Shark Tank Jump Start Your Business: How to Launch and Grow a Business from Concept to Cash (9 page)
Authors: Michael Parrish DuDell
Copyright:
If a trademark protects a brand, a copyright protects the content that brand creates or,
according to the U.S. government, “works of authorship, such as writings, music, and works of art that have been tangibly expressed.”
You know the warning that flashes on the screen before you
watch a movie? That’s enforcing a copyright. What most people don’t know is that you needn’t register a copyright for it to exist. A copyright is active from the very moment the content is created. You must register your copyright only if you want to go on record as the owner or you feel as though you may need to protect your copyright in a court of law. For most people, registering a copyright isn’t necessary.
| “Entrepreneurs with unique products are wise to try to protect themselves with a good patent. Often when a company is successful, a competitor will try to knock off the idea or replicate the business model. As an entrepreneur, you put so much time and energy into getting a product to market. It feels great to be able to protect it.” |
While the majority of entrepreneurs will spend little time dealing with any of this, intellectual property should be understood and taken seriously. Infringing on another party’s intellectual property, even if accidental, can result in expensive punishment for you and your company—something many small business owners cannot afford to encounter. It’s possible to navigate intellectual property issues on your own, but hiring a professional is usually the better choice.
While entrepreneurs spend too much time protecting their ideas, they don’t spend enough time protecting their business with the right insurance.
A 2010 survey by Travelers Insurance found that 94 percent of small business owners feel confident
they are protected against “insurable risks that can result in significant financial losses or even cause you to go out of business altogether.” But at the same time, only a little over half—56 percent—of that 94 percent had disaster recovery insurance.
Of the many expenditures an entrepreneur faces, insurance seems to be one of the most resented. And yet purchasing the right insurance can end up saving your business thousands or even millions of dollars. From data breach to workers’ compensation, there are a plethora of different insurance options, but here are four of the most common types of business insurance that every entrepreneur should understand:
General liability insurance:
If you only purchase one type of insurance, general liability is probably the most important one to get. This type of policy covers accidents, injuries, and, usually, claims of negligence. If somebody is injured on your property, for instance, this is the insurance you’ll need. It’s important to note that general liability insurance most often does not cover claims like wrongful termination, harassment, and discrimination.
Professional liability insurance:
Also known as “errors and omissions,” this insurance covers malpractice, errors, and negligence in the rendering of services to your customers. Some professionals, like physicians, are legally required to carry this type of insurance. If your business primarily provides services, as opposed to products, professional liability insurance is important to have.
Product liability insurance:
If your business manufactures, distributes, or retails a product, this insurance is something
you may wish to consider. It protects the company against any financial loss accrued from a defective product that causes injury or bodily harm.
Property insurance:
Property insurance covers more than just damage to the physical property; it covers everything related to the loss and damage of that property, including business interruption and loss of income. There are two types of property insurance policies: peril-specific and all-risk policies. Unless your business is in a particularly high-risk area for certain types of natural disasters, the all-risk policy is most likely all you need. If you run your business from home, keep in mind that most home owner policies do not cover home-based business losses. For that, you’ll want to explore specific home-based business insurance policies.
Now the big question: How much insurance do you actually need? Unfortunately, there isn’t a one-size-fits-all answer. If you own a construction company, for instance, you probably need more liability insurance than a photographer. If you’ve purchased a new office, you’ll want to take out more property insurance than somebody working from a modest, temporary space. While it’s smart to be prepared, be wary of getting too much insurance. The last thing you want is to spend precious money on services that you don’t actually require.
Insurance can be complicated, so you may wish to consult an insurance broker to help determine exactly what it is you need. He might even be aware of certain tailored packages that already exist for your specific industry. Whether you seek professional help or move forward on your own, be sure that your business has enough of the coverage it needs to withstand any foreseeable conflict—and perhaps some of the less foreseeable ones as well. Even the smallest of accidents or
oversights can potentially wipe out your business if you’re not sufficiently protected.
TANK
TIP
“Don’t take shortcuts when it comes to the logistical and operation stuff. So many people try to do everything themselves to save money. But in the long run you’ll only end up losing money that way.”
—TRAVIS PERRY, FOUNDER OF CHORDBUDDY
If you decide to patent your idea or product, there are three different types of patents you can pursue, each with its own specifications:
Utility patent: Making up more than 90 percent of patents, the utility patent is issued for the invention of “a new and useful process, machine, manufacture, or composition of matter, or a new and useful improvement thereof,” according to the U.S. Patent and Trademark Office (PTO). This patent protects a product for up to twenty years and carries with it regular maintenance fees.
Design patent: Issued for “a new, original, and ornamental design for an article of manufacture,” the design patent will protect your product or idea for fourteen years and carries no applicable maintenance fees.
Plant patent: The least popular of the three, the plant patent protects “a new and distinct, invented or discovered asexually reproduced plant including cultivated sports, mutants, hybrids, and newly found seedlings, other than a tuber propagated plant or plant found in an uncultivated state.” A plant patent is valid for twenty years and carries no applicable maintenance fees.
BIG IDEA: A magnetic, power-free iPad amplifier that improves sound quality and clarity.
INVESTOR: Daymond John
Like many entrepreneurs, Rabbi Moshe Weiss has always been remarkably curious. Working in his parents’ bakery as a child, he was exposed to business at an early age. As he grew, so too did his interests. Eventually he found himself working in the education sector. But when the school he helped found was forced to close its doors, Moshe felt deflated and uncertain of the next move.
To help lift his spirits, a donor to the school, now one of Moshe’s good friends, presented him with a gift: an iPad 2.
“It was very thoughtful,” Moshe recalls. “After only using it for a few days, I realized the quality of the speakers weren’t very good, so I got a Band-Aid box and propped it up to bend the sound.”
The contraption worked, so Moshe began looking online for a product that would do the same thing. But, shockingly, he couldn’t find any such product. Was it possible? Nobody had thought to create such a thing? Moshe paused for a moment in silence. “This is it,” he thought. “This is my salvation.” And right then and there the SoundBender journey began.
To get the product to market, Moshe borrowed seed money from a friend. Thanks to a few family connections, he was also able to hire a patent attorney and gain access to other important resources at little to no cost. “It was tough,” he says. “I really was starting from scratch.”
Once the product was designed, Moshe launched a Kickstarter campaign to raise additional financing. It proved to be a success. From the $10,000 the campaign brought in, Moshe was able to make his molds and begin selling his product.
Almost one year later, Moshe stood backstage, preparing to present his product in the tank. Not only was he committed to proving himself to the Sharks, he knew he’d have to prove himself to the world.
“The way I looked at it, I wasn’t just pitching to the Sharks,” says Moshe. “I was pitching to my consumer and to the entire business community. I wanted a deal, of course, but I knew there was more to it than that.”
Clearly this was a solid approach, because Moshe scored a deal with Daymond John.
“Not only did being on
Shark Tank
boost my sales,” says Moshe, “it took about six years off the business-building process. Overnight I gained the credibility I needed to take my business to the next level.”
In many ways, Moshe’s business has been a community effort. Without the help of friends and family, Kickstarter supporters,
Shark Tank
fans, and of course Daymond John, the idea for SoundBender might never have advanced past the Band-Aid box.
“So many entrepreneurs make the mistake of thinking they know everything about everything. But my approach has always been to surround myself with people whom I trust and
who have my best interests at heart. That’s how you become successful.”
To find out more about SoundBender, visit The SoundBender.com or follow them on Twitter @SoundBenderTM
.
REAL-WORLD WISDOM: “Work with people who complement your strengths. I have ADHD. I’m like a kite ready to fly up into the sky. And any kite knows that to be successful they need a good anchor. So I choose to only work with very grounded people who can help me keep the business anchored.”
