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.

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.

I’ve Got Lots of Time

clock face

Time (CC) I_Believe_, Flickr

So here it is Wednesday, the day our team, Entrepreneurs and Their Communities, posts its regular blog. I have known it was coming. And I have told myself to get started or at least to think about a topic.

My answer? You guessed it, I will start tomorrow! But now the time is here and I am scrambling. So let’s talk about procrastination.

Procrastination, from Wikipedia, is “practice of carrying out less urgent tasks in preference to more urgent ones, or doing more pleasurable things in place of less pleasurable ones, and thus putting off impending tasks to a later time, sometimes to the ‘last minute’ “. And that pretty much describes it. I had a great mentor and friend who, when faced with a large, major task, told me that was the only time she had a sparkling clean apartment and went routinely to exercise.

This same driving force is why we often need to remind business owners to work on their business and not in their business. Stocking shelves, unpacking boxes, and rearranging the displays are important but is it really what will move your business forward?

As humans, most of us are driven more by short term issues, tasks or pleasure. This is not to say these things are not important BUT looking ahead, planning ahead, and working ahead offers so much relief. It lowers your stress and gives you time to think about what you have done. Most importantly, business studies show that forward planning and working is linked to greater success. I suspect I may look back at this post and think about everything else I should have said at some point in time.

So how can you stop yourself from putting off the important tasks?

The first step is to recognize you are doing it. Business owners wear many hats (and the smaller your business, the more hats you wear). Every task you do is good for your business. That includes cleaning, stocking shelves, and straightening up your desk. But listen to your thoughts. You know there are things that probably are more important.

The next step is doing something to get you on track. For me, I need to keep a to-do list and regularly prioritize what is on that list. (And yes, I am old school as my list is on paper.) There are online tools that work well but find what you are most comfortable with. For me that is paper. My list is fairly comprehensive but it is the only way I keep things together. I put dates and priorities on the crucial items. It is my routine to check the list every day both adding and deleting items as well as reshuffling existing items based on changes in my life.

Realize that you need to be flexible. Priorities change. Opportunities come along.

I also have to plan when I am going to do certain things during the day. I get lots of email and social media every day. It took some time but I know it isn’t important that I read every piece that comes in. Use tools to screen and don’t be afraid to hit the delete key.

And the big one, learn two things: 1. How to say no; and 2. How to delegate (And that means delegating and giving authority and responsibility and not second-guessing all the time).

Well, there it is. My life as a procrastinator and what I have done to work around it. I and the other readers would love to hear your tips on how to handle this issue.

And as I leave, you can join me as I repeat to myself – I won’t do this next time, I won’t do this next time, I won’t do this next time.

It’s the Questions You Don’t Even Think About

Oil well site (CC) Glenn Muske

Oil well site (CC) Glenn Muske

Everyone who has considered starting or has started a business has probably received this piece of advice, you need to do your research and planning. This means finding the data that may influence the potential success of the business and then planning on how you will overcome that challenge.

Often times aspiring owners also find a somewhat standardized list of the information they need to gather such as market size, income levels, potential competitors and availability of suppliers.

What you won’t find on the lists, though, and you really can’t because each situation is different, are questions about the unusual factors that must also be considered (I suspect that every area has one and probably more unique items).

Currently in my role with the North Dakota Extension Service, I regularly get questions about starting a business in western North Dakota. Now if you have watched or listened to the news during the last couple of years, you probably know we are experiencing an oil boom. Many of the people contacting me are interested in how they can get involved in the boom. They have a business idea and are now trying to make the idea a reality. In general, their questions focus on the standard questions.

When I get the standard list of questions, however, I suspect that the aspiring owner has not taken the time to do a little more research or homework into some of the most important questions – those not asked.

When talking with a potential business owner looking to come into the western ND oil patch, other questions they need to consider include:
– where am I going to live and what will it cost?
– can I find a space to locate my business and what will it cost?
– if I need help, can I find it and what will it cost?
– if I am bringing a family, can we find daycare or what is the school situation like?

Those are questions I add to their list. Yet every area will have a set of unique issues that owners need to be aware of and take into account when planning. Many of these issues can be found with research – the Internet is a great tool for this. It may be development plans or zoning issues that may impact a community or a major employer who is growing or downsizing or new competitors who have announced their intentions. In a rural ag-dependent community, it may be commodity prices or what the weather has been.

The bottom line for the aspiring business owner is to do your research and then dig a little deeper. Consider what questions “you should have asked.” One place to get that information is with talking to other business owners.