Beat Canvas had an angry post entitled "What is Wrong with America".  Brett is disgusted with a justice system that allows a lawyer (and administrative law judge) to sue his dry cleaner for $67 million in damages for a lost pair of pants.

It’s cases like this one that upset people and tarnish the image of lawyers and the justice system.  I predict justice will ultimately prevail but it is unfortunate our system is often clogged up with cases of this nature.  For example, last year I blogged about a man that sued Michael Jordan for $832 million because he was constantly mistaken for his Airness.  (The case was ultimately dismissed and it was reported no money was paid).

And although these cases are considered by many as outrageous it is important to point out that neither plaintiff had a lawyer to represent them.  Moreover, I take issue with some of the commentary on Brett’s post which lumps the famous McDonald’s coffee case in the same category.  Sadly, there are many misconceptions about that case.  If you are interested in reading facts about the McDonald’s case you might want to check out this site.  You might actually think McDonald’s got what it deserved if you know the facts.  We know the jury who heard all the facts sure did.

It sure is helpful to see how many view our justice system.  I’ll remember a lot of the commentary in preparation for my next trial.