Small Business Trade Secrets

Guest Blogger – Richard Proffer, University of Missouri Cape Girardadeau County Extension Office SBTDC

Secret

Photo (CC) by laverrue, on Flickr

Every business, whether large or small, has a secret considered vital to success. It could be a family recipe for a meat dish that has a special spice or a new way to create a rubber product cheaper but yet it lasts just as long. Whatever it is, it is of value to the business and is often considered to be one of the most important assets when the business is up for sale.

Unfortunately, trade secrets cannot be easily and universally defined. The real definition comes from the fact the following three tests on the idea: is kept secret, is considered important and necessary for the business’s success and has a value to it. Those three tests must be met for a court to protect the trade secret in a legal issue.

A trade secret can be almost anything used in the business or created by the business as long as it is not generally known in the industry. For example, if a business owner creates a new recipe using pinto beans for a homemade chili, it will not probably be considered a trade secret because 1) chili is common, 2) pinto beans are common, and 3) most importantly, it is common knowledge you can use pinto beans in chili. What a trade secret does is provide the business owner with a competitive advantage and allows it operate a higher profit margin usually.

Trade secrets are treated differently than copyright or patents. As long as they are kept secret they remain valuable to the business. But that value can diminish when a competitor has figured out how to duplicate the process. Once discovered independently, the once trade secret can be used without any legal action being able to be taken unlike the copyright or patent. If obtained illegally, then the owner has the right to take legal action and claim damages.

How can a business protect its secrets? The first step is to determine what in your processes create a trade secret. Unfortunately, the information gathered in creating a product cannot be labeled as one as it usually represents skill or industry practices. Courts also protect an employee’s rights to carry with him his experience from one employer to another or her own business.

The second step is to write them down in a log and indicate who knows the secret. The business owner needs to make sure all the people on the log understand the importance of the secret to the business and they are not to disclose the information.

While no protection plan is entirely safe, the starting of one should indicate to the staff the owners are serious about protecting the secret and its importance to the business.

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Take 15! Build Your Business!!

Where do we get answers to our questions? I suspect that often we connect with our network.

For business owners doing that is hard. Taking time away from the business takes planning and is costly. With that in mind, we want invite you to a new program:

Friday 15 – Live Chats

Your opportunity to share and learn while networking with other business owners. Just 15 minutes in length and you can stay in your office.

The first event is April 4th at 11:15 a.m. CT. Future events will continue to be held on the first Friday of every month. So grab your coffee and join us!

Power of Business - First Friday Live Chat

First Friday – Live Chat

To register, go to: http://go.unl.edu/Friday15registration

The Power of Business – Building Your Business Together – SHARE – LEARN – DO

Reputation and Customer Satisfaction

Reputation eats your brand

Photo (CC) by David Armano, on Flickr

Business owners know a satisfied customer is more likely to be a repeat customer. And a dissatisfied customer can only hurt your reputation.

If that was the end of it, business owners might not have to worry as much about their reputation. But it doesn’t. Research suggests that a satisfied customer will tell about five other people about their experience. Dissatisfied customers will tell approximately 20 other people.

Those numbers, especially for the unhappy customer, are why business owners are continually urged to do everything they can to maintain high standards for customer satisfaction.

Yet those numbers represent only those people who we told mostly by word of mouth.

Today the potential audience that people can tell is much larger. Why? Welcome to the impact of social media.

There are two reasons why social media is so powerful in terms of your business reputation. First, look at the size of the audiences. We have all heard about certain viral customer complaints that went viral. Certainly those can have some substantial impact but what about a single negative comment just among friends.

Let’s look at a couple of examples. I routinely use TripAdvisor to post reviews of restaurants and hotels. I recently made three posts. According to TripAdvisor, within 10 days approximately 60 people had read those reviews.

Let’s move on to social media such as Facebook. Now the potential reach gets much bigger. For example I have about 250 friends. Already the audience is four times greater. But now friends tell their friends. If only 10% pass of my friends share the post with perhaps their 250 friends, 6500 people have now read something negative about your reputation.

And if sheer numbers aren’t enough to make you cringe, consider the second issue. People believe what they read online. Although the rate varies by generation, about 50% of baby-boomers and 80% of millennials accept the reviews they find online as valid. And that rate only goes up if I know the person writing the review.

More than ever before, customer satisfaction makes a difference in terms of reputation. And the trend is going to keep on growing.

So: (1) keep your customers satisfied and (2) monitor your online reputation. The time spent doing these will be time well spent.

The Right Time

Right time

Right Time – Photo (CC) by thornier, on Flickr

When is it the “right time” to open a business? When is it the “right time” to add a new product line or expand? When is it the “right time” to hire your first employee or your next 25 employees? When is it the “right time” to sell the business or close the doors?

The “right time” question is a common one. Business owners want to maximize their chances of success or growth and minimize their potential downside.

The answer to the question though is always the same, there is no right time. You might have a better time to make a move based on your motivation, resource base, or economic conditions just as there are times where things will just be somewhat more difficult.

Typically when a business owner asks me if it is the right time, we dig a little deeper. Often the digging leads to their wanting to find the perfect time.

The reality is there is no perfect time. Often someone waiting for the perfect time just isn’t ready to take the step. They have planned and planned but simply cannot move forward. It is the fear of the unknown. Admittedly, you can’t, or shouldn’t, make your move without looking ahead and planning, but there comes a time when additional planning provides little in terms of increasing the chances of success.

The other common time owners ask about the right time is when they think having the right time will allow them to avoid planning. The rationale is that if outside factors are positive a shortened planning process, or even no planning, is needed. Here again the reality is that thorough planning is necessary even in the best of times.

So if you are waiting for the “right time” to make your decision, quite often the real reason behind your question leads back to your planning. Either you want to skip it or are so enmeshed you can’t move forward.

The bottom line is there is no right time, just better or worse times. In either case, good planning is the best thing you can do to maximize your chances for success.

Words of wisdom from Dr. Seuss

Some inspiration for small business owners and for those of you who want to be a small business owner. Post this someplace you can see it every day.

Next Generation Extension

You have brains in your head.
You have feet in your shoes
You can steer yourself
any direction you choose.
You’re on your own. And you know what you know.
And YOU are the guy who’ll decide where to go.
~Theodor Geisel

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