How to get your business prepared for 2023 - 77

How to get your business prepared for 2023 and beyond. Welcome to Creative Counsel with Brittany Ratel. I'm your host Brittany, an attorney for creatives who believes in solid contracts and cute office supplies, and who wants to empower you to be a more confident business owner. Whether you're a creative, influencer, maker, artist, shop owner, or content creator, you are not just a blank. You are a real bona fide business owner. So let's help you own your business and get you legally legit Britt. So today I'm going to be talking about how to get ready for 2023. We're closing on the end of 2022, and frankly, it's kind of a scary time for a lot of us, and especially for a lot of small business owners. There are worries about a recession, there's worried worries about a downturn in the economy, about people getting laid off, and that certainly can have an effect on small business owners and their ability to support themselves and their families and to make business happen in a profitable way. So knowing that there's lots of stuff in the world that we can't control, unfortunately, what can we do in terms of what we can? How can we make sure that we're being resilient, that we're being prepared and not being paralyzed by fear or indecision or overwhelm? Let's talk about it. So today I want to talk about specifically a few things you can do to help protect the assets of your business, the revenue streams of your business, to make sure that you're set up for success and to make sure that you're not making yourself an unnecessarily large target for anyone who might want to give you hassle or trouble in your business or take away some of your hard-earned profits. So let's tackle each of these in turns. First of all, we're going to talk about your website. So let's talk about how to get your website legally legit and protected. The biggest thing I still see plaguing business owners is not having their website legal docs. I know these are the boring documents that are in your footer and which you've probably never paid attention to. Frankly, most people don't. They kind of ignore them. I think only a few nerds in the world like me who do this for a living are the ones who actually read through things like website terms of use, terms of service, terms and conditions, and privacy policies. However, more than 5 states next year will have state privacy laws that will come online. California, in addition to Colorado, Utah, Virginia, and Connecticut. And that means that if you are transacting business with people who live in these states, which undoubtedly you are, you could be subject to these state privacy laws, and people who live in those states or their governments could have a right to sue you or to enforce if you're not being compliant with their law. Now, before you start to panic, there are some exemptions in these new laws for smaller businesses. Some of them say that the more onerous duties of what you have to do with personal data and the processing and controlling of that data are smaller if you're under a certain revenue level or if you are not processing enough data. However, I can tell you this for sure: the trend in America privacy law, and really international privacy law, is only swinging in one direction. And I can promise you this, is that people are more and more concerned about their data and the use of their data online, and want transparency from anyone who's touching any information that we're putting onto our laptops and mobile devices and anything that we're interacting with the internet. So it's likely that we're going to be continuing to see more and more state privacy laws and probably federal privacy legislation coming up. So what does this mean? It means you can't ignore this. At the base level, you have to have a privacy notice on your website. Absolutely. It doesn't matter what you sell, what you collect, even if you don't think that you collect personal information. If you're running basic analytics from your site processor, from your hosting, which you probably are, if you have an email list, then guess what? You're collecting private information. So It's not a big deal, but you need to be clear about that. And so for sure, you need a privacy policy. And if you think that you're in one of these categories where you're making more than $25 million in revenue or possibly collecting more than 10,000 names from any particular state— some of them, the threshold is 100,000 names for many of those states that I listed— please make sure that you're working with an attorney who can review not only your privacy policy, but also your data maps and data practices. Also taking a look at your vendors. Another thing in a lot of these laws is that it's requiring that business owners and website owners have written policies with anyone who's touching personal data. This means that you— it's a good time to review who you've let opt into your website. This means looking at your plugins, your other partners that might be helping you with landing pages, email marketing, retargeting ads, any of those extra add-ons that might be on your website that might be helping you connect the dots in terms of your marketing funnels. You need to make sure that you know who you're doing business with, that they're reputable companies, that they're on top of all this data and privacy regulation, and that you have a written service contract with them and they have written policies about what they do with this data. So if any of those questions are still up in the air come January 1st, please take care of it as soon as possible. Okay, now that we have privacy policy— and by the way, if you don't have a privacy policy at all yet, make sure you stay tuned to the end and I'll let you know where you can get them. But spoiler alert, I sell a website bundle that has everything you need to get your privacy policy in check. And yes, I will be updating it to make sure that it's going to be compliant with next year and these new privacy regulations that are coming online. Okay, next thing I wanted you to draw attention to is if you have subscriptions as part of your website. We've seen a proliferation of digital curriculum, digital offerings in terms of subscriptions. Pretty much everyone and their mom has a subscription box right now, and that's great. However, we need to be careful with any kind of recurring payment, a recurring revenue stream like a subscription, that we're being very clear to consumers what they're opting into and how to opt out of it. Okay? If you make it difficult for people to cancel a subscription, that's called negative option marketing, meaning people have to do something affirmative to turn off, to make sure they're not charged. And just like those good old days with the Columbia tapes and CDs, it's kind of a sketchy business practice and the FTC is cutting down on it. In fact, they issued a regulation earlier this year that said, hey, We're looking out for this. We don't like what we see in terms of so many people making it hard for people to cancel, of giving them the rigmarole in terms of how to do this, and that they're looking out for it. Just this week, Vonage, owned by Ericsson telecommunications company Voice over IP, was fined $100 million by the FTC because they use practices called negative option marketing, and they had dark paths that make it really hard for their customers to cancel their plans. They would say, no, you have to use and call our— you have to call the special number and talk to a retention specialist. It turns out the number— that number was hard to find, wasn't clearly listed on the website along with their other support numbers, and it wasn't staffed all the time. And even when people did get on the phone finally for someone, they still found it very burdensome, very onerous for them to cancel their plans. And sometimes it didn't even happen then, that they would get charged accidentally a few more times. So obviously there was a pattern of behavior here that was egregious, and that's why the FTC lobbied this large fine, actually the largest fine they've ever done for negative option marketing. But they're trying to send a lesson, okay? They're trying to send a message. Don't let that go unheeded to you, especially if you were in a subscription business. Make sure you're making it very clear to your consumers what they're signing up for, when they're going to be billed, and how they're supposed to be able to cancel. And that needs to be clear and transparent. Ideally, you have a one-click cancellation button that's in their account portal, you know, or their membership portal. Please don't make them hop on a phone call, fax, or mail anything, or try to have some more difficult and burdensome practice for them to cancel. Don't listen to any marketing gurus who tell you differently or any funnel or specialists or whatnot because it's not going to be worth it, especially the price to your audience and certainly the price if you're involved in litigation over this. Because especially because there's state laws that people can also sue, consumer protection laws, not only just the FTC coming down on you hard like this. And in case you think this only affects larger companies and telecommunications, it's not going to happen to you. ABC Mouse, which you're probably— if you have kids, you probably know who ABC Mouse is, or if they watch YouTube— got lobbied a $10 million fine last year because they had a lot of free plans during COVID and then did not tell parents that those morphed into paid plans and that they had to do some kind of more difficult things. It was a really unclear way and of showing people how they could cancel and weren't very prompt about canceling those accounts. So Make sure you're not engaging in any of those sketchy practices. Be careful about your subscriptions out there. Okay. Next thing I want to tackle, we've talked about website and privacy policies, talked about subscriptions, is talking about using media on your website. Okay. This is an issue that I see pop up every year. I get clients and who that this bugs them basically, and this is a pain and sometimes it's an expensive pain and painful lesson to learn is that they have photos on their website and these are usually older blog posts. These are things from like the good old days when people did lots of roundup posts and would say, here's 10 beautiful gardens. I love their style. And would embed photos in that blog post that didn't belong to them, that were usually commercial photos. They were beautiful images that they found online. They found probably in a Google image search or on Pinterest or whoever else they sourced. The problem is old photos like this are like zombies. And just like zombies, these things can rise from the dead when you've forgotten about them, when you thought they were over and done with, and you come and bite you in the butt. Okay, to the tune of hundreds and sometimes thousands of dollars depending on how many photos, how long you've had up, and what are the damages that this photographer— and it's usually like a copyright firm or a copyright law firm that does these type of matters— is coming after you for. There's AI that trolls the internet. There's bots that look for this specifically, that when a photographer, commercial photographer, has hired one of these companies— and they usually do it for free, it's the model of, hey, We will put all your photos in our database. We will scour the internet. And if we find that someone is using some of your photos in a way that they shouldn't be because they did not purchase a license from you or from Getty or from other licensed photo locations, we're going to shake them down and make sure they pay. And then look, I do respect copyright law. I'm an intellectual property attorney, but I also understand that it's hard for creators and people who are content curators and editors who maybe didn't understand, don't understand the law, or maybe didn't have forgotten that they have some of this media on their sites and that it could be a point of exposure to them. So please be careful about old content, about reposting audio, photo, and video specifically that does not belong to you. If you can hire an intern, either yourself or someone else, to go through, I think this is a worthwhile project, and to just go through all the content on your website, go dig through your archive And if you're not sure that you have the rights to use that photo, delete it, get rid of it. It's not worth it. The SEO, the traffic is likely not— in Spanish they say no vale la pena, not worth the pain. It's not it, okay? The ROI on that is going to be dubious. So make sure you get— put an axe to those zombies, whatever horror metaphor works for you, and get them off your website so they're not going to bother you anymore. And if you get one of these letters and you are worried about this and getting shaken down for money, please do not pay the first offer they throw out. They're usually really high, reaching for the moon. Even commercial photography, nice stock photography, is not usually valued at thousands of dollars, okay? It's maybe in the hundreds depending on who shot it and what's it worth and a lot of other factors that can go into media licensing. But so if you get one of those letters and need someone to help you with that, my firm does handle that and have guided people through that process, okay? All right. So we talked about websites, subscriptions, zombie photos. Let's talk about contracts. Okay. No surprise, right? The lawyer in the room likes contracts, wants you to use contracts, likes to have things in writing. And here's the thing, guys. It's not because I think contracts are so sexy and fun. I mean, they are a little bit to me, but it's because boundaries are sexy and fun. Money is sexy and fun. Keeping your profits, keeping your sanity. Not having clients bug you after hours, not having people coming after you for chargebacks when you provided a digital product and now they think it may be the juice wasn't worth the squeeze and they've changed their mind and got cold feet. All of those issues can be resolved with a little proactive planning with nice solid contracts. And so I do own a contract shop, a contract template shop. It's called Creative Contracts and you'll see the links for those provided in the notes But here's the thing is that boundaries are sexy and a boundary is only a real boundary if it has a consequence, which is what a contract will provide for you is that if this happens, if we have this contingency or something, we can clarify expectations and have a way for you to continue a working relationship that can be successful for both parties. And that's what we want. So the biggest contracts that I see people overlooking and are unequivocally most important in your small business, number 1 is going to be your client service agreement. Okay, and this is obviously if you are a service provider. If you are e-commerce and just providing a product, then it's going to be your— going back to your website terms, your refund and shipping policy, which again should be part of your website terms and conditions. That's going to be in your footer. Go get my website legal bundle if you need that. And if you are a content creator, it's certainly going to be the contracts that you're signing that would get you doing for sponsored collab. But if you are a service provider, whether you're a photographer, balloon artist, a coach, you do— you're a graphic designer, interior designer, and social media manager. And for example, I sell client agreements for all these different types of businesses, and they're all special and curated for exactly what you need for your type of business. That client agreement is your most important tool to setting out a really healthy working relationship between you and the person on the other side. And you're making sure that we have clear boundaries, clear expectations, we know how payment's going to work. And by the way, They need to pay something upfront. We need to have payment benchmarks and milestones to keep incentives aligned and keep everyone honest and working together on the same goal. We're going to have a tight scope of work. This is the biggest threat and thorn in your side to people who are service providers is if you do flat fee arrangements, you got to have a clear scope of work. Do not throw out a number and agree to be in a working relationship with somebody until you have a really clear scope. And if the budgets aren't aligning yet, then narrow down the scope and make sure that's a really good fit. I love— if you haven't had a chance to— Jamie Brendel is an amazing freelancer coach. He's a graphic designer by trade, and I think he's putting out some great resources. I've loved seeing all this Instagram content about how to make sure you're negotiating and clarifying your scope, especially in your contracts, and making sure that you have a good fit. Otherwise, keep on moving because you'll end up burning out as a freelancer. And it's all too often and often all too easy to do. After client service agreement, if you have a business partner, I'll say it once, I'll say it a lot of times, you got to have a business prenup. That's your operating agreement or a buy-sell agreement. So if you have an LLC, which most small businesses are, your operating agreement is going to be your foundational agreement. It's the rules of your business. It is a private but binding document that outlines who owns what equity in the business, what are you bringing into, The business marriage— how long can I continue this business marriage metaphor, right? And outlines really importantly what happens if someone wants to leave the business marriage bed. Do you get to take anything with you? Do you get to take intellectual property? What about photos or media? What about podcast episodes? What if you've created digital products together? Do— what about an email list? Does anyone— do partners get to take that with them, or has that all been properly defined and boundaried within the business and it has to stay within the business? It's owned by that entity and not you personally. It's a really good conversations to have. And if you need more information about partnerships, I highly recommend my podcast episode of Creative Council number 45. It's all about business partnerships. And it also— there are links to there to a business questionnaire that will help you kind of suss out your vision and some of the kind of stickier questions that need to happen really at the beginning and honeymoon phase of a business relationship. Please do not make the mistake of wanting to overlook or gloss over what could be a slightly awkward conversation. I know, in favor of being set up for a really ugly business divorce, because that's what can happen if you're not willing to have an awkward conversation. Then you're setting yourself up to have an agonizing— an agonizing defeat and a breakup, possibly of the business, possibly of the relationship. Okay, which is probably the last thing that you you want. So please make sure that you have those, those hard conversations and have those things. And if you find that your business partner is not amenable and can't talk about these kinds of scenarios and conflict without taking it personally or losing their head, maybe that's a good sign that you shouldn't be in business with them. They could be a great friend. They could be a brilliant friend and have lots of other gifts and talents, but the ability to self-confront and to be able to challenge yourself and to be able to work through these issues is a really important critical skill for a business partner for sure. Okay, client service agreement, we've talked about operating agreement. The other really important agreements that I see is if you are running giveaway promotions of any type of in your business, please make sure you're having the necessary fine print that you need in your actual post and on your website. My giveaway kit is the fantastic one-stop solution for this. It says everything you need to make sure your giveaways are legit. And then model releases. I still see businesses overlooking these or punting these to their commercial photographers. And look, some commercial photographers or photographers, brand photographers, especially when it's like quasi— you're maybe are taking regular photos with someone and they turn into commercial photography because you're using them in your business— it's not always clear if they've taken care of that. The rule is if there's someone in your media that can be personally identifiable, meaning you can see part of their face, then you need to have permission to use those images commercially. Okay? This is especially important if you have children, if you have product photography that's involving— obviously if you have professional models or other people that you're paying for, but even if it's just a friend who's coming over and helping you with the photo shoot and friend and friend's kids and whatnot, or you're having an event, you need to make sure that you're having a model release, or we call these usually media releases when we're dealing with larger events. That should be also part of your event policies or part of whatever people are signing up to give permission to attend the event. So if you're— if you have an event and you don't have any kind of fine print, you need an event release. And I sell one in my shop that has language like this along with the liability waiver. Okay, I have 30 more contracts in my shop that I could tell you about, but we got to get going to our last bit. But if you are confused and thinking that you're a little thin in the contract department and are looking to have some solutions that are DIY, that are affordable, but that are solid, attorney drafted, and easy for you to buy, download, edit, and put in your business right away without having to pay custom done-for-you attorney's fees, which my firm does and is happy to do for people, but it definitely comes at a premium price point, make sure you're checking out creativecontracts.co. That is my contract template shop. They have all been drafted and vetted by me, industry tested, and I have personally designed these to be easy for you to use in your business. Each of them comes with a video step-by-step guide because I don't believe in a lot of gotcha fine print that you don't understand what's in your business. I want you to be a more confident business owner and part of that means making sure that I've given you the tools and the resources you need to use these agreements in your business to make sure that everything is in alignment, that what you're saying and onboarding with new clients, vendors, partners, team members matches what's on the backside of your business and what's protecting you. So, hey, that leads me to my last area of things that we need to protect and make sure we are ready to be clean and confident going into 2023, and that is with our team members. Okay, the way that I normally see a lot of online and small businesses and their evolution, especially ones that are virtual businesses, is they usually hire independent contractors at first, freelancers, which is totally fine. Love it. Great. Good for you. I don't— I roll my eyes when I hear people talk about having a huge team and okay, but these people live in the Philippines. No offense. I think it's great to have— that's fine to have offsite overseas team members, but let's, let's be a little bit more transparent, right? And marketing bros who are in the business. But if you are hiring an independent contractor, sometimes also known as a 1099er because of the IRS form 1099 that you need to send to them. Here are some things you need to be aware of. The general trend is that states, particularly California, is being very careful and very aggressive in controlling and patrolling whether someone really is an independent contractor or whether they're an employee. And while you may think they're a 1099 and this person has asked to be treated as a 1099, the reality is that if your state or the state that your person lives in that your team member lives in. Okay, so here's one to keep in mind. You could live in Florida, and Florida doesn't care. Okay, Florida's Florida Man. Exactly. But California cares, probably because they're chronically over budget. So California cares. And if California says, look, we've looked at our state test, our ABC test, which is the state test that's in California, and this independent contractor doesn't seem to be very independent They're only working for you. You're giving them hours. They're not invoicing you. They don't have a business set up. They have a uniform. They're using your software and your materials. That person is an employee and we think has been an employee for a while. So you should have— here's all the back taxes that you should be paying. So this, these are— this is a true story. This actually happens, has happened to many people that I've been able to help and navigate through the situations. And certainly is something that I'm trying to now prevent happening from my future clients and clients are working towards. And so we're trying to be preemptive in making sure that we have really clear frameworks. And so biggest thing you can do is to make sure you're being careful about how you're using 1099s in your business. They should be independent contractors and be treated more as freelancers. Ideally, they have their own businesses, they help you and they help other people. You are not giving them hours, you are not having them— they are working on a project basis. And a more short-term and getting you from A to B, and then they go and move on. The more and more involved they are with their business, with your business, the more like they're my right-hand man. They're intricately involved with that. If they're sometimes doing the same job as you're doing your business, this, these tests will vary by state, but there's some general IRS ones that you can have. And it's a very complicated analysis and not something that I can go into here for your business. But if you have questions or concerns about this, please reach out and work with an attorney and/or your tax professional and make sure that you have an eye on this because you don't want to have a really nasty surprise. So if you have a 1099 though, and they're a true 1099 independent contractor, guess what? They need an independent contractor agreement. They need a contract. I know, shocker, the contractor needs a contract. So make sure that you get them and have them sign when they begin working with you, or if they're already working with you, have them sign something tomorrow. You can blame me. I can always take the heat. My independent contractor agreements hit the high points of things that I think are important in these agreements. Namely, to make sure that they have confidentiality or NDA language because they're going to have access to behind the scenes, how the sausage is made in the business. And we want to make sure that we have clear expectations that this is private information, confidential. And this is not something that you can post about. You'd think it'd be clear but turns out you have to be really explicit with people. Especially younger team members. Also really important to have that work-for-hire language. This is kind of a dirty word sometimes by used by creatives or creators in the professional world because they think it's people stealing your stuff. But here's the thing, you are paying them to usually, especially if these people are creating things for you, if they're graphic designers, if there's virtual assistants, if they're video editors, they are creating new works for you that you need to use in your business. You might even be turning and selling or reselling and licensing those assets in your business. Which means you need to have clear chain of title, clear intellectual property of who owns that. And so the terms in an independent contractor agreement will have that work-for-hire language to make it really clear. Kim is the person, she is creating these graphics from me. I am in turn selling them as part of my online course or as part of my templates, or they're part of my book or my ebook or my podcast, etc. and so forth. So really important to have that language in there, plus a bunch of other highlights that help strengthen that case that someone's an independent contractor and not an employee. So that's the biggest point there. If you were to the point in your business where you have employees, that's awesome, good for you. And also, it's a big deal being an employer. And so if this is new to you, or if you are not sure that you're having the HR support you need, highly recommend that you work with an HR professional, your accountant or tax planner, or a local attorney. For employer issues, I highly— I really recommend that you work with someone in your state, because states have very different laws about being an employer, especially with regards to benefits or overtime or state-specific employment laws that you need to make sure that you're in compliance with. So make sure that you have things that basically everyone needs as an employer. You have an employee handbook, you have your labor posters printed, that you have employment insurance set up and workers' comp, and that you're paying through a nice payroll processor that's got everything set up the way they need to. Okay, these are the quick wins that we've talked about today in terms of how to get your business set up for 2023. Big picture here is there's a lot— there's going to be a lot that are going to— people are going to try to capitalize and make you feel afraid or uneasy about the economy, about the way things that are happening. And there's certainly— I think there's room for that, to be introspective about our own spending, about work-life balance, about all of that. But I don't believe in fear-mongering. I do believe in preparation. And I also believe in opportunity, and I can definitely see that 2023 will be an important year, especially for small business owners, to be able to really dig in and find that there are opportunities to serve, to create value, to solve problems for other people. And certainly, if you've been thinking about getting a side hustle started, or starting or expanding your small business that you have now, please take the time to do it right and to get your legal ducks in a row, including with some of the things that I've talked about today to make sure that you're in a position to take care of opportunities, to confidently offer solutions with swagger, and to make sure that you can go out and use all the tools and the really the digital landscape that we have to be able to do what you can to solve value, to be able to create value and solve problems for yourself and for other people. I hope this pep talk doesn't get you down, but gets you excited about crossing these things off your list and making sure that you're ready. You're ready for all the good things that I'm sure will be coming your way. So thanks for joining me here at Brittany Ratelle. As a reminder, if you have not downloaded my freebie, which is the Legally Legit Workbook, it is my— I would say it's best-selling, but it's for free. It's my number one download that helps you as a modern online business owner step-by-step attack some of these things that you need to. It's your legal roadmap and guide for what you need to do to get your business legally legit. And you can find it at getlegitwithbritt.com. And please use that as not an excuse to be overwhelmed or get analysis paralysis, but to just methodically check things off one thing at a time, one bite at a time, to make sure that you can move forward. I'm here to serve you and to help you and to help you be and show up as a more confident entrepreneur. So thanks for joining me here, and I hope this episode was helpful. As always, please make sure to check out the links and resources are in the show notes. They're there to help you. And note that if you're listening to this in real time, our big Black Friday sale actually starts early next week on Monday, November 14th, bright and early. I know that many of my listeners, including maybe you, are business owners yourself, and probably a lot of you, especially if you're in e-commerce, have promotions and marketing of yourselves and offers that you're doing during Black Friday. So to make sure that you have what you need to be prepared to protect yourself, to put up some nice healthy business boundaries around yourself, your shop, your revenue streams, I want to make sure that all of my resources and templates, uh, over at Creative Contracts are available to you so that you can get something if you need it in a pinch quickly up on your site before you, uh, launch your promotions and offerings. So make sure you make a note, have set an alarm on your calendar that it's opening Monday, November 14th. And if you're not already on our email list, go ahead and jump on there because we will be sharing about some opportunities to have Instagram Lives where I'll be giving out and answering your, you know, free legal advice, basically answering questions where you can get support and make sure that you're getting exactly what you need to protect you and the modern offerings in your business. So thanks so much for being here, for giving us your time, and we'll catch you on the flip side.