In Part VI, our final blog in the series based on attending David Durick of Paychex’s workshop at the Small Business Expo 2016, we analyze step nine and ten. The necessary contracts are identified with Traklight’s free Business Risk Assessment, which you can access here. To identify, track, and protect valuable IP, you can upgrade to our Full ID your IP product for a special price of $99 with this code: BMBPC16. The Risk Chart and IP Diagnostic link you to Paychex partners who can help both address your issues and protect your IP.
Step 9: Protect your Intellectual Property (IP)
You cannot sell what you do not own, whether that is your product or service or your company. Therefore, regardless of your retirement or exit plans, you must identify, track, and protect your IP to operate. Being sued or embroiled in any type of conflict will distract you from running your business.
Your goal is to inventory and lock down ownership before you raise money or sell. The best way to do that is to keep track of your IP. If you just try to use Excel, the different versions can get away from you. And paying a lawyer to track when you are just starting out is likely beyond your budget. You can create a simple inventory that is always online in your Traklight Dashboard.
Every business has IP because you have at least some type of company name and likely some product or service plus a website presence. IP is more than 80% of a company’s value and with early stage often over 90%. Startups often wait too long to protect the IP with only about 20% seeking protection in the first year.
You cannot protect your IP until you identify it. And sometimes, if you do not protect it from the start, it’s too late. The Traklight checklist allows you to identify IP without knowing anything about it.
Before we discuss all IP, a special note about copyright. When you are creating original work, you automatically have copyright and can put the symbol © and the year on your creation. Best example is a website in the footer. Traklight’s website says ©2015 Traklight, Inc. You register copyright to secure rights to pursue others who may misuse your creations. In other words, without registration, you cannot litigate.
You cannot use other people’s creations without their permission, even if there is no © symbol. Also, your domain name is not the same as a trademark registration. We do suggest seeking professional advice on all IP matters.
The checklist approach is based on three categories of potential IP: Ideas; Brand; and Secrets.
You will note that secrets appear twice. Trade secrets are the unsung heroes of IP because almost every business has them. And trade secrets do not stop at the valuable recipes; they are supplier lists and more. Secrets are not registered but rather protected by policies, processes, and contracts.
Don’t try to protect your own IP other than perhaps registering very simple copyright. As we discussed in Part II, the Strategy Report gives business advice to minimize risk plus save money gathering information on potential IP to bring to the professionals.
Your end goal is to ensure ownership for all your valuable IP, which is achieved not just by filing or IP registration but also by having firm contracts in place. Never do business on a handshake; that’s just for the movies!
Step 10: Minimize Risk with Contracts
This may be the final step in the workshop but it should definitely not be done last. Contracts secure your assets, including ownership of your IP and agreements with co-founders from day one are critical.
Like marital breakdowns, co-founder disputes are almost as common as divorce. It’s too late for agreements if you are already splitting up and there is no contract to cover how you unravel your relationship.
Also, contracts need to be used with suppliers, customers, employees, and contractors. Some businesses believe that it’s a choice whether you bring on new people as employees or contractors. It’s a complicated test and you should consult with a professional to determine the proper way to hire.
Once you have done your entire IP your IP checklist, use the chart and dashboard as a roadmap but do not forget to download and review your Strategy Report. Also, your IP inventory report is a simple Excel spreadsheet that helps you manage and track your registrations. This report is useful if investors ask for a listing of your IP.
Whether you are building a business to attract investors, grow rapidly and sell or a lifestyle company to pass on to your family, having the right protection for your assets through contracts and securing your IP from day one are critical steps.
Get started on your business today using our free Business Risk Assessment and upgrade to identify and protect your IP using the Paychex code BMBPC16. Don’t risk it all!
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