- June 30, 2017Read more
Which Business Entity is Right for Me?
I’ve helped many dozens of business owners get their start. A common question is, which business entity is right for me? The answer: the one that lets you start making money as quickly as possible.
The most common reason small businesses fail is lack of capital. In other words, they run out of money. The more time and energy an entrepreneur spends trying to create a complex business entity, the less time she has to talk to customers and sell her product or service.
Is a C Corporation the Right Business Entity?
Some entrepreneurs, particularly entrepreneurs in the technology industry, have heard that they need to set up a C Corporation in order to attract investors. Sometimes they even want a C Corporation set up in Delaware or Nevada, even though they’re doing business in another state.
While it’s true that many investors require or desire a C Corporation in order to invest, there are at least two reasons why it doesn’t make sense for most early stage businesses to worry about this.
First, no matter how cool your business idea, you’re almost certainly not going to get funding from professional investors. Less than one percent (1%) of startups receive angel funding, and only .05% receive venture capital funding (link: https://www.entrepreneur.com/article/230011).
Second, setting up and operating C Corporations, particularly in another state, is the most complicated and costly choice you can make when choosing a business entity. Attorney and CPA fees are higher for these relatively complicated entities, and the meeting and reporting requirements are significant.
LLC or S-Corporation: A Better Choice for New Businesses
For almost all new businesses, a simple LLC or S-Corporation will do the job quite nicely. Both of these entities provide the owners some degree of liability protection, provide a format for governing decisionmaking and owner exit, and they’re far less expensive to create and operate.
What’s more, if your business does end up being the next Uber, you can relatively easily convert your LLC into a C Corporation to take advantage of real, and not just pie in the sky, investment opportunities.
Spending a little money to form your business entity the right way is a really good idea. But when you go in to meet your attorney, focus on the simpler and cheaper, rather than the more complex and expensive.
So, don’t over-complicate the entity selection process, and instead spend that time, energy and money on making money for your business.
- June 13, 2017Read more
New Bend Business Registrations Topped 300
If you’ve followed the Bend Entrepreneur Report posts here at EagerLaw PC, you know new Bend business registrations (and new Oregon business registrations as a whole) fell off by more than 20% in April. The May numbers are in, and we’re pleased to report Central Oregon showed encouraging gains in May.
In April we reported 260 new business registrations in Bend, but in May, that number increased to 314, which is fairly typical of what we saw with new business registrations each month during the first quarter of the year. Even with the dip, April’s new Bend business registrations were impressive compared to the average throughout Oregon that month—but those numbers came back up fairly dramatically in May.
Bend Business Registrations Double State Average for May
In fact, Bend more than doubled the rate of new business registrations in Oregon as a whole. Nearly all of Oregon’s largest cities saw gains in May over April’s new business registration numbers, but Bend’s rate of nearly 345 new business registrations per 100,000 population eclipsed the statewide rate of just under 138 new business registrations per 100,000 population. And, as usual, Bend was second only to Portland in number of business registrations. This has been true four out of the last five months.
New Business Registrations Strong Across Central Oregon
That held true for Central Oregon as a whole: From Sisters to Prineville and Madras to Sunriver, new business registrations were higher in May than in April. The two notable exceptions were Redmond and La Pine, which saw 50 and 15 new business registrations in May, respectively. For prospective business owners eyeing those two cities, that could signal opportunity, particularly since the average rate of new business registrations per 100,000 population in both Redmond and La Pine last month were well above the state average.
While statewide new business registrations climbed 12% in May over April’s numbers, they still aren’t back up to the levels we saw in the first quarter of 2017. Central Oregon, by contrast, is generally looking strong. Bottom line: Our region continues to be an attractive location to entrepreneurs looking to start new businesses or relocate businesses from out of state.
- May 31, 2017Read more
How a Young Elvis Impersonator and a Bike Shop Shaped my Career
by Eric Taylor, Attorney, EagerLaw PC
I grew up around small businesses, but not just my parents’ toy store and grandparents’ goat hair business (see Taylor’s Tales for more stories). I also had young entrepreneurial friends, and that’s how I learned firsthand that business ideas can come from anywhere, anytime. I also learned to put your customers’ needs first and keep an eye out for an underserved need. I believe this is why I was naturally drawn to business classes in law school.
During high school, I was involved in helping a friend run the event production company he had started. Mike, entrepreneurial from the start, became an Elvis impersonator in middle school. From that, he saw a need for a concert sound company and grew his business exponentially. Mike’s entrepreneurial ambition and excitement was contagious. We spent many long nights discussing new business ideas and working through the details. In the course of working numerous events, Mike heard from event organizers that they were extremely dissatisfied with their event security and management companies. Mike took that idea and ran with it. He ultimately developed a significant event security company employing over 100 professionals and has expanded further to include a local private security company.
Working with Mike taught me a lot about growing a business. He always had an eye out for an underserved need and looked for areas where he knew he could beat out the competition. Mike also cultivated a strong team and showed appreciation for their support. People would follow him anywhere because they believed in him. It was exciting to be a part of the business.
After college, I worked at a Hutch’s Bicycles in Eugene, where I again applied my small business training to help produce significant sales results. My background in small business taught me a lot about what customers were looking for and how to treat them. I’m passionate about bicycles, and I was able to combine this passion with my experience to develop a strong base of loyal customers. It was really fun to watch the business succeed and to get to know so many amazing people. I learned firsthand the importance of listening to your customers’ needs and putting them first.
In law school, when my classmates were groaning about how boring contracts are, I was thrilled! When I read contract cases, they came alive for me. The fact patterns just make sense. It isn’t about the boring terms, it’s about the struggle people are experiencing. Many of the facts at issue are similar to things I grew up around, and I know what it means to lose a huge case and how important it is to deal with legal issues up front.
Leaving law school, I was drawn to business law because of my experiences with entrepreneurial friends and family. I feel fortunate to have found a position in a small firm where I once again have a chance to be a part of the business. As a business lawyer, I really enjoy the opportunity to work with small businesses and help them navigate legal issues. It’s fun to tag along for the ride with a business as it grows. My small business background allows me to help clients in a unique way as the issues they are dealing with are familiar to me, and I understand the impact those issues have on their businesses.
Eric Taylor is a business attorney with EagerLaw PC. He regularly represents business in a wide range of issues including formation, dissolution, real estate transactions, and employment law issues. Call him at (541) 323-5851. Stay up to date on all Bend business matters with EagerLaw PC on Facebook.
- May 19, 2017Read more
New Bend Business Registrations Down 21%
Each month since we began compiling the Bend Entrepreneur Report back in January of this year, new Bend business registrations have stayed pretty consistent. Between January and March, we never saw more than about a 9% increase or decrease month to month.
That changed with this month’s Bend Entrepreneur Report. Our data showed that new business registrations in Bend dropped off in April by 21%, with 260 new business registrations. Those were the lowest Bend numbers of 2017 to date: In January, new Bend business registrations came in at 325, followed by 297 in February and 328 in March.
Bend Drop Mirrors Statewide Numbers
Interestingly, the 21% dip we saw in Bend in April was mirrored in Portland and in Oregon as a whole. Among Oregon’s most populated cities, new business registrations in Medford and Salem fell off similarly at 19% and 20%, respectively; Hillsboro saw the biggest drop, with 39% fewer new registrations in April than in March.
Bend Business Registrations Still Outpaced Oregon
The news wasn’t all bad in April: Bend’s ratio of new businesses registered per 100,000 people exceeded the state average for the fourth consecutive month, more than doubling the state figure. Bend saw 298.80 new business registrations per 100,000 population in April, while the state averaged just 123.46 per 100,000. Central Oregon seems to remain the place to start a business in Oregon: With the exception of Warm Springs, every city and populated area in Central Oregon exceeded the average Oregon ratio in April.
What’s more, Bend once again saw more new business registrations than any other city in the state, except for Portland. But at 204.01 new business registrations per 100,000 people, Portland significantly trailed Bend’s rate of 298.80.
Overall, the Bend Business Picture Remains Encouraging
Although new Bend business registrations did hit a bit of a slump in April, businesses were still created at a rate higher than everywhere else in the state. It’s encouraging to see that even as Central Oregon registrations fell off, our region continued to outperform the rest of Oregon. This is the first year we’ve tracked this data, so we can’t say for sure whether this is a seasonal change. It may be that entrepreneurs start more businesses at the beginning of the year, and they’ve gotten it out of their systems by April. Plus, April is a shorter month than March—and most people file their taxes in April, leaving less time for starting new ventures.
- April 28, 2017Read more
Commercial lease agreements are one of the most common contracts small businesses deal with.
If you’re not operating your business out of your home, or if you don’t own the building your business operates out of, chances are you’ll be signing on the dotted line as a tenant in a commercial lease agreement.
These documents can be lengthy and complicated, with unusual terms like triple-net, insurance requirements, hazardous waste language and more. It can be a lot for a busy small business owner to process. And, if you’re just getting your business up and running, funds for attorneys can be limited.
Do you need a lawyer to draft or review and edit your commercial lease agreement?
As we lawyers are fond of saying, it depends. There are a number of variables that may affect your decision. Ask yourself these questions to get an idea of what makes sense for your particular situation:
- Do you have a commercial real estate broker working for you? If so, the broker likely has commercial lease forms that he or she can adapt to your situation. While real estate brokers are not allowed to give legal advice, most of them have seen a lot of leases, and their forms tend to be pretty good. Also, having your broker do as much of the drafting as possible saves you money: Brokers are typically paid by commission, not hourly.
- Are you the tenant or the landlord? Typically, the landlord, the landlord’s broker, or the landlord’s attorney will prepare the first draft of the commercial lease, with the tenant, the tenant’s broker, or the tenant’s attorney reviewing and suggesting changes.
- How complicated and expensive is the lease? If it’s a 20-year lease of an industrial building, with relatively complex hazardous waste and other issues, it’s probably worth it to involve an attorney. On the other hand, if it’s a short-term lease of space for a fruit stand, it might be best to save your money.
- Does the other party have an attorney? If so, that may be an indication that there is sufficient complexity to the deal to warrant at least having an attorney review the lease.
- Do you or your broker have a relationship with an attorney who is knowledgeable about commercial leases? If so, involving an attorney will probably be faster and more effective than wading into the legal marketplace and shopping for a lawyer.
Have you decided to hire a lawyer to help with your commercial lease agreement?
If you do decide to engage an attorney to draft or review a commercial lease agreement for you, there are some steps you can take to save yourself time, money and hassle. This assumes you’ve located a lawyer either because you already knew him or her, or you found the lawyer via referral.
- Tell the lawyer specifically what you want him or her to do. Is it drafting the commercial lease or reviewing it and providing you with comments and recommendations? Reviewing will usually be less expensive.
- Ask the lawyer to quote you a flat fee for the work. Tell the lawyer how long the lease is or, if the lawyer will be drafting the lease from scratch, give him or her some details about the transaction to help the lawyer give you a price. Ask for a fixed price, not an estimate. When drafting from scratch, some lawyers are reticent to quote a fixed price, because they are not sure of all the issues before they start. Our firm, EagerLaw PC, offers a fixed price review and written comments for commercial leases for $899.00 for leases up to 25 pages.
- Tell the lawyer when you need the work to be completed. Ask the lawyer to agree to have it completed by that date. One common complaint from small business owners and brokers alike is that lawyers take too long to do commercial lease work. Get a commitment from the lawyer up front.
- Once you have agreed on a price and a timeline, make sure the lawyer has the letter of intent or similar document that lays out the critical pieces of information about the lease. This typically includes the price, the term of the lease, how maintenance is to be handled, etc. Giving this to the lawyer up front can avoid time-consuming (and potentially expensive) back-and-forth as the lawyer tries to learn enough about your wishes to make sure the lease achieves them.
There is no question that many, many small businesses benefit from involving an attorney in their commercial lease transactions. Small business owners who approach the attorney relationship prepared to get the most out of it are more likely to come away with a positive experience.
- April 12, 2017Read more
More new businesses were registered in Bend in March than in any month so far in 2017, according to the newest installment of our Bend Entrepreneur Report. In March, 328 new businesses were registered in Bend, versus 297 in February and 325 in January.
“Bend’s strong March business creation numbers are consistent with strong statewide and national employment data and sustained first quarter small business optimism, as reported by NFIB small business optimism in the first quarter. Bend appears to be setting itself up for a strong summer,” said Jeff Eager, attorney and founder of EagerLaw PC.
Bend’s ratio of new businesses registered per 100,000 population continues to exceed the state average. Bend’s rate was 376.95 per 100,000. The state average was 156.66 per 100,000.
The Bend Entrepreneur Report is prepared using Oregon Secretary of State business registration data. The Report is released monthly, initially via facebook live on the EagerLaw PC page. Like our page and watch for notices to tune in to get the latest new business info.