YunHoster

Getting an online business up and running is a real challenge. Once you figure the process out, it is vital that you realize that one success does not necessarily guarantee a second success with other products or services. While you should investigate other profit opportunities, isolating your risk when doing so is critical.

Blogging is all the rage these days, so let’s talk about a common situation that comes up. You start a blog and develop a strong following. Your blog covers some particular niche that you establish yourself as an expert in. You start making money through affiliate product sales and leads. To protect yourself, you form a business entity to hold the site. This is an ideal and typical approach on the web.

As your blog become more and more popular, you will start receiving unsolicited joint venture offers. Most are junk, but a few catch your eye and you investigate them. One looks like a really good idea that could bring in a good bit of money. You decide to move forward with the business relationship, but how do you deal with risk?

This is where most online businesses make a huge mistake. They don’t isolate their risk. They enter into a contract using the business entity that holds their original successful website. Can you see how this might be a problem down the road? An example can show you how.

Let’s say the joint venture involves putting together an all-in-one software package that will help people make money online. A nice sales page site is developed and the software is put up for sale. People flock to it and buy like mad. A year later, complaints start rolling in that it doesn’t work. You don’t have insurance or any way to deal with the complaints. Lawsuits start coming and your partner alerts you to the fact they don’t have any money and are filing bankruptcy. You are now isolated.

Now things get ugly for you. You can’t file bankruptcy because the business entity you used also contains your original money making blog. Well, you can file but you will lose the blog and all your income. That is a disaster by any measure.

I’ll be the first to admit that doing business on the web has a certain informality built into it. Generally, there isn’t anything wrong with this, but strategies need to be put in place to isolate risk. Exposing successful sites to the potential failure of new sites is not a smart move, so make sure to isolate your risk as much as possible. Doing so might require the use of multiple business entities or other strategies.

The web used to be a place where people could, shall we say, get away with anything. Those days are long gone. Protecting yourself is a must these days, so make sure you take steps to do so.

Article Source: EzineArticles.com

In all the excitement of bringing a new product or service to the marketplace it is easy to overlook the related legal risks – which may, at the time, seem trivial or inconsequential.

However, at every step of the way from the naming of your product or service to the delivery of it, ‘hidden’ legal risks can potentially cause you serious embarrassment, and in some cases might place your business itself at risk.

Here are just five examples (out of many that may be relevant) which you should definitely consider:

1. It’s a fancy new product or service, so you’ll be wanting a fancy new name for it. A bit of brainstorming in the office produces a list of names, from which the CEO picks one to settle the issue. However, two weeks after the (extensive) marketing material has been printed, thousands of dollars have been spent on designing a logo to incorporate the new name, and the ad campaign is about to kick off, you discover the same name being used by another business operating in your area. This is similar to what happened to a major Australian brewing company who were forced to change the name of a whole range of beers, a dispute which ended up in Court but which could have been avoided if proper steps were taken initially to research and trademark the new name.

2. You genuinely believe that people who use your new product or service will be much better off. You say this in your advertising. However, a few months later you are served with a claim, brought by a disgruntled customer who says he was misled by your advertising. To top things off he has also made a complaint to the ACCC, who are investigating whether your advertising was deceptive behaviour under the Trade Practices Act 1974 (now known as the Competition and Consumer Act 2012). This is what happened to a large telecommunications business in Australia recently, who ended up paying out about $5.26 million due to customers having been misled by ‘false’ advertising.

3. Is your product safe? Are you really sure of that? Do you have control over every aspect of manufacturing and distribution so as to be sure that negligence by a contractor or supplier is not exposing you to liability risk? Think outside the square – this is not just about the core product itself, but the possibility of liability arising from accessories or fittings, or even from packaging materials. I doubt that UK and US blind makers were prepared for the heartache, reputational risk and financial cost which arose from young children being caught around the neck by the strings from window blinds manufactured and sold in those countries.

4. Consider carefully the lifetime risk profile of your product or service. In relation to products the law generally expects that spare parts will be available for the whole of the reasonable life of the product, or that some other arrangements are in place to compensate consumers who experience product failure during the reasonably expected life of the product. While a limited guarantee period may appear to protect you from some claims, consumer legislation often includes statutory rights that effectively extend the guarantee period. In relation to services it is important to ensure that your insurance coverage remains in force long enough to protect your business from claims that arise years after the service was provided or carried out. In one case an architectural practice had to pay a substantial claim itself, as its insurance cover no longer covered claims for negligence arising from a building designed by them several years earlier. They saved a modest sum by changing insurers after the building was finished, but that saving paled into insignificance against the cost of the claim.

5. Be careful who you employ. Due to a legal principle known as “vicarious liability” you are generally liable for the negligence of your employees during periods when they are employed by you or carrying out tasks specified by you. Responsibility for the actions of employees who mislead your customers, or whose work is sub-standard, rests with you as far as your customers are concerned. Even if you have some entitlement to recover your losses from an errant employee, that is unlikely to result in full recovery of the financial losses or repair the reputational damage suffered by your business.

Keep in mind that a product you sell today could remain in use for many years, multiplying the likelihood of inherent issues coming to light. Similarly, a service you provide today may have consequences well into the future.

To summarise the five points above:

- Trademark your product name

- Avoid misleading claims

- Consider all possible safety risks

- Plan for the long-term

- Choose and train your employees carefully

It’s a good idea to check with a lawyer before finalising your product planning. Most commercial lawyers can help you identify ‘hidden’ risks and put in place measures to address those risks.

Article Source: EzineArticles.com