Time period 5/1/2011 - 10/31/2012

169, 013 units sold

I should also point out that we maintained an almost spotless seller record on Amazon - 97% or better feedback and rated Excellent by them, which is very tough to achieve.

Still awake?  Here comes the good part.

So, I woke up on a Monday in late October of 2012 with an email from Amazon that informed me that Amazon was permanently closing my account because “they suspected we had sold a counterfeit item.”  The action was permanent. The end.  Have a nice life.

Wha???

Amazon allows you to appeal the decision via email one time, and so I did.  I pointed out all the logical arguments:  a) hey Amazon, what item are you talking about? Can we see it so I can agree or disagree?  b) in the last 17 months we have sold 169,013 items and have NEVER had a complaint for counterfeit, which is because we literally examine each and every item we receive before we send it back out for sale and since we have been inspecting dvd’s for over 10 years, we are experts at detecting counterfeit.  c) did I mention we are rated Excellent by Amazon with a 97% feedback rating?

Within 48 hours, Amazon wrote back to say that my appeal has been denied.  The end.  Have a nice life.  I wrote all of my Amazon contacts.  No response.

So, just like that, my second  business had been wiped out.

Hold the phone - there’s a lot more. Go get some more coffee

Well, I can’t really have a nice life just yet.  Know why?  Because I have 55,000 items stored at Amazon’s FBA warehouses, and now they are all just sitting there incurring storage fees.  Amazon will happily either return my items to me or destroy them for me.  For .50 a unit + shipping or for .15 a unit, respectively.

We’re entrepreneurs - let’s do math!

55,000 x .50 = $27,500 + shipping to return my items

55,000 x .15 = $8,250 to destroy all of my items

Amount of money I have after the spectacular failure of Inflatable Madness a few years earlier =  $0.00.

I try to explain my dilemma to Amazon via their email case system, and it goes something like this (cue the Benny Hill music):

Me: Amazon has permanently closed my account. I have a large volume of items in the FBA program. I cannot afford either the .15 disposal or the .50 return fee. I would like to have my items returned to me. How can Amazon help me accomplish this?

Amazon: Greetings,

I apologize for the current situation you are facing.

Unfortunately, there is no other way other than place a removal order or disposal order which will be charged of the amount you have already mentioned in your email.

We will not be able to exempt the removal or disposal fees in this case.

Please write back to us with your confirmation so we can go ahead with further processes for placing a removal or disposal order for your existing items in our fulfillment center

We look forward to hearing from you soon,

Me: I’m not sure you understood my original email. Amazon has turned off my account and cut off all of my income. I cannot afford either the .15 disposal fee or the .50 return fee. I feel that Amazon should waive the return fee and give me back my inventory.

Amazon: Greetings,

I deeply apologize and I completely understand your situation.

Please know that we will not be able to waive out the removal or the disposal fees as Sellers are not exempted of this fee. Therefore I kindly request you to create a removal order for the units present in the Fulfillment Center.

Sooo,  there’s that.

Here’s where we start to go down the rabbit hole.

A few weeks later, I receive a phone call from another seller of dvd’s and music.  Not just another seller - really they are the second largest 3rd party FBA seller of media on Amazon. They are huge. 10 times my size or more. He tells me that they have been kicked off of Amazon as well for “potentially selling a counterfeit item”.  They had to spend hundreds of thousands of dollars to get their product back out of Amazon’s FBA program and their overall business has taken a serious hit.

He then very casually asks me how I was handling the lawsuit against me.

Exsqueeze me? Baking powder?

I tell him I have no clue what he’s talking about, and he points me to a legal website that states that I have been sued by a major DVD manufacturer/distributor for selling counterfeit.

Um, huhhhh?

This was at the end of October.  I did not receive a single piece of paper about the case until mid-December.  Sure enough, I was being sued for selling a counterfeit item on Amazon.  I call up some attorneys and am told that my legal fees would be $25k or more to defend myself.  I faint. Then I wake up and faint again.  If I don’t have the money to destroy my items, I sure don’t have the money to defend myself.

I write to the attorney for the rights holder and explain that they’ve got the wrong guy and tell them all the reasons and statistics and track record of my company, and ask them to drop the case.

They don’t, and the case progresses through the courts while I helplessly watch.

The attorneys wait until the case passes a point of no return to actually send me the evidence they have against me.  It’s a packet with photocopies of the Amazon receipt showing they bought the item from my user id on Amazon, the package they received, and the item in question, which turned out to be a brand new and sealed boxset from the TV show The Mentalist (or as my mother-in-law calls it, The Medalist).

As you might expect, I cannot tell anything from these copies. The copies are in black and white and I can not find anything wrong with the boxset.

I again write the attorney for the rights holder and tell him that I don’t see any evidence of counterfeit, that it was a new sealed item, and that we obviously can’t open new items and inspect them because they wouldn’t be new anymore.  They ignore me.

About a week later I had a dream.  I was on a brand new cruise ship with a brand new crew and I was staying in a brand new cabin. The weird part was that I couldn’t find my cabin because they were all brand new and they all looked the same.

Within 2 minutes of waking up, I literally said “holy s**t!” out loud.

The item was new.

Which means it probably wasn’t mine.

To explain,  Amazon.com FBA has a program called “co-mingling”.  What this means is that if you are in the program, and I am, if you send a new sealed item to FBA, you do not need to place an inventory sticker on it like to do for every other item you send to Amazon.  You don’t have to sticker it at all.  What Amazon does with your item is co-mingle it with all of the sellers of that item who are also in the program and Amazon’s own inventory and when they sell that item they pull a unit at random from their co-mingled stock.

In other words, the physical item I sent to Amazon may or may not have been the physical item the customer received! The item wasn’t mine.

This time I got the attorney on the phone.  I explained the situation to her, and she said “Mr Harmon, in California copyright law, we don’t have to prove that the item was yours - just that we bought the item from your user id on Amazon”.

So I called more attorneys, who were all willing to help me for $25,000. They would not verify what the rights holder’s attorney had told me, but they’d be happy to look it up for $25,000.

Ironically and suspiciously, a few days later my phone rang and it was an attorney from Amazon.  Finally! I could explain this to them and they would reopen my account and I could get back to selling again…

“I’m just calling to inform you that there were no other sellers of that item that were in the co-mingling program,” the attorney said. Oh crap - Amazon and the manufacturer/distributor were in cahoots.

“Ok. But Amazon had stock of that item, correct?” I replied.

“I’m just calling to inform you that there were no other sellers of that item that were in the co-mingling program,” the attorney said.

Mmmmmmmk.

Gang, I would love to be able to tell you that this story has a happy ending, but the fact is that I lost the court case.  I’m the proud owner of a giant fine that will bankrupt me.

The title of this article is “Third Party Sellers Need To Rethink The Amazon.com  FBA Program,” so let’s think through why I have said that:

1.  I was an Excellent rated seller on Amazon with 97% positive feedback.  We had never had a complaint for counterfeit, so the ratio stands at 169,013 to 1, or .00000592% . Amazon holds sellers to the highest standards in all of the 3rd party selling industry - that fact alone should have warranted some defense against this claim.  Yet Amazon just stepped aside and let a giant corporation obliterate me. I should also point out that the same company has sued over 80 other sellers in the same manner in the past 8 months.

2.  Once your product is at FBA, they’ve got you.  Amazon can raise fees on you, which they have done, and they can even implement fees that didn’t even exist when you sent them the items. A few years ago, Amazon implemented a new fee called a “long term storage fee” where they clobbered any seller with storage fees for items in Amazon’s warehouse for over a year.  That one cost me $50,000 in product I was forced to destroy.  As I’ve already explained, Amazon will charge you a fee to return your product or destroy it.

3.  For the love of all that’s holy, NEVER agree to use Amazon’s co-mingling program.  If you do, my situation proves that you are liable for other sellers products, not Amazon.

To prove my co-mingling point even further, I recently ordered Amazon to return some items to me so I can resell them and recover some fees.  When we sent out all of our items to the FBA program, they all went to 2 different Amazon warehouses.  Now that I’m receiving them back, guess what?  So far, the new sealed product has arrived back from 9 different warehouses.  Yep, they’re sending back someone else’s new sealed items to me.

This situation literally breaks my heart.  I was a HUGE proponent of Amazon’s FBA program for a long time.  I counseled other sellers to use it, I wrote about it, and I loved using it.  There are thousands of other FBA sellers out there, and I used to think about how smart we all were to outsource major components of our businesses to Amazon.

Now? Yeahhhh not so much.

Best,

Kevin Harmon

kevin@redshortsmedia.com

Kevin on Twitter

Kevin on Facebook:

Kevin on Linkedin:

I love to blog and work with social media.  Let me know if I can help you!

If you’re like me, you’ve probably said this statement many times: “If I had only known then what I know now.” I understand that mistakes are part of the process, but do I have to make so many of them!?! Experience has made me a fast learner and now, more than ever, I pay attention to those who have gone ahead of me so I can learn from their mistakes and hopefully not make so many on my own. Maybe you do too.

To gain some more insight, I asked business owners who have been in business five years or more the same question, “If you would have known then what you know now, what would you have done differently and why?” Their answers were not only insightful, but inspiring and I think you will really appreciate what they had to say.

So here you go; 29 (plus one) insights from business owners like us on what they would have done differently had they known.

We would love to hear your answers too, please leave a comment and let us know, “What would you have done differently in your business if you would have known then what you know now.”

Enjoy!

1. Hire Slowly, Fire Quickly

Oh man, I wish I would have remembered this one every day when I woke up. There is little of greater importance than having the right people on your team(s) and when you find out an apple has gone bad or you have found a worm in a seemingly perfect apple, get rid of it ASAP! The old adage is often true, ’some dogs can’t hunt’.

Thanks to Ben Sayers, VoIP Supply, LLC.,VoIP phone systems, in business 8 years

2. Be More Open to ChangeTechnology and trends are constantly evolving: one day you are set in your Facebook ways and the next day Pinterest is the new phenomenon. Social media has changed the way we do business and how startups utilize it is integral to your success. However, if someone told me this during social media’s infancy, I would have called them crazy. I let all my years in business bias my first impression of social media and thought it was simply a fad. I couldn’t have been more wrong! Social media has changed the way we do business and has set the bar for the way we measure success. If companies are not willing to adapt, they will never become an industry leader or experience great successes.

Thanks to Jim Joyal,, SHIFT Communications, PR and social media agency, in business 9 years

3. Be the Boss Not the Buddy

Don’t be friends with employees. When you try to be too nice it makes it easy for others to take advantage of you, and that’s been true of about 80 percent of everyone I hired in the past. There was a time when I would give a job to almost anyone who asked, regardless if they were qualified or not, because back then I had the capital and I did not want to be the person who turned them down. Most of the money I lost when I started out was due to being overly tolerant of inefficient employees. It’s fine to be friendly with your staff, but you have to set boundaries and be willing to be a firm boss — whether you have three or 300 people working for you.

Thanks to Cathy Ward, BridesVillage.com, wedding accessories e-commerce retailer, 11 years in business

4. Lock in Your Location

Had I known then what I know now, I would have done everything possible to purchase my own business property. Last year, the rent for my original office, located in the Prospect Heights section of Brooklyn doubled, necessitating my having to move during my income tax preparation season.  If I had to rent a property, the lease would have included a “lease to own” clause and have a termination date during my slow season.

Thanks to Eustace L. Greaves Jr., Greaves Financial Services, Insurance and Income Tax Preparation Services, 17 years in business

5.  Start with Sustainably in Mind

In hind sight I would have focused much more deeply on a sustainable way to generate deal flow and new leads. No matter how large you think your network is (mine is large) it is not large enough and although power networking/word of mouth is the best source of leads of all the advisor/coach /consultant/soloprenuers I know almost none are reaching their personal income goals. What I am doing differently is focusing on the internet. I have just launched an e-commerce site and hope to launch a content site in the next 90 days. Historically my advisory services were delivered on site at companies located regional. I will continue with my advisory work with about 1/3 of my time, but focus on national and to a lesser extent international clientele via phone or Skype.

Thanks to Ajax Greene, On Belay Business Advisors Inc., business advising, 7 years in business

6. Know the Value of Vision

I would have placed an earlier emphasis to define the vision, mission and values of our company. It is important for the value of our employees to be aligned with my vision for our Company.

Thanks to Jason Maxwell, MassPay Payroll Services, payroll services company, in business for 8 years

7. Eliminate Distractions

Having owned several companies, I would have eliminated my distractions sooner than I did, e.g. real estate investments (rentals), buying and selling a laundromat, renovating homes, etc. While all the ventures were profitable they took away from focusing on building a brand that ultimately would have had more value than the combined profits of each transaction not related to directly building that brand.

Thanks to Joseph Carvelli, Retail Ingenuity, retail inventory and sales forecasting, in business for 12 years

8. Set Aside Significant Saving

I assumed if I built a good product, they would come! I had no idea how costly being in business would be, the amount of money I needed to succeed, or the toll the financial strain would take.

I am blessed that I had the tenacity and the strength to succeed despite overwhelming odds. If I could go back to the beginning, I would make sure I had significant savings set aside, or capital from another source. I cannot overstate the importance of being properly funded!

Thanks to Regina McRae, Grandma’s Secrets, dessert delivery, in business for 18 years

9. Put More Emphasis on Processes

If I had known then what I did now I would have put a lot more time into creating processes.  I find that with the majority of businesses these fundamentals often get overlooked and sometimes ignored completely. To me this is utter madness! A company can succeed or fail just by their processes. We find that we avoid 99% of mistakes because we process them out. This not only avoids unnecessary errors and client issues, but actually makes the company as a whole more efficient.

Thanks to Ben Norman, Koozai Ltd., UK based digital marketing agency , in business for 6 years

10. Delegate, Delegate, Delegate

I would have delegated more and not tried to do everything myself. Although it does take time to build relationships with your staff, I waited too long to delegate certain responsibilities that could have been done by someone else. Giving responsibilities does much to validate a staff member’s gifts and also demonstrates a deeper level of trust in the employer / employee relationship. Letting go of certain tasks has been difficult for me but I have come to realize that the more responsibilities I entrust to others in their areas of expertise, the lighter I feel, the more confident a staff member becomes and greater things are achieved by their efforts than could have been done otherwise.

Thanks to Stephanie Ciccarelli, Voices.com, online voiceover talent marketplace, in business for 8 years

11. Let Go and Let it Grow

For many years I had to know everything and do everything. I have discovered that other people and organizations can do things better and at a lower cost than doing it myself.  Letting go has enabled my business to grow and prosper and made my life much easier.

Thanks to Bob Shirilla, Keepsakes Etc. and Simply Bags in business for 30 years

12. Avoid Delaying Difficult Decisions

My biggest lesson over the years was learning that sometimes decisions had to be made for the good of the company, which sometimes meant disciplining or dismissing employees. In particular, when the economy started going into recession, I had to fire one of my closest friends in order to keep the company going. I should have done it sooner. As a result of my delay, it took a while to regain the company’s financial stability. Making difficult decisions is part of owning a business. Owners have to be willing to do it.

Thanks to Susan Southerland, Just Marry, Just Right DM and The Susan Southerland Secret, event planning, destination management, and small business consulting, in business for 20 years

13. Start with a Solid Team

I would have started with a solid business plan, hired an account, and started with a solid team around me.  There are not many businesses that are successful with one person wearing so many hats. Do what you do best and allow others to contribute what they do best to help your business grow.

Thanks to Amore Leighton Black, Apples & Oranges Public Relations, public relations and marketing, in business 7 years

14. Charge What I am Worth

I would have charged more! I was so excited to be working for myself doing something I loved. I’ve never been a person who chased profits -that’s not why I do what I do. But I didn’t do my homework and when I started, I charged pretty close to what I was making hourly at the jobs I’d left behind. That was all fine dandy except when working for myself, that wasn’t enough to cover things like taxes, health insurance, and so on. And also, I was definitely undervaluing my services. I was booked ALL the time, yet I could never seem to get ahead. Even though my clients all loved me and thanked me for my work, I doubted my value, and that was definitely reflected in my pricing.

Thanks to Alaia Williams, One Organized Business, professional organizing and small business systems consulting, in business 5 years

15. Focus on Building Relationships

We spent a fortune of money on advertising when we started out (with unimpressive results). We then changed our focus on relationship building with existing clients and organic search maximization vs. paid ads.  Now we see incredible returns in the form of referrals, and new business at a cost that is a fraction of what we used to spend. We needed to learn the hard way but if I knew then…

Thanks to Ben Schusterman, ElJet Aviation Services - private jet charter service, in business for 5 years

16. Start with More Money, Less Friends

I would start with about three-times as much cash as I thought I needed. I’d also be cautious around hiring friends/family.

Thanks to Heidi Ganahl, Camp Bow Wow, doggy day & overnight care, in business for 12 years

17. Use a Better Business Model

If we knew then what we know now, we would have started with the business model that we changed to about two years ago. Before the recession hit, we charged $39.95 for an annual membership with no free trial, and no automatic rebilling at the end of their membership term. During the recession, the rate in which we generated new members waned and we reached a growth plateau. To combat our stagnation we decided to change our revenue model to a free trial and a monthly rebilling combination. We implemented a three-day free trial and then a recurring $18.95 monthly fee after the three days expired. We are doing very well as a company now, but in retrospect, we should have thought about rebilling from the get go.

Thanks to Ian Aronovich, GovernmentAuctions.org, providing information about government auctions of seized and surplus merchandise

18. Hire Employees Sooner

One thing I would do differently if I were starting my training business today would be to make my first hire sooner. Operating on shoestring (and a broken one at that), I originally had to do everything myself. The thrift that made it possible for me to survive and then thrive in the beginning quickly became a hindrance when I delayed hiring people who could do any number of specific tasks easier, cheaper and far better than I could.

Thanks to Barry Maher, Barry Maher & Associates, motivational speaker, leadership trainer

19. Dream Bigger

I would have dreamed bigger from the start. In the beginning, my focus was on serving clients in my own Puget Sound backyard, even though successful people who were familiar with my publicity expertise and storytelling gifts were telling me to think nationally or globally. If I had it to do over again, I would have put more emphasis on national and global reach of my message right from the start.  Lead with juicier, higher value, and leveraged offerings first. When I was just starting out, I put a lot of emphasis on creating the absolute best $10 product about do-it-yourself publicity that I could create. Yes, the Media-Savvy-to-Go Publicity Tips Booklets have sold by the thousands since debuting in August of 2006. However, it is so much easier to make a bigger impact for more people and my own balance sheet by leading with a juicer, higher value offering. Today, the Broadcast Your Brilliance Webinar Series and Bye-Bye Boring Bio PLUS! Programs deliver great value for many around the nation and the world at price points that make it a whole lot easier to make a good living. Whether you create an entry level product or something much more, you still have to create all the systems to support those offerings. By leading with a deeper offering, the rewards are greater for all.

Thanks to Nancy Juetten, Authentic Visibility, PR tools and training, in business 11 years

20. Approach Additional Services More Cautiously

I’ve been in business as a web designer for 18 years. The main thing I would have done differently knowing then what I’ve learned along the way is I would approach any add-on services very cautiously. I used to briefly check out add-on services such as hosting, domain name management, and others, and then I would jump in whole-heartedly. Most of the time, it worked out fine for me. However, the occasional missteps cost me dearly.  As I learned more about running a business, I also learned through hard knocks that it is much better to approach additional services methodically and cautiously. I don’t put a lot of funding and energy into them until I’m sure it is the right thing to offer. I’ve learned it is easier to resist the urge to jump at opportunities than it is to extract myself from the occasional quagmire!

Thanks to Jim Smith, Blarneystone, LLC web design, in business for 18 years

21. Give More Away Sooner and Speak More

Network a lot more in person (the Internet was in its commercial infancy) and hunt for in-person speaking engagements, even if they are not paid.  Good writing alone is not enough to convince clients to hire you. They want to hear you speak on your topic of expertise, and when you help business owners with their problems or concerns, they are more likely to hire you and/or to recommend you to others who hire you. I once helped a business owner write something for his church at no charge, and with another small assignment that paid very little. That led to a long-term writing assignment that exceeded $40,000 in fees. Sow seeds of good will and interest through your networking, speaking, and help. Continue to do this even after your business is successful because it leads to more success.

Thanks to Candace Talmadge, Talmadge Writing Services, writing services, in business for 29 years

22. Been More Focused on This Business

I wouldn’t have started it out of my apt.  I would have “cleared the decks better” by parsing other interests that I was juggling at the same time. I would have learned more about guarding a business (legal, insurance, LLC/Scorp/Inc).  I would not have spent so much money on a business plan.

Thanks to Todd Greene, HeadBlade men’s grooming, in business 12 years

23. Don’t Do It All Yourself

I would have gotten an assistant, accountant and web coder much earlier. I did it all myself for 8 years in my business and have only been hiring assistance for the last two years. I knew it would free up my time to hire people - and what I didn’t know was how much it would free up my mind and let me do better, more powerful work along the way. I’ve been able to create more products and do more thought leadership since getting those little tasks off my plate… and if I’d done it earlier, I can only imagine how amazing things would be.

Thanks to Erin Ferree, BrandStyle Design, branding for small businesses, in business for 10 years

24. Look Before Leaping

What I know now is the huge cost of marketing and promotion required to build demand. We started out expecting to sell retailers and distributors and attend trade shows and travel to customers and sell and spent two years on that path. Then we took a hard right and for past two years we have evolved into an Internet retailer running DRTV (Direct Response TV) infomercials with 85% of our business now direct to the consumer. Social media was never in the business plan either now it’s vital.

What would I do differently knowing what I know now? (1) Keep my old job as long as possible and not leapt off the cliff (but it was a nice feeling) (2) Anticipate 5 years to break-even, and set aside “don’t touch” money.

Do I regret jumping off the cliff? No way. As I tell my wife- don’t look down, keep looking up!

Thanks to Brad Barrett, GrillGrate, LLC, grill surface for better food, in business 5 years

25. Pick More Profitable Partnerships

I would have used deeper discernment in picking partners/vendors/joint ventures, even markets. I picked some doozey’s AND after the fact, saw all the red flags.

Thanks to Shawne Duperon, ShawneTV, media coach and production company, in business 11 years

26. Focus on Face to Face Interactions and New Technology

We learned a lot of lessons in starting our company. For example, we would never produce four-color mailers that are sent to mass prospective clients. We’ve learned that face-to-face interaction and building the business relationship is key. (This was pre-Internet). We also learned that a lot of mailing lists are not updated. This endeavor was expensive and resulted in a poor ROI. When the Internet came around, we certainly would have jumped on this new technology much earlier — developing a website much sooner. It’s an amazing tool to get your message out to the world to sell products and services with visuals. We try to make it much easier for clients to find us rather than we search for a ‘needle in a haystack’ to find prospective clients.

Thanks to Greg Jenkins, Bravo Productions, event planning and production company, in business 25 years

27. Plan For Growth, Be More Discerning in Following Advice

As the owner of a driving school in New York City, my first big regret is that I did not get all other licenses (Motorcycle, Bus, Truck license) earlier in life. I just pass my truck road test Tuesday January 17 2012.  Now I have to wait two more years before I can expand to teach Truck Lessons thanks to NYS requirement. Secondly, I was too naive and trusted many so called experts that convince me how to run my business only to find out they were wrong.  I wasted a lot of money trying ideas that did not work. 3.  In the real estate boom time I should have purchase commercial real estate to accommodate my growing business.  Now it’s impossible to get a loan.  I would have preferred to spend a bit more money to secure a property.

Thanks to Rajendra Hariprashad, Ena’s Driving School, in business for 8 years

28. Leverage People, Build a System

If I knew then what I know now I would have invested in two areas. One, I would have developed other people and brought them into the business sooner. No one is good at everything. Even Michael Jordon had a coach and team mates. One of my friends started a business five years ago and has 700 people working for him today. The more you can leverage other people and create a ladder for them to achieve what they want to then the more successful you will be. Find people you can trust and learn to work effectively with them. My business is much stronger today because I have a strong team.

Secondly, every business needs a system to build a pipeline that is consistent and measurable. I have depended too much in my business on my farming method which is delivering exceptional value to people I meet and eventually they and their friends become clients. I wish I would have understood how to build visibility for my business in my target market like I do today. I am beginning to develop a hybrid model that is both farming and hunting which I believe in the long run will deliver greater growth to my business. My approach that involves taking a prospect from visibility, credibility, and trust is proving to be highly effective. When people work with me they become more than clients they become friends because I am invested in their success. Everyday owning a business is a learning experience. I am very happy it is what I have chosen to pursue in my life.

Thanks to John Paul Engle, Knowledge Capital Consulting in business 10 years

29. Focus on Building Relationships with Customers

When I first started out, like most new veterinarians, my prime concern was my patients and their care. What I failed to fully appreciate was that each patient had an owner (aka client) attached to it! Often I would not address the needs and concerns of the client as well as I was trying to practice medicine and over time, I likely lost clients who, if I had better built my relationship with them, would still be a client today.

Thanks to Dr. James Day, Glendale Animal Hospital, veterinary practice in Glendale, Arizona, in business for 27 years

Bonus Tip:

30. Establish Boundaries With Employees

I would certainly separate “church and state” and I would have been more of a leader than a friend. As an owner and an active President& CEO of a small business- I’m in constant contact with my employees. When hiring new employees, certain requirements and credentials are necessary including: experience, expertise, and industry knowledge. Additionally, I look for multiple interpersonal skills and qualifications. That said, I’ve managed to find and retain wonderful employees who work well and who work well with one another. Formulating good friendships with my employees is nice but maintaining and stepping up as more of a leader at times, has been challenging. Establishing boundaries early on with employees is key and I wish I had known the importance of this, earlier on.

Thanks to Georgette Pascale, Pascale Communications, LLC. a healthcare specific PR firm, in business 7 years

Want to get more inexpensive and practical small business marketing ideas, grab a free e-book called “Build Buzz for Your Biz, 23 Creative and Inexpensive Marketing Strategies That Will Get You Noticed” at http://23kazoos.com.

Wendy Kenney is the bestselling author of How to Build Buzz for Your Business available on Amazon.com, and has been featured in the Wall Street Journal, USA Today, and Newsday.

As you likely have heard, California passed a new tax law last week that created quite a stir, and resulted in Amazon.com terminating its affiliate program in the state effective immediately.

What you may not know, though, is that this type of law - an Affiliate Nexus tax law - could require you (not just big companies like Amazon) to pay sales taxes on revenues generated via online sales in the places like California.  It is critical for you to understand the rules so you don’t run into trouble with the tax man.

Let me first say that I’m not a tax lawyer or CPA, so make sure you confirm how these rules apply to your business with your own tax professional. However, I do want to give you some background here so you have a basic understanding of the rules.  Historically speaking, sales taxes are required when your company has a sufficient connection with that state. The technical term is a “nexus.”  Up until recent years, a nexus was defined by most states as having some kind of physical presence in that state, either by having an actual office or brick and mortar presence there, or employees physically in that state.  Online transactions were not taxed unless the retailer also had a physical store in that state.

However, in recent years, a number of states have extended the definition of nexus to include online sales via affiliates.  In essence, those states are treating affiliates as an extension of the retailer, similar to an employee.  Amazon and other companies object to that definition.  Their position is that the affiliate is a marketer or advertiser and nothing more.  No matter which argument you agree with, the reality is that California joined the ranks of the states using the affiliate definition of “nexus” for purposes of collecting sales tax on transactions in the state.  Let me put it another way:  California will now impose a tax on any sales revenue generated in the state just by virtue of the affiliate being physically in the state (not the retailer).  Online retailers with California-based affiliates are now required to collect and pay state sales tax on purchases made by California customers.  As I understand it, this includes all revenue, not just affiliate revenue - the affiliates’ presence in the state just gave the state the “nexus” it needed in order to claim that Amazon and other online retailers were connected enough with the state to justify taxing their activities.

So, for example, even though the affiliate is not an employee or agent of Amazon.com, because Amazon had affiliates physically in the state, that results in a tax burden in California for Amazon.com.  Amazon’s reaction was to immediately terminate its affiliate program in California so that it no longer had the “nexus” required to enable the state to tax their online sales to California residents.  Other online retailers did the same thing, including Overstock.com and BlueNile.com.

This is important because it doesn’t just affect companies like Amazon.  It affects you if you have an affiliate program of any kind for your company.  If so, you need to make a decision about how you want to proceed.  If you want to continue your affiliate programs, you must know which states require you to pay sales taxes on internet-based sales (all sales to residents of that state, not just sales through affiliates) and you need to make sure you are operating your company in compliance with each of those state statutes.  The states that have these affiliate tax rules currently are:  Arkansas, California, Connecticut, Illinois, New York, North Carolina, Rhode Island.  Other states are considering similar legislation.

Please contact your tax professional immediately to make sure you are in compliance with all of these state rules going forward.  And if you keep your affiliate program, then make sure you stay informed about any new Affiliate Nexus tax laws that pass in other states.

Upon arriving home from vacation, I set up a phone conference with my lawyer — I had an assortment of legal issues that I believed to require his attention.  A few hours before the phone meeting, I sat down at my desk to finalize the list of what I wanted to discuss in order of importance (necessary step when talking to lawyer to avoid BIG bill).  While, I was writing the list, I realized that there were a lot of “If this is the scenario? and “If that is the scenario?”  and many times “In a third case scenario what dos this mean?”  Although I was anxious to have my meeting and get my questions answered, little red flags were popping up in my head.

The flags said WAIT!  There were too many “What if’s” in my list which to me meant that I would pay for a lot of information, but not necessarily need that information.  Waiting was crucial because I did not have enough clarity on what I wanted to ask to make the meeting worthwhile.  I promptly emailed my attorney, and in 2 sentences explained what  pieces of information I was waiting on to make the meeting more successful.  He agreed that he would be way more useful with these certain little nuggets of knowledge (awesome? that I have such a truthful lawyer).  Therefore, I avoided a major legal bill for that day, and for once - I was not annoyed with waiting.

Of course, I am waiting again because there are a number of steps involved in gathering the specific information.  Now, I do not want to be cliche’, but really “haste makes waste” is slowly becoming my motto.  Remember in the beginning of my blogging adventure, I told you that I would not only discuss the pretty aspects of being a mompreneur?  Well, I meant it — I promised the mistakes, too, and here I am to deliver on that promise.  When I rush, act impatiently, or jump to conclusions QUICKLY, I make mistakes.

You all know that I am a BIG fan of lists — I have little lists everywhere! There are lists on my phone, on my desk, in the center console of my car and any other place, the list-making mood strikes me.  List making has now involved into more of a timeline exercise for me.  When I am evaluating a long-term project or information gathering process, I set FLUID dates for myself.  For me, this removes the sense of waiting because I appear to be meeting my deadlines, however, I purposefully set my dates in a no-rush fashion.  I am playing mind-tricks on myself!

Certainly as a mom and an entrepreneur, I like to check items off my list every day, but I had to teach myself not to barrel through the list with rapid vengeance.  I like to think of my little Jedi mind-trick as Back’NGrooveMom’s special ingredient. Do you find that sometimes you rush to feel a sense of accomplishment?  Does it come back to “bite you?”  Do you ever trick yourself in business?

While you wait for my next post — Check out my blog at http://backngroovemom.com to follow my new-found snail’s pace.

Here are 5 key benefits of filing a provisional patent application before filing a utility patent application.

1. Lower cost

A provisional patent application can often times be prepared and filed for less than $600, where the preparation and filing of a typical utility application can cost $5,000 and up, depending on the complexity of the invention.

2. Easy to file

The application and process is significantly less complex than a utility application and can even be done by inventors themselves if they take the time to understand how to complete a thorough application. 

3. Immediate “patent pending” status

Since the patent office does not review or approve provisional patent applications, inventors can immediately use the term “patent-pending” once the application has been filed.

4. Provides 12 months before a utility patent would need to be filed

Although the provisional patent application is not a substitute for ultimately filing a non-provisional patent application, it provides the inventor with 12 months of valuable time to further develop or market the invention.  Why spend thousands on filing a utility application only to realize later that you need to make changes to your invention or that your invention is not going to sell/license.  You can use the 12 months to figure out if this expense is worth while or if you do find a company to enter into a license agreement with you, try to negotiate for the company to cover some or all of the cost of filing a utility patent.

5. Establishes priority date

Once your application has been filed, you have established a priority date for your patent.  This means that when and if you file a utility application, you will be able to claim the original provisional filing date.

It’s important to understand that even if you file a provisional patent application, you will still need to file a non-provisional application down the road if you wish to maintain patent protection. Think of the provisional patent application as a possible step in the patent process, but not the final step.

The provisional patent application establishes the filing date but does not start the USPTO review process.  The provisional patent application provides a measure of protection for 12 months from the filing date and expires unless you file a utility patent application before the 12 months are up. 

Whichever direction you ultimately decide, remember that research and self-education are invaluable to your success not only at this beginning stage, but also as you progress in the process of inventing.

For Help With Your Invention or Patent - Click Here

Additional info:

• http://inventionhome.wordpress.com/
• http://inventionhome.wordpress.com/
• http://mvelette.wordpress.com/

�

This one is especially for the ladies, because I think this is an epidemic issue with us.  But men, you are warmly welcome here!  I hope everyone gets something from this post….read on!

There are so many programs out there that talk about marketing, sales, Social Media, finding your bliss, etc….  All of these things are really important to be sure, but there is one area of launching a business that is so critical that is can be the difference between long term success or, well….at the risk of sounding dramatic…losing everything.  And amazingly, it routinely gets skipped, shortchanged or ignored.  That one critical step is creating a solid legal foundation for your business.

I think it gets overlooked for three main reasons:

First, it is pretty intimidating to think about, especially when you are new in business or don’t have experience with the legal side of running a business.  Most of us avoid what we don’t feel comfortable with, and this is no exception.

Second, I think we not only feel intimidated, but we feel scared often when talking about lawyer stuff.  For most of us, this is outside of our comfort zone and we don’t know what we don’t know.  Plus, the idea of hiring lawyer, someone who does know, is scary in and of itself, and it threatens to be an expensive process.  For many startups or small businesses, it seems like an expense that can’t be justified.

Third, I think the process of getting your legal foundation in place gets overlooked or put off because it is, well, just plain boring.  It is so much more fun to think about the creative side of launching a business, especially when you are doing something you feel passionate about.  I know that legal issues can be pretty dry - enough to make most people’s eyes glaze over.   It certainly doesn’t feel sexy or exciting.

Or is it?  Actually, while the process of getting your legal foundation in place might not be the most fun you have ever had, the act of it is incredibly sexy, smart and exciting.

Why?  Because the point of getting your legal house in order is that it frees you up to then get on with the fun part of running a business.  You will have the peace of mind that you have done all you can to protect your hard work.  Peace of mind is the best food for creativity, and it gives you mental and emotional freedom to take your business to the next level and to focus on what you love to do and what you are best at.  By taking the time to focus on it, you are making the choice to be smart, and to honor yourself, honor your gifts and honor your hard work.   I’d say that is pretty sexy!

For more information on how to get your legal foundation in order easily and without hiring an expensive business lawyer, visit http://www.businessbrillianceuniversity.com.

I love the internet. It is a great leveling force, allowing small businesses to have the same presence at huge corporations. It allows start-ups to reach as wide an audience as multi-national companies. And these days, getting online and having a great looking, user-friendly website is as easy as saying 1-2-3.

But before you launch headlong into the virtual world with your business, take a minute with me here to make sure you do it in a way that protects your business and yourself from unnecessary risks.

Here are two of the most important things that you need to do to minimize risks of legal trouble from your website. There are a few others that I will deal with in future posts, but make it a priority to get these two things nailed down as soon as possible for your website. (Disclaimer:  This post should not be construed as legal advice!  This is for informational and educational purposes only.  Consult with your friendly, local business attorney for how to best protect your own business!)

a. Have a Terms of Use Policy on your website:

All business websites should have a “Terms of Use” page. It is basically a contract that sits on your website under a “Terms of Use” tab and it spells out in detail the terms required if someone is going to use your website. If your site contains copyrighted content, offers advice, or sells products or services, a Terms of Use agreement is a must. What language in your Terms of Use agreement depends on your business.

For example, if you sell clothes, you will need terms of use that governs use of the website and the terms by which your customers purchase items from your website. If you offer professional services of some kind (like a law firm or doctor’s office), your terms of use might include a statement that no attorney/client or doctor/patient relationship is formed by the mere use of your website or by the act of sending you an email.

If you allow people to post comments or content on your site, or you have an interactive forum, you absolutely need terms of use that govern those activities and that spell out what is prohibited, and that reserves your right to exclude people from your site.

No matter what your business is, you need to give some real thought to what needs to be contained in this agreement, and you should use others in your same business as a guide for what needs to be in there. This is a really good time to retain a reputable lawyer who knows how to draft terms of use properly for your type of business.*

b. Have a Privacy Policy on your website

Next, you must also have a clearly posted privacy policy on your website. If you have forms that collect personal data from visitors to your site, such as an opt-in form to collect email addresses or other personal information, you should post an abbreviated and clear privacy policy right below that form. But then you also need a more comprehensive policy published on your site somewhere that is easy to find. The policy should deal with how visitors information is handled, collected, kept safe, the use of cookies, etc…

The reasons for having a privacy policy are twofold. One, it is about building trust with your customers and clients. As we have seen with the privacy faux pas by Facebook, people care passionately about their privacy and don’t take lightly an unauthorized use of their personal information. In order to build trust, which is critical in today’s world of social media/relationship marketing, you must have a clear policy on how you will use the information you gather, and you must adhere strictly to it.

The second reason for having a privacy policy is to protect yourself legally. This is very important, especially if you collect any kind of information from visitors on your website. For example, if you collect personal information for an opt-in box for a newsletter or ezine, or from people who want to use your online forum, or from people who register for an account or membership on your site.

Also, if you send out email communications with your customers or clients, you absolutely must adhere to the federal Can-Spam Act or you could find yourself being prosecuted and fined heavily for being a spammer. This is no small thing and I have had clients almost go out of business because they were embroiled in litigation with the US Attorney’s office for violation of the Can-Spam act. Among other things, you must have clear authorization to contact someone via email, and you must provide a clear and easy way for someone to unsubscribe from your list. Never ever send an email to someone who didn’t voluntarily give you their email address and agree to you using it to contact them. I personally think the best way to handle this for yourself is to use a service that will collect and monitor emails for you, such as Aweber, iContact or Constant Contact. They will receive the “unsubscribe” requests and the database will automatically remove that email from your list and will put it on a “do not contact” list to comply with the Can Spam act. There is a monthly fee to use these services, but this is about easily minimizing a huge risk in the virtual world and I wouldn’t bat an eye and using one of these services.

If you put these two items in place on your website, you will make huge leaps forward in protecting your hard work, your business and your reputation as your business grows in the virtual world.

*As an alternative, I will be offering several versions of a sample terms of use policy in my Business Brilliance University, so go check out my self-help resources there as a way to jump start this process yourself and possibly save yourself thousands in legal bills.

Here are the two logos at issue:

Apparently, Jimmy has a great sense of humor and set up his company to sell some t-shirts and hopefully raise money to cover his college tuition (he did end up raising something like $100,000, according to Hurst). I love this disclaimer on his website:

We are not in any fashion related to nor do we want to be confused with The North Face Apparel Corp. or its products sold under “The North Face” brand. If you are unable to discern the difference between a face and a butt, we encourage you to buy North Face products.

(Sound of author trying to compose herself after period of robust laughter)

Anyhoo….long story short, management at The North Face failed to see the humor in this situation (or apparently the difference between a face and a…. bottom) and actually slapped Winkelmann with an expensive trademark infringement lawsuit.

Hurst’s post does a great job of analyzing what the North Face would have to establish to prevail on their claim (something Hurst doesn’t think they will succeed in doing – and I agree with him).

But this does bring up a couple of really important points for those of us launching and running businesses.

(1)  Don’t Use A Name That Is Already In Use!

When you are choosing a name and logo for your company, make sure to research whether that name is in use already (particularly in the industry that your company will be in) and make sure you do not create a logo that looks like one from another company (as best as you can determine). You need to search your state records for names (usually the Secretary of State’s office will have the ability to search LLCs and Corporations in your state;  also search any other state in which you plan to do business now or in the future).  Also search national records, such as the TESS at the US Patent and Trademark office. I also recommend doing a Google search for the name to see if the domain is taken (or any variation of it) and to see if anyone is already using that word or combination of words for their business already.

Right or wrong, big companies generally are not shy about enforcing their trademarks (as you can see in the North Face case) and you don’t want to end up getting a cease and desist letter from an in-house legal department just after you spent your last red-cent having your logo and branding designed.

If your name or logo could cause confusion between your company and one with an already established trademark, you could be found to be infringing on their trademark. If you are, you could be forced to change your name, logo, packaging and anything else that uses the infringing mark. If you have any market traction already, you would then have to rebuild your brand and lose the work already put into marketing the infringing name/brand/logo. Add to that potential money damages and attorneys fees, and not doing your homework about your trademarks becomes an expensive (and potentially fatal) detour for your business.

(2)  Protect Your Own Trademarks!!

Once you are sure you aren’t at risk of infringing on someone else’s trademarks, make sure that you have properly trademarked your own logo, tag lines and even product names and packaging so that you have the ability to protect your intellectual property and branding if someone does attempt to infringe on your trademark in the future.

Generally, “use” of the trademark itself does give you some protection (use the ™ symbol as soon as you start using anything you want trademarked). That means, always include the symbol on your website, on all of your advertising, correspondence/emails with customers, and written materials at a minimum.

But the best way to protect yourself if to file with the US Patent and Trademark Office in order to have a “registered” trademark (at which point you use the symbol ®).

Of course, I recommend hiring a good lawyer for this, as the paperwork can be tricky and you want to make sure it is done right. However, there are services out there that can help you file your own paperwork, such as Legal Zoom, so you have that less expensive option.

Just don’t decide to NOT trademark your branding. That could be an expensive mistake if someone else decides to use your name, logo or a variation of your logo (deliberately or without knowledge of yours). If you don’t have a registered trademark, you might not be able to stop them from using it, you will have less protection under the law to go after them, and might even lose your right to use your own name or logo in the future.

I’ve glossed over this because it is really fairly complicated subject, so make sure you find someone knowledgeable in trademarks to help you navigate this process.  (And now for the required disclaimer:  this post is NOT intended to give legal advice, so seek your own independent counsel for that!)

And if you have any experience with trademarks for your business (positive or negative), or questions, we want to hear from you so make sure to post a comment below!

You can read all of Hurst’s post at the link below.

http://intellectual-property.kmklaw.com/Trademark-Parody

The site is one of the experiments I like to refer to as the “inverted news paper” - citizen journalism at its most raw. Every day, a wealth of local information is created — officials inspect restaurants, journalists cover fires and Web users post photographs — but who has time to sort through all of that? EveryBlock aims to collect all of the news and civic goings-on that have happened recently in your city, and make it simple for you to keep track of news in particular areas. They’re a geographic filter — a “news feed” for your neighborhood, or, yes, even your block.

If your business is local and serving the public, check out how you are being discussed in your communuty.