Creating A New Industry/Buisness

[Bingo-Player]

I've been throwing a really good idea around in my head for a couple of weeks now and after speaking to a friend who works in software development its become evident that most of the components i need to set up my business are already available but they are yet to be combined and applied correctly which is where my business will come in.

obviously i dont want to mention too many details here as i know once this new industry is up and running i am going to need to patent the software & systems which will make it all work because it could potentially be easily replicated

anyway i have never done anything like this before so could really do with some guidance on setting up a new business ?

i have a mild accounting and financial services background so not completely inept

but does anyone know the route i need to start with ?

do i need to write a business plan first ?

the company is going to be split 50/50 with myself and the friend whom is going to do a vast majority of the technical side of the work,

so im guessing i need to initally set the business up as a partnership ? , does this need to be limited ?

filing for patents ? costs of doing this etc ?

there are two main issues i can think of at the moment

1) i already work full time
2) i have very little capital to invest at the moment but im prepared to do whatever it takes to get this off the ground as i think it could be a real success so may need to seek investment


any advice would be much appreciated

cheers

 

[Tictac]

For accounting - QuickBooks.

For corporate structure - a limited liability corporation.

For partnership - a bilateral contract that includes buyout language.

Unless you are going for outside money (equity or debt) you don't need a business plan beyond ways to internally fund yourselves. Early stage planning should be written well enough for the partners and initial equity investors to use for 'air traffic control' (higher level finance, cash flow and direction of the business).

Patents - at least two years and no less than $25,000, likely more time and money.

 

[guru1000]

Bingo, if I am extrapolating correctly, you bring the idea; your partner brings the programming. Correct?

What’s to stop your partner from running with the idea and programming it himself? Patent with inadequate funding for legal fees?

I encourage that when you begin ANY business venture to think of all the ways in which you can get screwed, as unfortunately, those you don’t, usually get screwed.

Until you are financial equipped to hire a patent attorney, request assistance from the United States Patent and Trademark Office (USPTO), check to see if your area offers free patent filing assistance, visit a law school clinic, or a seek government sponsored patent assistance.

First create a confidentiality agreement (CA) and non-compete (NC) agreement to be executed individually between you and your partner.

Then create an ancillary contract which clearly delineates (to alleviate ambiguity and further support the CA/NC agreements and potential patent):

• The idea was created solely by you, and that Partner X is made X% partner for the express purpose of programming only;
• 
  
• Should Partner X pilfer the idea and profit from it elsewhere, you will get an immediate Judgment by Confession (if your state permits) for 100% of the profit originated from Partner X’s alternate venture(s);
• 
  
• Should XYZ LLC dissolve or discontinue due to irreconcilable partner differences, the business idea and programming will remain titled to you. Should Partner X, thereafter, profit from the idea, he will be liable for 100% of the profits originated from alternate venture(s); and
  
• 
  
• That Partner X profits directly from XYZ LLC, and you had the option to get programming assistance elsewhere, but, notwithstanding, still elected to use Partner X, and thus his equity position as a partner restricted by the foregoing conditions is reasonable.

 

[Bingo-Player]

Bingo, if I am extrapolating correctly, you bring the idea; your partner brings the programming. Correct?

What’s to stop your partner from running with the idea and programming it himself? Patent with inadequate funding for legal fees?

I encourage that when you begin ANY business venture to think of all the ways in which you can get screwed, as unfortunately, those you don’t, usually get screwed.

Until you are financial equipped to hire a patent attorney, request assistance from the United States Patent and Trademark Office (USPTO), check to see if your area offers free patent filing assistance, visit a law school clinic, or a seek government sponsored patent assistance.

First create a confidentiality agreement (CA) and non-compete (NC) agreement to be executed individually between you and your partner.

Then create an ancillary contract which clearly delineates (to alleviate ambiguity and further support the CA/NC agreements and potential patent):

• The idea was created solely by you, and that Partner X is made X% partner for the express purpose of programming only;
• 
  
• Should Partner X pilfer the idea and profit from it elsewhere, you will get an immediate Judgment by Confession (if your state permits) for 100% of the profit originated from Partner X’s alternate venture(s);
• 
  
• Should XYZ LLC dissolve or discontinue due to irreconcilable partner differences, the business idea and programming will remain titled to you. Should Partner X, thereafter, profit from the idea, he will be liable for 100% of the profits originated from alternate venture(s); and
  
• 
  
• That Partner X profits directly from XYZ LLC, and you had the option to get programming assistance elsewhere, but, notwithstanding, still elected to use Partner X, and thus his equity position as a partner restricted by the foregoing conditions is reasonable.

thanks for going into such detail guru , my partner will be an old friend of nearly 8 years if i can't trust him then I'm afraid i cannot trust anyone il look into creating a contract between us anyway though

I'm going to start sketching out the finer details this week and hopefully get parts moving within the next 6 weeks

will keep you all posted

 

[guru1000]

I've had a 20-year old friendship and familial relations fall apart in business, so cover your azz.

 

[dasein]

1. Ideas are cheap, plans are cheap, legal structures are cheap, how to books are cheap, advice including this post is cheap, feedback from friends and strangers is cheap, patents are cheap, copyrights cheap, trade dress, office space, etc., all dirt cheap.

2. Capitalization is expensive. Time is expensive. Repeating paying customers are expensive. Competent execution is expensive. What are your immediate sources of turning existing capital into sales today, as in today, and continuing that with the least possible time expenditure? Until you can answer that single question and commit to start it, then all the rest is busywork.

"Time" means competent hands other than your own that are as competent as you are at doing things that lead -directly- to revenues. You must have one other person like this, preferably more. You will almost certainly not have more than three. Without such, burnout is imminent. People will blow sunshine up your ass about their ability to commit time and perform. Don't overcommit until they are tested as such for months consistently. 90% chance you are going into business with the wrong people, so better to go into business with 10 than one other so chances are that at least 1-2 will pan out. It's not that people are dishonest, people are just generally weak as a flaw in human nature.

3. Bootstrap as quickly as possible into a scenario where you start getting money for capital, where everyone associated with you is doing the same, let the business shape itself from there. The biggest mistake I see is overplanning and #1 related wasting factors at the expense of #2 factors. Start selling things today out of your car, Laundromat or box, doesn't matter which. After doing that for six months, whether or not leverage can increase profitability will become apparent, you won't be burnt out, and with luck you may be close to self-funding the experiment. Getting money in your palm for honest effort salves lot of burnout, endless committees ala "brain storms" and BS sessions OTOH exacerbate burnout.

 

[BeExcellent]

Pay a good lawyer to work through crafting a partnership agreement. Partnership agreements (good ones) are supposed to sort out all the particulars that might happen beforehand. @guru1000 gave you great specific traps to be wary about.

You trust your friend and that's the whole problem.

It's your lawyer's job not to trust your friend and to protect your interests.

My ex husband was screwed over by his business partner...who he grew up with & knew since he was 10 years old.