It still amazes me the percentage return on investment that is possible with an Internet business. For myself, I have several online businesses which each required about a $1,000 on average to launch and get to a point where they were bringing in revenue. This includes everything from all the infrastructure, web design, keyword research, and marketing. These sites are now each bringing in between $ 80 to $+5,000 in net income a month. 

At the low end, a site that costs $1,000 and brings in $80 a month in passive income is close to a 100% ROI return annually.  Now, $80 a month is not a lot of money but it can be if you rinse and repeat. And the sites that are bringing in $5,000 profit a month create a whopping 6000% ROI return annually. 

Nothing can beat these returns especially when the time to get to these returns is usually a few months to a year.  And, they can keep improving as you optimize each online website. Now, I have had some unsuccessful sites, but the most I have ever risked on a website before finding out it will not be profitable enough for me is about $1000 a site.  This is not a bad stop loss.

Just to compare- I also invest in residential real estate where typically I need to put up (or borrow) capital of about $150,000 in order to make $15,0000-$30,000 in profit. This ROI for the deal is 20% and there is a lot more capital at stake if things do not work out.

Also, I have several clients that have put up hundreds of thousands of dollars to launch a business which will take several years to possibly pay off by creating a consistent revenue stream or a business that may be lucrative to a potential acquirer.  This is a lot of risk to take. 

Now, these companies are exciting to work on and for the smart entrepreneur, it is worth the capital, risk and toil, but from a straight risk and ROI perspective, it seems like the traditional Internet marketing based business model is more attractive to the average person thinking of starting a small business.

Currently, it is a perfect time for anyone to start an Internet business.  While we are in the midst of a struggling economy and the real estate market is horrible, the percent of transactions being transacted on the Internet is growing.  More people are going online and more companies are advertising online.  Once you add in the revenue potential and the minimal amount of capital, any person thinking of starting a business (part-time or otherwise) should strongly consider an Internet based business.

I recently created a video for The LLC Expert website- explaining why any business owner should always do business through an asset protection vehicle such as an LLC (limited liability company).  Many think through this analysis of whether to start an LLC the wrong way.

For example, it is improper to think that you do not need LLC protection just because you are the sole owner or because your business is just starting and not making money.  Liability protection has nothing to do with either of these factors.

I usually get people to understand how to think through this by using examples.

My video talks about a colleague in the internet marketing industry who recently started an internet consulting business. She only started her consulting business less than 3 months ago.  And, she is facing a PERSONAL lawsuit from her first client who only paid her $250 for consulting.  The shocking part is that the client is suing her for $10,000 in damages.

Her client spent over $10,000 in adwords advertising after the consultation and is now complaining to her about her advice.  They are want her to pay for the $10,000 that did not turn into an sales.

She made two mistakes.  One, she should have started an LLC for her business so this would be a business problem not a personal problem.  Second, she should have used a contract which limited her liability.

Watch the short video here for more details: LLC Protection Explained

The LLC Expert website has an in-depth learning center if you want to learn about the limited liability company and provides the fastest LLC formation service backed by a compliance guarantee.

The Internet is fundamentally based on the creation of a widespread and viral method of sharing information and most information posted on the Internet is FREE. Despite this, the content posted by anyone on the Internet is protected by copyright laws.

Republishing or otherwise copying any articles or other content without the permission of the owner constitutes copyright infringement.  In layman’s terms, it is unlawful so do not do it.

There are some limited exceptions such as the fair use doctrine which is a complicated area of the law.

Bottom line (and the practical advice here_ is that if you are thinking about copying content available on the Internet to benefit your site or your business, you should not do it unless there is permission granted already, you obtain that permission from the author or you are very comfortable it falls under a defense such as fair use.

Courts have even stated that copyright protection applies even if content is written in a PUBLIC DISCUSSION FORUM.

The initial reaction in times of economic hardship is to buckle down and hoard money.  So, many would not even consider the idea of making an investment of your time and money to start a business may  not even enter into the minds of people. . . unless they have been laid off and are forced to find ways to make money in a time when few companies are hiring.

I have two friends- one who is a lawyer and one who is a banker  who were recently laid off from their jobs.  I helped both of them to start a “side” business while they engage in their job seeking effort.  The interesting thing is in the 4 to 6 weeks of starting a business, the entrepreneurial bug has hit them both. When you feel you have no choice but to find your own way to make money, you would be surprised at how effective you can be as an entrepreneur. One friend is now focusing entirely on his new consulting business.

Corporate America is a tough place to depend on for feeding your family and as you can see corporations can turn on a dime. Entrepreneurship is difficult in its own way but the essence of owning your business is you take total responsibility for your financial security.  You may not get all the perks of executive life, but what you do get is the ability to work on something you really want to do and make money at the same time.

I encourage EVERYONE, to consider starting their own businesses. . . even if you are gainfully employed.  Business ownership can give you an extra stream of income, significant tax benefits (which can reduce the overall tax you pay on your W-2 income), and some financial flexibility.

For any business, online or off, you should always be looking at complimentary services and products in your industry.  Then, you should go and strike business deals with those companies to package your products or services together or to cross sell to your customers.

This is very common in the online business world where affiliate, reseller and joint venture arrangements cause companies to grow over 1000% with just one deal.  This is because everyone wins.  Usually there is a revenue share so both businesses make more money and the customer gets high quality products endorsed by businesses they trust.

The biggest mistake you can make when you do one of these deals is to not reduce the business joint venture to a legal document.  These documents do not have to be complex but they serve an important purpose.  First and foremost, they document the business terms- this is important to make sure everyone is on the same page.  Second, they provide legal protections for both sides which is equally important.

One thing that savvy businesses like to sneak in is an exclusivity clause.  These come in many forms but, in essence, their goal is to restrict you from doing similar deals with others.  Now, there is a price for everything and so if you are getting such a unique deal or the other side is making a significant investment in the deal, perhaps one might be worth it.

However, in most cases, it is a trap that will significantly limit the growth of your business and options you may have later.  Let joint ventures thrive on meeting business objectives and not based on legal ties or legal requirements.

Another question I get often is whether an online business owner can register a domain name with a big name in their space.  The goal here is that the search engines give some value from a search engine perspective to words in a domain name.

For example, if someone sells a product or service related to online auctioning, can they get a domain name like “www.ebay-alternative.com” to help them get traffic to their site?

No- this is only opening the door to trouble.  There now is a specific law called the Anticybersquatting Consumer Protection Act (ACPA) passed in 2000. The goal of this law is to stop the misappropriation and improper use of domain names.  While there is a lot of complexity in this set of laws and in some cases a use of a name may not be in violation of laws . . . from a business perspective, the bottom line is to not go down the path of using the brand or marks of other companies in your space to build your businesses. URLs are intellectual property and protected under the laws.

I always advise business owners to build their own brand and not try to take advantage of short cuts by using others makes and names in any way without their permission and involvement. Now, if you are doing a business development deal or a co-branding deal with another company, then you can negotiate the use and leverage of the other company’s brand.  This topic is the unilateral use- just do not do it.

One big issue with the Internet is that it is really easy for competitors and other businesses to publish and share content on the Internet. Because many Internet businesses are so easily reproducible, the biggest competitive advantage you can create is developing your BRAND in your market.

Think about the best brands on the Internet- Amazon, eBay, Google, Facebook for example.  People choose to visit sites and do business with these companies sometimes because of their brand reputation. While you may be operating a much smaller business, your brand is still going to be the most valuable asset to your technology or online business.

Now, as you develop your brand and establish your trade names and trademarks, there may be others out there who will seek to exploit them.  One method includes attempt to try to confuse the public into buying their products and services based on the customers thinking it is part of your company – this is through the unlawful use of your trade names or trademarks on your site.

If you ever find one of these culprits, what can you do?  There are two things you can do immediately.

1. First, find the owner of the site with the offending content and send them a cease and desist letter.  This is basically a letter notifying them of the infringement and asking them to remove your marks and any other infringing content from their website immediately.  You can send this directly or have your lawyer send out on law firm letterhead (there is nothing to get people to behave more than sending letter from a lawyer).

2. Second, there is a law called the Digital Millennium Copyright Act which provides an avenue for you to send a letter to the internet service provider or the website that is hosting the content where your trademark resides.  Now, this company can be a hosting provider like GoDaddy or Hostgator, but it also includes every major website that hosts content (e.g., Google, Yahoo, Facebook, YouTube, Craigslist).

They will have a policy on their sites for how you can notify them of an infringement in their hosted content.  Make sure you follow their policies exactly as written.  They all have staff dedicated to this because if they do not take down infringing content once they are put on notice of it, they could later be held liable.  The law requires that have a policy.

The law has specific requirements for what should be in the notice to the service provider and you should review the specific provision before preparing one, but generally it requires -

- a signature of the person who owns the trademark being infringed

- adequate description and location of the infringing material (URL link)

- information to help the provider contact you

- a statement that you in good faith believe that the use of the material being complained of is not authorized by the owner or the law

- certification of accuracy

Business owners seem to dread the obligation to provide their employees with reviews each year.  Even if one will not come with a raise (which is likely this year given the economic environment), it is a good idea to conduct these annually.

First, employees want to know how they are doing.  Your employees are your most valuable assets and so it is important to give them the feedback and to get their feedback so you can continue to build mutually rewarding relationships with your employees.  Many employee stay with their employers even if they can make more money elsewhere because they feel they are engaged and a part of a business. This impacts the bottom line because losing a productive employee costs a lot.

Second, performance reviews are a necessary part of keeping adequate employee records from an employment law perspective.  This is especially key if you have performance issues with some employees.  Here are some tips to help with the overall process of having a review:

1. Do not compare an employee with others within your business.

2. Be very specific when discussing both the good and the bad.

3. Do not make light of issues and problems for fear of confrontation.

4. Do not let personal bias affect an evaulation.

5.Ask the employee for his or her feedback on what is working and what is not.

6. Record a summary of the review and keep employee jacket (term for files) for every employee.

Most importantly, make sure you actually do these reviews and provide your employees with the feedback they deserve.

I love business development deals because these are the one plus one equals three business arrangements that can make a business grow extremely fast.  A business development deal is generally one when you partner with another business to create a business channel that benefits the businesses of both sides.

Now, these deals can be a lot more complicated then a straight sale deal where one side is buying something from the other so it is very important that you have a competent business lawyer helping you to structure and document the final deal.

But, there are two factors that you should focus on at a business level from the beginning to best end up with the optimal deal for you.  Here they are:

1. Align the Incentives. Create a business structure where the business incentives are aligned.  In these types of deals, the more you can get away from diametrically opposed positions, the more likely the arrangement will be successful.  So, you should create the business obligations and the economic components in such a way that both sides are better off when the one side performs as planned for.

All too often, a business development deal starts off as a win-win but then when it gets into negotiations, things can get messed up as aggressive negotiators come in.  Keep in mind that many times it is not the lawyers that cause this but business people that start to get a little too greedy or have the wrong thinking that they offer more because they bring more to the table. This may be the case, but if the end result makes it a suboptimal deal for the other side, everyone loses.

Bottom line- think creatively and create a business arrangement where both sides are incentivized to act in a way that will create value for both sides.  A related, second tip that I have seen make a big difference when it comes to business development deals is to assign an actual person on each side of the partnership to manage the arrangement and give those persons incentives to build the relationship and create ROI. When you have specific people with specific obligations for its management and success, it increases the chances of a more profitable deal.

2.  Always Have Break Up Planning.  When you are working on a business development deal, always be asking yourself internally what happens if the arrangement does not work out and what can happen that will cause it not to work out.  This is especially important if there EXCLUSIVITY is involved which means that the deal will prevent your business from doing any kind of other business deal (no matter how big or small).  Here is where a lawyer can help but it is reasonable for each side to have some downside protection planning in the legal agreements.

You should always know the what is my worse case scenario and plan for it as best as you can in the legal documents.  This is usually done with proper mediation, arbitration and termination provisions.  Other areas include planning for who owns what after a break up and what rights each side will continue to have.

I had a client once who, prior to retaining a lawyer, signed a horrible deal with a so called business partner.  The contract was so one sided in favor of the other party. It allowed the other side to limit what my client could sell to competing businesses and yet contained no obligation on the other side’s part.  Even worse, it gave the other party a right to renew the agreement over a very long period.  This in effect, tied up my client to ever expanding their business with other parties.

You should always have a legal out no matter what.  You do not have to exercise it and will not if both parties are mutually benefiting but without proper downside planning, you could be significantly affecting the future of your business.

After working with small businesses for over 15 years, I have to answer this question with a NO.

I always try to persuade any client who I work with not to ever have a 50-50 ownership business.  This is always a tough conversation to have because in most instances, the new business venture sounds exciting and two people are very committed and ready to move forward with a jointly owned venture and they have dreams of having this super positive mutually rewarding business relationship and making all this money.

The last thing I ever want to do is to get in the way of building a successful business.  But this advice I give is meant to protect the business that these two people will be working so hard to create.  Why am I so against 50-50 businesses?

Well, at the beginning of a business, no one is thinking or even wants to think about the things that can go wrong or that will cause challenges in business building. But, I can state with 100% that nothing ever goes according to plan and that with any successful business, there will be challenges, difficult choices, and disagreements.  Do not worry about this- it is a necessary part of building a great and profitable business. Instead, understand this and plan for it.

Based on the statistics, there is an over 88% chance that these two business owners will at some point face some significant conflicts and stand stills when it comes to a major business decision or transaction.  When a business is set up as a true 50-50 structure, both the business and the legal dynamics create an impasse environment.  There is nothing to help.  Each person will make himself or herself go crazy.  So, what happens in the typical situation is that the business is the victim to this.  The business dies as the owners fight over control and what should be done.  With the owners focused on the dispute, no one is minding the store, taking care of customers and sustaining the business. All the assets both business and personal go to the lawyers they hire.  It is really a sad outcome that I and many lawyers see all the time.

I am a business lawyer but I have business litigation and dispute lawyers who make a very good living just mediating or litigating business divorces among 50-50 partners. As a planning lawyer, the best way to deal with this is to not have a 50-50 business structure to begin with.  Between two owners, one should have the ultimate decision making power in the event of a dispute.

There are specific ways to get each one to receive the same economic deal as a 50-50 but when it comes to business decision making which is the necessary process to build a business, there should be one who trumps at the end of the day.  Now. there are some advanced planning methods used by business lawyers to allocate the trump decision among the two owners if it makes sense.  So it does not have to be 100% one way.  The point here is that the business should come first as this is the best way to preserve the value that the two owners will be working so hard to create.

If two owners insist on a 50-50 structure, then the next best answer is to have some prenuptial business planning in a shareholders agreement.  The most common technique is what is known as a buy sell arrangement. This is an automatic process which kicks in if there is a stand still that cannot be resolved and it results in one owner buying the other one out (usually after an auction process for price).