What is Larry Thinking? #15 => The Business of Business

August 6, 2008

In this edition…

About this Newsletter

The goal this time around was to get another newsletter out in less than a month, a goal that I just barely made. Here’s to small victories! This one will actually be short (I know I always say that), covering just a couple of things. Hopefully it’ll still be a good enough and worthwhile read. The next newsletter will probably be a straight Q&A, so send in any questions you’d like me to address. As always, thanks for listening. Or reading, as the case may be.

In the Forum => Online Poll

I’ve created an online poll for a question that I have on which I’d love to get some feedback. The direct URL is https://www.larryullman.com/forum/read.php?20,38041,38041#msg-38041 You do not have to be registered to vote but I suspect you’ll need to be registered (and logged in) if you want to add any comments. The basic question involves how I, in my books, recommend places online where you can learn more about a subject.

What is Larry Thinking => The Business of Business

I’ve been asked a few times about the business of business: how to establish and manage a small business. I can address this topic very succinctly: don’t ask me! I know many things but there are many, many more things that I don’t know. Just like you shouldn’t take medical advice from your auto mechanic, you shouldn’t base your business on what I have to say. I’ll provide a sense of what I know on this subject but, in the end, get your official answer from an actual expert! This subject is too important not to.

The company I work for, DMC Insights, Inc., is a small firm of which I am a co-owner and current President. Like many small companies, it was created largely to provide a corporate entity through which a handful of people could work. Although I did not establish the company, I was involved in the process and have some sense of how things were done. We did have a lawyer help legally establish the company, register trademarks, and create a contract for use with clients. We also had an accountant set up the books. And here’s the most important point: if it’s worth your while to try to create your own business, it’s worth your while to do it right. And that means spending some money on lawyers and accountants to make sure things are done properly and legally. Consider it a required business expense, just like buying a computer (and both are tax deductible, in the US at least).

With respect to a lawyer, having a proper contract is a must, so I’ll discuss that separately. Lawyers can also help setup trademark and copyright protections for your company’s name and logo. Doing so protects you, preventing others from riding the coattails of your company’s success. As an example, imagine that you don’t trademark your company’s name and you become successful. Someone else could come along and then trademark the name, prevent you from using it, and start getting the business that should rightfully be yours. Yikes! After all of the initial setup, you shouldn’t need to spend much (or maybe even any) on lawyers. Unless things go bad, that is.

With respect to an accountant, you’ll need someone to setup your books, help pay taxes, help pay employees (you!), do the end of the year stuff, etc. There are legal issues involved with the accounting, but your accountant should be familiar with those laws for your city, state/province, and country. Basically what this comes down to is making sure the government gets paid properly, which is very important. If you don’t pay the government, bad things happen. Further, a good accountant can help you choose the right corporate structure, maximize your deductions, etc. For the past couple of years, I’ve been doing the accounting for my company, but that’s mostly an issue of using good accounting software (QuickBooks) and following the system that was already setup. I expect in the next couple of years we’ll hire an outside accountant part time, at the very least because my time is better spent making money doing work, not filling out forms.

If spending money on these kinds of things, particularly when you don’t have much money, seems unnecessary, I understand. But you don’t want to be in a situation where things go bad and you wish you had a proper contract or had trademarked your business’ name. Best just to bite the bullet and have these things in place. If you’re going to try something as difficult and as potentially rewarding (in many ways) as starting your own business, do it right! Now, one thing to consider is that many cities or states/provinces have small business help: governmental agencies that will provide assistance at little to no cost. Definitely worth looking into! Maybe you can get some of the necessary paperwork and initialization in line without spending much, or any, cash.

Another thing to consider is that you’ll need a professional look for your company. In this day and age, that means proper logos (perhaps hiring someone to create one), business cards, and a Web site. For a previous incarnation of my company’s site, I hired someone to do a graphic design/template because I don’t have great skills in those areas. (This leads me to an aside that you shouldn’t try to claim that you can do things that you really aren’t qualified to do. It’s just bad business in the long run.) Eventually I changed to a CSS-based look, created by modifying an open source template. I’m still using the logo purchased years ago, though.

What is Larry Thinking => Contracts

If you’re going to do business, where people pay you to perform a task or create something, you need to have a signed, legal contract in place. Again, get a lawyer on this, but some things that a contract should do are:

  • Identify the client and the work provider (you/your company)
  • Outline the total cost of the project and payment terms (dates, milestones, penalties, what happens in case of non-payment).
  • Be explicit as to how changes will be handled (the number of changes, at what point extra costs come in, how changes should be submitted, how quickly they’ll be addressed)
  • Define the total scope of the work, in as much detail as possible
  • Name dates and deadlines
  • Explain all contingencies (things you need from the client)
  • Dictate who owns the work and how you can reference the work/client in your portfolio
  • Indicate what you are and are not responsible for
  • Establish how conflicts will be resolved
  • Limit your liability to the value of the project (i.e., you can’t be sued for more money than you received for doing the work)

Those are just a few of the things the I can think of off the top of my head. With Web sites and programming, being explicit can be hard but the more details the better. And remember that contracts aren’t just to protect you: they should be fair and balanced, protecting the client as well. For first time clients, who may not even understand how Web sites (or whatever) are created, it’s very important that you establish, and they agree to, a change policy. There should be a limit to how many changes can be requested or how large they can be in scope. There should be policy as to when they submit the changes (in terms of an actual date) and how. The contract should also state how quickly you’ll implement those changes. I had a client that wanted to email me every little issue on a Web page and have me change it and reply almost immediately. I refused, as that’s not an efficient use of my time, and as the contract specifically stated how changes were to be requested.

My Book News

Not much to report this time around. I’m just working away on my “Ruby: Visual QuickStart Guide”. The publication date did get pushed back a bit due to delays on my end. The book will be out this fall, though.

After I finish the Ruby book, I’ll do a relatively light revision of my “PHP for the World Wide Web: Visual QuickStart Guide”. It’ll be the third edition of that book and updated for PHP 6. That will come out by the end of the year. Over the winter I hope to do some online writing, mostly on JavaScript (a free, online book-like thing) and perhaps on PHP and MySQL (also free, but much less structured).

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