Succession Stories host Laurie Barkman, The Business Transition Sherpa(™), welcomes Heather Pearce Campbell, The Legal Website Warrior. Heather equips entrepreneurs with tools to champion positive change and safeguard businesses.
Her passion for working with entrepreneurs extends to her popular podcast “Guts, Grit, and Great Business.”.
Laurie and Heather discuss protecting the transferability of your business assets. It’s as much about legal protection as it is about value protection.
Heather shares ways to protect the assets in your business and proactive problem prevention when the time comes for a business transition.
When you’re building and scaling, you’ll want to close the legal gaps needed to ensure a smooth and lucrative transition in the future.
Find Heather Here: legalwebsitewarrior.com
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TRANSCRIPT:
Laurie Barkman
Heather Campbell, Welcome to Succession Stories. I feel like we talk all the time from a variety of different angles but I’m so glad that you’re on the show with me today.
Heather Campbell
Oh, my gosh, it’s so good to see you again, Laurie! It’s always great to connect with you and I just received your book in the mail so that was super fun.
Laurie Barkman
I’ve been on your show a couple of times so let’s go ahead and mention that because everybody should check out your podcast right away, of course, after they listen to this episode, which is called Guts, Grit, and Great Business. It’s a wonderful show and just give us a little snippet. What’s the show about?
Heather Campbell
Guts, Grit, and Great Business, I launched actually, at the start of COVID, as it was really my way to create conversations around longevity in business around what it takes to build a legitimate business. I could see COVID coming over the hills at us and nobody was talking about it. Nobody was talking about the impact it was going to have on small businesses and a lot of the folks that I serve. I just thought we need conversations that build people’s grit, and build people’s willingness to keep going through some crazy times, because we’re about to have some.
Laurie Barkman
You had some foresight on that. I’ve worked with a lot of lawyers in my career, I wouldn’t say very few hold a candle to you and your ability to be comfortable in marketing. Many lawyers would rather just do the law and not be out there but I commend you for that and that’s how we met.
You have supported me and some work and some projects. We are working together and thank you for that. I wanted to have you on today because a lot of business owners are building such great assets; they may not think about it that way but they are. I want to talk about our business as an asset. Then I want to dive deeper into that about well, what happens if we want to sell that asset or transfer that asset to someone else third-party, because as we all know, 100% of business owners are going to leave their company one day and very few are prepared.
You and I are meeting people on this journey. We’re meeting people who are building their business and I think this will be a good episode to have them just take a step back and reflect. I know you have some tools and things that we’ll talk about that help people think through that. We’re going to make it very action-oriented and we’re going to make sure that people can take some insights from today and take action. Why don’t we start with that? Why don’t we start with this idea and this notion of whether it’s your clients or others who talk to on your show that are building businesses that have assets to it?
Heather Campbell
Absolutely. I do a lot of teaching in my work and it’s one of the things that I love, it’s part of my effort. I’ve told many people this, I really think that our traditional legal system has some major flaws, right? That’s not a surprise. It tremendously underserves small and growing businesses and individual consumers of legal services as well. But my goal, and I call it the black box, legal model, is not very helpful because everything is so tightly contained in a black box, there’s a high barrier to entry. A lot of people find it frustrating to get the information that they need. For me, I thought, we can do this differently. Why don’t I build a business model? This is actually where The Legal Website Warrior came from. That is information first; that is education first, right? That meets a lot of my businesses where they are in the online information learning space. That is a little bit of the backstory.
One of the things that I tell people is it’s never too early to learn about intellectual property, right? When you say business assets, that’s often a huge piece, if not the only piece in some businesses of what we’re looking at, right? Things can go wrong very early in the business-building journey. Right off the bat, when people start out the gate with an idea like, I want to do this, or I have this idea very often. What do they do? Go talk to somebody about it, share that idea, and begin collaborating like and It partly depends. Are they going to be kind of a sole founder and build it themselves from the ground up? Are they bringing in people to build a team right away? Are they looking for partners? It so often depends on the individual journey, but even early on, you can create what is called an Accidental Partnership, which is where you start that process of exploring ideas and collaboration before you’ve ever put a nondisclosure agreement in place or done anything to protect that idea. It’s a big problem because sometimes businesses can’t even get off the ground if they’ve done that.
Laurie Barkman
Right. So what does that mean? Practically speaking, let’s say there’s a business idea that I’m exploring with someone and we’ve been working on it for months. Now, I want to go a different direction but I want to take the idea with me and that person says, No, you can’t, that’s my idea too, I own half of it.
Heather Campbell
Yes, it can hamstring a business or potential business. What you’ve just described is so often what happens usually in that idea formulation stage. Let’s pretend you have anywhere from one to a handful of people involved. One person is going to be the driver and wants to go on with that idea. Most of the rest fall off in many scenarios, right? While it’s a good idea to collaborate and get feedback, and all of that you should absolutely not do it without understanding the power of an idea as a future business asset.
Laurie Barkman
Wow. If I am that person that is on the other side of that? Do I have a claim to make that I think that this intellectual property is partly mine because we were involved in the brainstorming is that? How do you prove that? Do you just prove the date, time, and context?
Heather Campbell
This is what ends up getting settled out through lawsuits, right? The last thing you want to do is try to start a business and then bam, get hit with a lawsuit. It can be what happens depending on how involved people are, how attached they are to that idea how business savvy they are, right? There’s a lot of factors that come into play but it absolutely happens regularly in the business and startup world that people don’t take care of their ideas early on in the process. They can end up really shooting themselves in the foot.
Laurie Barkman
Wow, that’s really interesting. The concept that an idea can be worth something at a startup stage makes a lot of sense. As our companies get bigger, more mature, more and more well established. It’s more about building and scaling and I know you’ve worked with clients in that phase two. What are some of the legal issues that you see most commonly in companies that are 5,10, and 15 years old?
Heather Campbell
Depending on where they’re at in their industry. If they’re a super traditional business, they often have had to get legal support earlier on because you’ve usually got some regulatory things involved, right? Or if you’ve got a brick-and-mortar location, even to establish that location, you’ve got to go through some legal hoops. Oftentimes, more traditional-looking businesses understand that legal is part of the process and they will tackle it earlier on. Not always, it’s amazing how often people still have gaps. But a lot of will just call them modern information, internet-based businesses can really struggle with that.
Regardless, the foundation is the same. Meaning that you have to look in the same areas to build out the legal foundation for your business. What I find across the board, whether somebody is right out of the gate in the business-building process, whether they’re years into it is we’ve done our best. Let’s be clear that building a business is no small thing, especially building a successful business. People do their best and often, they still have gaps in their legal foundation and sometimes significant gaps in their legal foundation. By way of example, I’ve got a client who has built a pretty amazing business and he’s really in the windup phase of that business and trying to figure out what comes next. We’re in a scramble to get a bunch of trademark registrations in place for him to move some of his IP assets around so that they’re properly held in the right legal entity. So often, you can just see some wild things. I never beat clients up. Let’s be clear, I meet my clients where they are so even though I might be like, Whoa, that’s kind of wild. I realize, we are all doing our best. They’ve done their best. This is what happened at this point in time.
Let’s look at the trademark world. I’ve had clients that register started a trademark in their individual name, and then never transferred it to their business, right? That happens? Well guess what? If you have trademark infringement, to be able to prove harm to your business, that trademark should probably be held by the business, not an end, you can’t claim harm as an individual, right? Some basic things like that, that are just simple errors to make but they get made about where are the assets being held? Do you have are they being held by the proper legal entity? Maybe it’s the same entity as the operating company, maybe it’s different. Maybe you need to be holding your intellectual property assets in a holding company, depending on the operations of the business, right? It can take just having somebody just help you look at an assess. What do you have? Where have you been? Where are you headed? Beyond obvious things like registrations, right? We’re also looking at business systems processes, right?
Sometimes these are called trade secrets, depending on whether or not they’ve been able to be held and maintained as a secret component to that business, right? How do you protect a trade secret? You protect those with business contracts, so you protect those with non disclosure agreements, you protect those with proper agreements put in place when you hire people into your company. On the employment side, there’s lots of risks. It’s the way that we build and grow companies and it’s the biggest risk to your big business. Contracts, aside from registrations, contracts can really be your friend, when it comes to building creating and keeping safe those assets in your business.
Laurie Barkman
When people hear assets, they’ll think the physical assets. they’ll think it’s the furnitures, the fixtures, it’s the equipment. What we’re talking about here are these intangible things. You’ve given some great examples. You’ve shared intellectual property, trademarks, your know-how and trade secret, it could be the formula for that special scent that your product has, or it can be how your processes work to get your products and services out the door. What are some other examples? How about a customer database?
Heather Campbell
Absolutely. You can think of a business asset as anything that brings value to your business and they’re absolutely client lists, customer databases, even maybe the secret sauce behind your marketing. It’s a lot of business systems, formulas, processes, the things that you put in place, that are really unique to your business, and other people don’t know about. They don’t do it that way. It can be what helps make you stand apart. It’s all of the above and we just protect these things in different ways, depending on whether they’re outward facing to the public, things that can be disclosed, are figure out double versus inward facing. It’s more internal to your company, internal to your team. Looking much more like a process or a system or something that does not get disclosed.
Laurie Barkman
If we break this down a little bit. First is building these, let’s call them assets, just to keep it general, building the assets. Then maybe documenting and training so that your internal people know how they work. And then eventually, it’s about protecting?
Heather Campbell
Let’s be clear, protecting me by moving that forward? No, right? You’re building it. Let’s pretend that you’re taking on team as you’re building it, you absolutely need to have the nondisclosure agreements, the IP protection clauses in place in those hiring documents at the point. Anytime that you have an idea or an asset that you’re about to share, you’re about to disclose it to a new person, whether that’s an employee or somebody outside the company that is not already shared. It’s not already widely known in the marketplace, that is no longer a trade secret.
Anytime you are about to make that disclosure, you have to ask yourself, “Do I have protections in place for this exchange? Do I have the proper documents in place?” Whether it’s a business-to-business collaboration, whether it’s potentially bringing on a partner, whether it is even just bringing in a consultant to help you; you’re on an internal project in your business. Definitely bringing on team employees, independent contractors, those are all potential disclosures. You need that protection in place before you make that disclosure. A lot of small businesses get that wrong because business moves fast.
Laurie Barkman
I think a lot of times, we don’t realize the value that we’re creating; the processes of your business can create value. I talked about this on a couple of episodes, about value drivers, one of which is having documented processes, and particularly in a business that is looking to scale and grow. It’s all about how can you maximize the value of your of your headcount. Whether it’s technology systems, or the scalable processes–that in and of itself can add a lot of value.
If we want to transfer this value one day, right? We want to sell the business, we want to sell the assets, or we want to sell the entity, we need the buyer to see what we see, right? How does the buyer see the value? Step one in all of this, and why I invited you on for this conversation is because if a seller doesn’t recognize what value they have, they’re not going to get top dollar, they’re not going to get the highest return. They’re leaving money on the table. Have you had any client situations or maybe other situations that you know of where this happened? Where the buyer said, “Oh, my God, this is great. They’re not calling this out. I’m going to underbid and I’m going to win because they don’t recognize really what this is truly worth.”
Heather Campbell
Certainly, to your point around, people often don’t realize the value of what they’re building. I’ll set an example even inside my own practice. I’ve built basically two businesses: I’ve got my quote, unquote, and I’m doing air quotes, traditional legal practice, which is just not that traditional, but it lives in the traditional legal world, and that’s Pearce Law; then I have this online business, which is The Legal Website Warrior, which is for, for lack of a better term. It’s an alternative legal service provider model. It serves many of my clientele but through automation. I built over the course of yours, the back-end of this business, really built on education. It’s kind of the marketing machine for both businesses then a lot of automation. I’m very analytical, logical, like I love being in the law, and I love solving problems and I’m very creative.
The creative side of me is really expressed through building that business and I just kind of went along, like doing this as a way to solve a problem. I think in many ways did not realize the value of what I’m building and over the course of recent years, I’ve had many attorneys come to me and be like, could you tell me how you did that? Could you and I even had a gentleman who has access to this major platform the back-end of it is built by the guy who built the Disney streaming platform. They’re really going big on a particular technology in the legal space and we met and had a meeting and he was like, “I need what you have and I need to build it into my platform.” So we’re talking about licensing. I haven’t been through this for myself, right? Even for myself, I’m trying to figure out how do I value this? It is a process to not only value what you’ve built, but to also figure out and see the value.
I would say a big recommendation is just be in discussion about it, learn from the people that you talk to about what it is that makes that unique if you’re not seeing it yourself. So absolutely, it happens frequently. I think it happens across numerous industries. Some people are going to be more sophisticated because they’ve been through that process before others. They might be more isolated or not have been through the process and they don’t really know how to value what they’ve built but you can you can get help.
Laurie Barkman
I like that you’re you’re trying to do: proactive work with folks. So many times lawyers are brought in when something goes wrong. The message for today is to be proactive and to work with someone like you if they’re gonna work with you. Fantastic, right? But to look at their business with fresh eyes, you’re gonna have a framework to help people do that. What is that framework?
Heather Campbell
It’s the same framework that I walk people through. If they’re at the very start of their business building journey or years into it and are making and generating millions of dollars a year in revenue, it’s the same places you have to look for your legal protection and to make sure that you fill those legal gaps. It is called my business builder five bucket framework; literally is five buckets because I have a visual that goes along with it and I’m happy to share that with anybody who is listening to this episode, you can email me or I can even pop a link over to you, Laurie and you can share it.
It is a framework that and I tell people, just like your marketing, your sales, like other things in your business, are not set it and forget it; ;egal is not set it and forget it. Even in the legal side of your business, you have to do what I call a rolling risk assessment to look at these areas at any time that you are adding something new to your business, taking a next step, adding a new product line, adding new people, new team, whatever–there’s always ways that we are taking that next step in business. You need to be able to look at this framework and say, “Do I have a new need in one of these buckets?” Just keep that in mind for context.
Quickly, do you want me to just touch on each of the bucket? We’ve got limited time but I’ll at least introduce people to it. If they want more information, they can reach out or you can literally take this framework to an attorney that you may already be working with and ask for help in assessing your needs within each of these areas. My goal is that people become more confident decision-makers on behalf of their business because they know where to look and they know what questions to ask.
The first one, bucket number one, is your legal entity, or structure–your business structure. A lot of people and for most of the folks that you’re talking to Laurie, I’m betting that they’ve taken care of this now, does it mean that at some point, their strategy may not need to be modified? No, it probably could be modified, depending on what they’re building. Again, I’ve helped clients separate out certain portions of their business, reallocate assets from their operating company into a holding company. Depending on the business, they may need some additional help in this bucket. Many of your clients will already have taken care of their legal entity, whether it’s an LLC, whether it’s a C corporation. Let’s be clear that 60% of small businesses in the US remain a sole proprietorship and some of these are really going businesses. This is always such a shock to me when I burn but it speaks to the challenges of small businesses getting the proper legal support in the legal marketplace. The way business evolves, again, it moves quickly. Some people have a thriving business a year or two into it and they’ve never gone back and taken care of some of those early legal needs. Just know that if you’re operating a business without a proper legal structure, and by the way, a business license does not give you a business structure, you need a C corporation around that business, you need an LLC, like you need some legal entity that is going to protect you from the liability that you bring in the door. If you don’t do that, and you remain a sole proprietor, your business liability and your personal assets live in the same house, and that is not good. Get help in bucket number one, that’s your legal entity. That’s literally the legal foundation of your business from a liability and growth perspective, from the from the perspective of tax advantages and various strategies that are available to you. You’re so much better off if you’ve got a legal entity around your business, right? That’s always where I start help people evaluate that.
Bucket number two is regulatory and insurance. Depending on what you’re doing in your business, and I realized, I’m not in the insurance sales world but I get a lot of questions around insurance. I’ve put this into my framework because people need to know where it fits. Again, depending on your business, insurance can be paramount. If you’re building a business with team, if you’ve got equipment, you’ve got a physical location. You’re just not going to be able to be in business without proper insurance. On the regulatory side, a lot of people don’t get up to speed on all the regulations that apply to your business. If you’re a licensed professional, and I work with a lot of licensed professionals as well, they’re familiar with the fact that they are a licensed professional, they have to learn their profession generally by starting with the regulations that apply to their industry. But for many other people, they’re learning them as they go, right? They’re learning them once a read slag pops up or they have their first employment issue, or they have a marketing snafu and they get flagged by a regulatory agency or the FTC or something because they’ve said something wrong online or misrepresented a statement about their services or their product or whatever, various ways that regulatory issues can pop up. It’s really important that you look in that bucket because this is most often where people need counsel is getting up to speed on regulatory issues. It’s a hard one to figure out themselves.
Bucket number three, and again, this a very quick walkthrough, I’d want to have help people have an idea of where this all fits. Bucket number three is a big one, it’s where I spend a lot of time with my clients, especially around this issue of business assets, what they’re building, protecting services, protecting income streams, protecting ideas. This is your business agreements or contracts. These are all the legal contracts that you use, as tools in your business, to build team, protect your IP, protect your services, protect your online content, all the ways that we expose our ideas and assets to the marketplace and to other people. That’s a big bucket.
Basically, if you think of anything that you do in your business, that’s an exchange of value, you need a contract around it. Even in the online space, publishing information, putting up a website, that’s an exchange of value, somebody shows up to consume that, to learn to benefit from your expertise or whatever. It’s an exchange of value. This is why you need legal terms in place, you have to have your privacy policy, if you’re selling things online, you need those terms of purchase in the backend of a business. If you’ve got client services, if you’re a service provider, those contracts, protect your IP, protect your services, protect your business. As you’re growing team, as you’re expanding to potential collaborations, all the ways that you can think of that we interact with other parties and expose our ideas. You need to you need a contract in place for that stuff. That’s a very quick overview of the business contract bucket, but it’s a big one.
Laurie Barkman
It’s super helpful. I think everybody can probably relate to one or more of those buckets. If you are not able to relate I’m going to challenge you on that because there’s probably some holes in the bucket you need to patch. That’s a really helpful framework. So thanks. Thanks for sharing that.
Heather Campbell
There’s two more buckets if you want me to dive right in. We only touched on three, we only did three.
Laurie Barkman
Oh my goodness, there’s a high level! What are the other two?
Heather Campbell
The other two are number four, your intellectual property protection strategy. This is going to be registrations. We talked briefly about registrations. This can be trademark registrations, copyright registrations, but also remember that your intellectual property bucket borrows a lot of protection from that bucket we just covered which is business contracts. Business contracts can be the gatekeeper to your IP so there’s a lot of overlap between the business contracts bucket and the IP protection bucket.
Finally, your communication strategy, which is also your dispute resolution strategy. They are synonymous in in business. We have so many opportunities for things to go wrong, whether it’s with a business partner, an employee, a vendor, a client–there’s ample opportunities for us to have difficult conversations and for things to go wrong. The faster you can get some skills in handling difficult conversations. For small businesses in particular that don’t have big budgets for litigation for wasting a bunch of money on that stuff. I tell people money in your pocket, it’s time back in your day, like your it’s time, energy and savings, all of it. So that final bucket again, a lot of attorneys don’t teach on because they jump in and help handle the disputes and go to litigation. I’m way more interested in preventing those problems and helping educate clients proactively. My one tip for that bucket is go by the book, difficult conversations. It’s written by the people that put on the program on negotiation and at Harvard. It’s brilliant.
Laurie Barkman
That sounds like a good one. That’s probably good for family and friendship for any any everything.
Heather Campbell
Personal professional, everything it will serve you well.
Laurie Barkman
I tell people it’s easy to read, harder to implement. A lot of these things are yes, you have an easy way to help us understand the legal world. I appreciate that about you because this can feel like an overwhelming, complex topic. Maybe a lot of these companies do not have legal staff, they certainly wouldn’t have a general counsel. These types of, I would say opportunities tend to be back burnered. It’s the important, not urgent things that we don’t always address so it’s good to be aware of them. We want to encourage people to take action. If you’re going to summarize and put into three things, what recommendations do you have for business owners?
Heather Campbell
Very quickly, if you’ve not already done it, start a legal file. Get what you have organized because, here’s what I tell people about legal, it is a system when it’s done. It’s a system that supports all your other business systems. It is the foundation in many ways to your business from a liability perspective, but it touches enrollment sales, if you’re in a if you’re a product based company you like you definitely need to deal with the legal side, regulatory side of that. Legal touches everything in your business, your marketing, your hiring. When it’s done, it’s a system that supports all your other systems. Treat it as that important and also understand you don’t have to tackle it all at once.
Number one is get organized: get all your legal stuff that you do have in a file and put together and you check on that regularly. Whether it’s your your business registration, your annual business license, your meeting minutes, because you’ve got compliance stuff that you have to just keep up with. Let’s say that you’re a small business that has a couple of client service agreements in place, a couple of other things, get all that together, know where it’s at both digitally and in the hardcopy world, so that you can build on that. If you need legal help, or review, you got the whole thing, you can hand it over and say this is what we have and that’s usually what I asked for when I’m working with a client and doing an initial assessment of what they have and what they need.
Step two, look at this map that I’ve just given you and choose one theme that will be your top priority in the next quarter of business. The next quarter of your calendar year. Is it that you need somebody to review and assess your existing business contracts? Is it that you’re growing your online database, and you need somebody that knows a thing or two about privacy to come in? Do an assessment of your online legal terms and put in place a proper privacy policy for you. Is it that you realize like “oh, yeah, we’re to the point of needing a trademark registration”
A calendar that like, these are all things that you can take a step and build on. Just choose one thing, what’s going to be your next thing.
The final step is keep up with it put legal planning as a part of your regular business planning. There is a step and there’s a map that I take my clients through, including order of priority, where we just tackle one thing at a time and then go to the next so that over the course of a couple of years, they’ve got their entire legal foundation built out. Fantastic, you can handle it, it’s accessible.
Laurie Barkman
Fantastic. As long as it’s in manageable chunks, we can do it. That’s a great message. Heather, if people want to get in touch with you to learn more, what’s a good way to do that?
Heather Campbell
You can find me at legalwebsitewarrior.com. Just how it sounds all one word. If they want to walk through this framework. Again, I’ve got a free link right at the top of the mind site that will take them through my legal basics boot camp. Sounds like a lot of work because I called it bootcamp. It’s like little mini videos that get delivered once a day for five days. It’s really designed to be bite-sized to just help you look in these buckets. That’s a great resource as well. Awesome.
Laurie Barkman
Well, you’re a great resource. Thank you so much for coming on Succession Stories, and I know this episode is going to help a lot of people.
Heather Campbell
Oh, I so appreciate you, Laurie. I’m a big fan of your work and I also am a fan of your podcast and look forward to digging into your book you you are very resource rich as well.
Laurie Barkman
Thank you so much. Listeners, be sure to follow Succession Stories and your favorite podcast player and YouTube and be sure to leave us a review. To learn more about maximizing the value of your business and planning for transition. Sign up for our newsletter and book a complimentary call with me at thebusinesstransitionsherpa.com. Join us next time on Succession Stories for more insights from transition to transaction.
