5 Keys To Selling An Internet Business

By | Business Contracts, Internet Lawyer | No Comments

selling an internet businessIf you had the foresight to create an online company years ago, you are likely ahead of the curve. According to Nasdaq, it is estimated that 95% of purchases will be through eCommerce by 2040. That means investors are motivated to get involved with eCommerce and internet business sales are booming. But what do you need to know when selling an Internet business?

The bad news is that a significant number of business sale transactions fall apart before closing. If you are considering selling your online business, it’s important to get informed so that you can maximize your profits and minimize risk.

Here are the top 5 things you will want to know when selling your online business:

1. Prepare your Internet business for sale

Before you publish your sale or start working with a website sales broker make sure your online business is actually ready for sale. Ensure you have written business contracts in place with key employees, suppliers, or contractors so they will remain with the business after the sale. Also make sure your intellectual property, spam, and privacy policies enable you to legally transfer information to the third-party purchaser. Have a professional look over (and supplement, if needed) your financial and tax information because you will need to divulge accurate and thorough financial information to potential buyers.

2. Determine your desired outcome

There’s more to selling an Internet business than simply deciding on a selling price. Determine how you would like to be paid (do you want to be paid a lump-sum or in installments?) and whether you will provide financing for the sale. Also, do you intend to stay with the business as a consultant or employee after the sale? If so, determine how long you plan on staying and what you want to be paid for your time (above and beyond the website purchase price).

Related Article: Sell An Internet Business – How To Avoid 3 Costly Mistakes

Do not make the mistake of offering ongoing consulting services without a solid agreement governing the terms of your consulting. Many internet business owners get stuck doing free work 90 days to a year post-sale just to keep the business afloat until the buyer is up to speed. You can avoid that.

3. Conduct a pre-sale legal compliance review

You will want to ensure your website is not violating any intellectual property, spam, or privacy laws before you even consider posting your business for sale. Legal issues in the business will reduce the value of your business, or worse, prevent a sale entirely.

4. Use the right professionals

There are plenty of well-versed professionals with respect to selling traditional brick & mortar businesses, but selling an online business is not the same. You will need to work with a professional with specific knowledge and experience in eCommerce business sales. An Internet business lawyer can help ensure you have the appropriate legal documents and field questions from potential purchasers to bring your deal to the closing table while minimizing risks.

5. Protect yourself against risks

Selling any business carries certain risks. Sometimes competitors act like a prospective buyer in order to gain confidential business information that they will use to compete with your business. Be wary of frivolous prospects by carefully reviewing letters of intent and seeking the advice of experienced internet business counsel. You also want to be cautious of contracts and legal documents provided by potential buyers, because those documents will be written in favor of the buyer, not you!

Also, if you plan on financing part of the sale, make sure you secure that part of the sales price with collateral to minimize the risk of nonpayment. Without collateral, it may not be financially profitable for you to pursue legal remedies in the event of nonpayment. By securing your financial agreement with collateral, you are protecting your ability to collect if issues arise.

While these are the fundamentals to selling an internet business, you will want to perform due diligence and learn as much as you can about this online business transaction process to ensure you get maximum value.

Do You Need Help Selling An Internet Business?

If you have a motivated prospective buyer and time is of the essence, it will be worthwhile to contact an experienced attorney right away. Attorney Young helps entrepreneurs sell their eCommerce business for a fair price while reducing your legal risks. If you are ready to sell your Internet business or simply want to learn more about the process, schedule a phone consultation with Attorney Mike Young and he will help you develop a road map to ensure you get what you want from the deal.

4 Secrets To Effective Search Engine Marketing Agreements

By | Business Contracts, Business Lawyer, Internet Lawyer | No Comments

search engine marketing agreements lead generationMore than 80% of shoppers do their research online before deciding which business to work with. As a business owner, you know you need to take advantage of search engine marketing (SEM) for lead generation so that potential clients can discover your business. A solid SEM strategy can help clients find you and can set you apart from your competitors. However, this type of marketing is complex and requires specialized knowledge. Rather than wasting hours learning and tweaking your own SEM strategy, it’s a wise business decision to outsource this important task to industry experts. This is where Search Engine Marketing Agreements become a necessity.

Like other business agreements, a written SEM contract is important for protecting your legal rights while reducing the likelihood of misunderstandings that lead to nonperformance and breach of contract. Here are four things you should know about SEM agreements before you start negotiating with a SEM agency.

1. Don’t assume free online templates will work for you

Internet Business Lawyer Mike Young has worked with numerous online businesses over the past 25 years and seen countless contract mistakes. One of the biggest and most common mistakes business owners make is using a free contract template found online. Because many free templates are not written by an experienced Internet attorney,they fail to address important topics that leave your business at risk. Even worse, none of the free templates you find online are written in your favor, based on your specific needs.

2. Don’t borrow someone else’s agreement

Another common mistake is to copy and paste someone else’s search engine marketing agreement you’ve found online. If you have not been given explicit permission to copy someone else’s contract, you may be committing intellectual property theft. Also, while contracts may look similar to the untrained eye, all contracts vary according to a party’s specific needs. Every contract is (and should be) unique. When you use someone else’s agreement, you’re using a contract that made sense for them, but that does not mean the contract will work for you or your business. The description of services, payment terms, intellectual property ownership, and warranties will vary in virtually every contract. Simply copying and pasting someone else’s agreement will not ensure that your business is protected from risks or that your expectations will be met.

3. Don’t forget the basics

There are some basic provisions you will want to include in every search engine marketing contract. You want to make sure you identify both parties to the agreement plus their contact information. You want to define the term (length) of the contract and whether any renewals will occur automatically. The services being provided should be described in detail along with the payment terms. You will also want a contract that clearly outlines how and when the agreement can be terminated for non-performance or other disputes.

4. Protect yourself from special risks

Marketing content and strategy are both considered intellectual property. It is important to address who owns the intellectual property created as a result of your search engine marketing agreement. The agency you choose to work with will likely want to maintain some form of ownership over their work product, but you may want to ensure you have a right to re-use certain marketing phrases if you decide to switch to another SEM provider. You’ll also want to ask if your SEM agency will be using any subcontractors or relying on any third-party services and discuss what will happen if their subcontractor or third parties make a mistake. Their answers to these questions should be committed to writing in your SEM contract to protect you in the event a dispute arises.

Likewise, you will want to include a dispute resolution clause that details how you will handle any disagreements (will you arbitrate or mediate before going to court?) and where you will handle any disputes and what laws will apply (preferably the laws of your state). Also, address warranties if your SEM agency plans on guaranteeing any results (be wary of guarantees if the agency does not want to confirm their promises in writing).

Lastly, determine who will be liable for the work product, especially in the case of intellectual property theft or infringement-you definitely don’t want to be held liable if your SEM provider uses someone else’s intellectual property.

As you can see, your SEM contract should be unique and tailored to your specific needs. While there are a number of clauses all SEM agreements should include, the terms of those clauses will vary according to your needs and expectations.

Do You Need Help With Search Engine Marketing Agreements?

An experienced business contracts lawyer can prepare a customized SEM contract template for you to use on one or more SEM projects. You can get an SEM agreement prepared by Attorney Young for a flat fee as part of our firm’s Business Contract Legal Protection Package.

6 Secrets To Buying An Internet Business

By | Internet Lawyer, Website Lawyer, Website Legal Documents | No Comments

buying an internet businessAre you considering buying an Internet business?

You’re not alone! According to Nasdaq, it’s estimated that 95% of purchases will be through eCommerce by 2040. That means individual investors are seriously looking at internet businesses to jump into the eCommerce boom.

Like all investments, purchasing a website carries certain risks. Not all deals are as good as they may seem. It’s unwise to jump into the eCommerce market without performing due diligence. The following contains detailed steps you should take to maximize your investment and protect yourself from lawsuits.

1. It’s practical to use a broker to meet sellers, but don’t use their forms!

Using an internet business broker is a great way to find motivated sellers and potential opportunities when buying an Internet business. Some of these brokers will even offer in-house legal forms to help you during the purchase of a website.

Buyer beware! Because most of these business contracts are not written by lawyers, and even worse, they are not written with your best interests in mind. There is no way to ensure you are adequately protected when you use broker-provided forms — unless you have an experienced business and technology attorney review the contracts for you.

2. Don’t makes the same mistakes as Microsoft and Alibaba investors

Even tech giants make mistakes. When Microsoft purchased LinkedIn, they purchased an online business with a disastrous financial model. Ultimately, they paid 7x Linkedin’s annual revenues (not profits!) to close the deal. While they may have had a legitimate interest in Linkedin’s data and platform, their valuation did not make good business sense and they took a huge loss on the purchase. Microsoft may have had the funds to bail out an unprofitable venture, but as a solopreneur you probably won’t have as much financial wiggle-room.

Another huge eCommerce investment blunder was the Alibaba.com initial public offering. While the company’s founder, the Chinese government, and Wall Street underwriters benefited from the IPO, unsuspecting investors set themselves up for failure.

Because the Chinese government restricts foreign ownership in technology companies, investors were only able to purchase equity in an offshore shell corporation that exists only on paper. The problem with this is that Alibaba is under no obligation to actually disclose or transfer profits to the shell corporation. Even worse, the shareholder contracts are only enforceable as long as the Chinese government agrees that they are. Basically, shareholders have no way of ensuring that they ever see any profits; they spent $93/share on a virtually worthless piece of paper.

As discussed below, it’s on you as a potential buyer to perform your due diligence before signing any contracts.

3. Perform a legal diagnostic on the website before purchasing

An experienced Internet attorney can help you perform a legal diagnostic of any website you’re considering purchasing to identify legal risks that may exist on a seller’s website. You don’t want to take ownership of a website only to find out the previous owner infringed on another’s intellectual property. You are looking for an investment when buying an online business, not a lawsuit!

4. Prepare a non-binding letter of intent before entering any contracts

When you first start negotiations with a website seller, you will want to protect yourself legally before you ever enter a legally enforceable contract. With a well-written non-binding letter of intent, you can maintain your ability to walk away if you discover any information that makes the potential deal unattractive.

5. Ensure your legal documents address dispute resolution

Sometimes deals go sour. The best way to protect yourself is to outline what you will do if a dispute occurs long before the dispute arises. Internet Business Attorney Mike Young suggests including alternative dispute provisions like mediation and arbitration that will help you work out the dispute without the need to go to court (saving you time and money). However, you will want to create an exception for intellectual property infringement and non-compete disputes so you can head straight to court if either of these issues arise.

6. Know what you’re actually purchasing

Last, but not least, make sure you know what you’re purchasing. Make sure you will have ownership over all intellectual property and ensure the previous owner legally owned all images and content. The last thing you want to find out is that the website you’ve purchased has stolen content or that the seller retains ownership over the content they created.

Do You Need Help Buying An Internet Business?

If you’d like legal help buying an Internet business, schedule a phone consultation with Attorney Mike Young today.

7 Things You Should Know About Website Privacy Policies

By | Internet Lawyer, Website Lawyer, Website Legal Documents | No Comments

website privacy policiesOne of the questions we hear the most from business owners is if we provide a “standard privacy policy template” for websites. It is great that business owners recognize the need for website legal documents, but most are still under-informed when it comes to website privacy policies.

Read on to learn the 7 things you should know about website privacy policies in order to protect yourself, your business, and your audience.

1. Your website NEEDS a privacy policy.

If you collect personal information from your website visitors, you need a Privacy Policy. Not only do these policies build trust with your audience and position your website as legitimate, many third-party services require that your site have a Privacy Policy. Your policy will govern the use of your website by visitors and how you collect and store information. It should also protect you by decreasing the likelihood of lawsuits or fines.

2. You Can be Held Liable for Violating Laws in OTHER Jurisdictions.

Some states and countries legally require website owners to have a Privacy Policy. Even if you do not live in one of those jurisdictions, you are still responsible for complying with laws where your visitors reside.

For example, if you collect data from European or California residents you’ll want to add the GDPR (E.U.’s General Data Protection Regulation) and CCPPA (California Consumer Privacy Protection Act) in your website privacy policy.

If you are a small or medium-sized enterprise, you may not have to comply with the CCPPA but it is important to explicitly outline why your business is not regulated by the Act. An experienced internet attorney can help you steer clear of government investigations for failing to comply with laws that you may not be familiar with.

3. Legal Form Generators: Buyer Beware.

You can readily find legal form generators online if you do not have the funds to pay an attorney for a custom privacy policy. However, buyer beware.

Because sometimes legal form generator software is unreliable or out-of-date. Even worse, there have been cases where the creators behind the legal form generators stole work that was created by another attorney (this is copyright infringement-and can lead to hundreds of thousands in damages).

If you want to use a form generator look for software that legally uses forms prepared and updated by an internet lawyer. Our firm recommends using Website Legal Forms Generator because the software is updated annually by an experienced Internet lawyer.

4. Privacy Policies are Intellectual Property

Many business owners think they can simply copy and paste privacy policies from other websites.

This could land you in an expensive lawsuit, because privacy policies are copyright protected. Intellectual property lawsuits can lead to fines of $150,000 per infringement: enough to destroy your business and personal financial situation.

5. Some Personal Information Requires Additional Protection.

Certain personal data, such as full names, credit card numbers, and home addresses are considered sensitive personal information (or personally identifiable information) and subject to stricter privacy regulations.

Even if you do not purposefully collect this type of information, it is possible an unsuspecting visitor may reveal personally identifiable information in blog comments or forum posts. You will want to be clear in your Privacy Policy that other visitors who read this type of information cannot abuse it or share without the owner’s express consent.

6. You Need to Address Laws that Protect Minors.

Even if minors are not your target audience, you need to address the privacy of minors who may stumble upon your website for the same reasons listed in #2. You can be held liable for privacy violations under COPPA (the Children’s Online Privacy Protection Act) even if your site is not intended for children.

That’s why it is important to clarify whether minors under the age of 18 should be using your site in your Privacy Statement (and elsewhere on your website). You should also put safeguards in place to ensure you’re not collecting data from minors.

7. Health industry websites (doctors, hospitals, clinics, etc.) require extra compliance.

If your website collects or deals with patient health information in any capacity, you need to make sure your Privacy Policy references and complies with HIPAA (the Health Insurance Portability and Accountability Act) and HITECH (Health Information Technology for Economic and Clinical Health Act). This is especially relevant if your website includes a Patient Portal!

Bottom Line: your website’s privacy policy is nothing to take lightly. You want to ensure you’re protecting yourself (and your site visitors) with a well-drafted website privacy statement that is tailored to your business’s needs.

If you have the funds, it is always worthwhile to get customized documents prepared by an experienced Internet lawyer. Our firm offers a Website Legal Protection Package for a flat fee where we’ll review your website, discuss your needs, and provide you with customized legal protection for your website.

3 Things You Should Know About Website Design Agreements

By | Internet Lawyer, Website Lawyer, Website Legal Documents | No Comments

Website Design AgreementsAre you a web designer? Or a business owner who is interested in website design agreements?

If you are a business owner, you understand that a company’s website is your online storefront. Your site is often the first thing potential clients see and informs their first impression of your business. The design of your website can also influence your search engine ranking, setting you apart from your competitors.

If you are reading this article, chances are you already understand the importance of good web design and want to know exactly what to look for in  website design agreements to protect your interests.

While you will have slightly different needs depending on whether you are the purchaser of design services or the designer, there are a number of common contract issues you will want to familiarize yourself with:

1. Your web design contract should outline the scope of work, deadlines, and payment.

The “scope of work” section is the bread and butter of any service contract. Identify, in detail, all the deliverables, the deadlines for receipt of the deliverables, and when/how much payment is expected.

Scope of work is one of the greatest risks for dispute, so include as much detail as is possible in order to predict and steer clear of common disagreements. As a designer, you may want to specifically exclude certain design and development tasks that you have not included in your quoted price.

2. Your agreement should address warranties, disclaimers, and change orders.

Clearly describe any warranties or disclaimers being provider by the designer. For example…

  • Does the designer warrant that all content used is royalty-free and you have full permission to utilize the content on your site?
  • Does the designer warrant satisfaction? Does the designer want to limit liability for content that you may add to your website after the initial design is complete?
  • Also consider how you will handle edits, change requests, or work that you would like to add that falls outside the original scope of work.
  • Do not forget to address changes in deadlines and pricing that will occur due to the additional work.

3. Your agreement should discuss intellectual property (IP) ownership!

Do not assume you automatically have ownership of your website design (whether you are the designer or purchaser). Clearly address intellectual property ownership in your website design agreement.

First of all, you may have to pay to license certain content like stock photography or custom fonts. If you want exclusive ownership of the design elements used on your website so that your designer cannot create a similar website for competitors, you may have to negotiate a higher premium to ensure your content is not recycled for multiple clients.

When you find common ground on which elements a designer may recycle and which should be single-use only, be sure to commit your agreements to writing.

4. Your agreement should consider how you will handle disputes.

If service disputes were rare, there would hardly be a need for website design contracts.

Don’t fool yourself into thinking that a dispute won’t happen to you. Instead, proactively avoid disputes by determining how you will handle conflict from the start.

You should include a clause in your contract that outlines how disputes will be handled, whether you have a preference to use arbitration or mediation to save on court costs, and where your dispute will take place. You also want to state what laws will govern your agreement (such as, “the laws of the State of Texas” if your business is in Texas).

The last thing you want is to be summoned to an out-of-state court over a dispute that could otherwise be handled in your backyard.

Just as web design is unique and varies from client to client, so should your website design agreement. The look and functionality of your website is important to create the professional image you want your business to portray. Unfortunately, it is not hard to find low-cost web designers who will sell you a low-quality website. Don’t fall into this trap. Clarify your expectations from the outset to create a positive, working relationship with a professional web designer. Chances are, you will want to develop an ongoing relationship with your web designer so that your site will continue to stand out among competitors for years to come.

Finding high-quality web designers and creating a positive relationship starts with a rock-solid website design agreement. You’ve taken the first step by getting informed.

If you find that you are ready for the next step of drafting the contract, consider contacting an experienced Internet lawyer for recommendations, advice, and an honest review of your agreement.

At our Internet law firm, an experienced attorney can professionally review any website design agreements before you sign to make sure you are getting the best possible terms for your money. We also offer customized website design contracts for those that would like us to handle everything.

Either way, we’re in your corner. To get started, just schedule a phone consultation today.