Business Law Breaking News FT. GrownTogether

Today we are cooking some vegan deliciousness and talking about business with the GrownTogether man himself, Storm. 

[Storm]: My name is Storm. I run a vegan meal prep kitchen here in downtown El Paso right next to the Plaza. Come by and say what's up! Today we have a little surprise. We're going to have a little Cook Show, Business Talk Show.

[Alex]: We're trying something a little different today because I know that a lot of you either have lost your job or are looking into more like non-traditional routes of employment. People are starting businesses online, offline, farmers markets. We're going to talk about tips for protecting yourself legally.

If you are using any sort of vender to source or let's say you have your recipe for this bomb pesto sauce, you're not going to disclose what's in that recipe or the exact ingredients. You're going to have to put a label on things, legally, and say "This is what it contains," but you don't need to put "a tablespoon of this," you don't give away your recipe. Coca-Cola's recipe is still a trade secret; nobody actually knows what it is, except those under some sort of non-disclosure agreement (NDA). Anytime you're sharing your recipe with somebody, whether it be a business partner, a potential investor, a vendor or somebody that's going to help you produce it in big quantities, you have to have them under an NDA or confidentiality agreement.

In order to protect your IP, you don't necessarily have to apply for a patent or a trademark or something like that if you're talking to potential partners. It can be done contractually.  That's my biggest advice about this, protect yourself because people are always trying to pirate ideas.

Let's get to cooking!

Alright, so talk to me about when you decided to go into business, what business formation are you? Are you LLC? Are you a partnership?

[Storm]: We're partnership, it's Josh and myself, it kind of started off in a non-traditional way. Josh had just gotten back from a trip to Peru and he went to go do a detox. I wasn't vegan at the time, neither was he. So he was doing a detox, was going to eat vegan for a month and I remember just laughing so hard like, "What are doing dude?!" especially with how hard he partied. That's kind of how it all started off and then from there he started cooking vegan meals. Someone asked Josh if he could prep some meals for them. He asked me one day, it was a Sunday and I had the day off he's like, "Hey man, you want to come and help me real quick?" I said, "Sure, I have nothing to do this on Sunday anyway" and it's kind of just grown from there.

[Alex]: A note to all of you about business formations, you're going to find online "Oh you should be LLC. Oh, you should not be an LLC. Oh, you should be a Corporation," whatever the case may be. My suggestion to you is to figure out your idea, figure out how you're going to market it and sell it before you even start talking about business formations. I think people get online and use LegalZoom and things like that far too early in the process and they end up spending money that they don't necessarily need to spend.

My advice is figure out your business funnel, figure out your target market, do all that and start selling your products, little by little, and then have a consultation and see, "What are my options? What are the protections?" everything like that because people just rush to "I need a trademark, I need an LLC, I need all this stuff," but if you're never going to have a viable idea or it's just going to sit on the shelf and you're not going to use it, don't waste that money.  

[Storm]: I think that's fantastic advice, definitely small test every product. You're going to need to figure out what the demand is before you try to build a supply for it, but it doesn't go the other way. 

[Alex]: How did you discover your target market? Talk to me a little bit about veganism in El Paso. Is it a trend that's continuing? 

[Storm]: Our target market feels like it, more or less, just came naturally, it was just a natural growth. Particularly, I didn't really have much involvement on the social media itself in the very beginning, I just came and cooked a little bit with Josh, and from there it's expanding the demand requirement and trying to fill that supply. That's where we started, mostly collecting data and figuring out what was the demographic was, the vegans in El Paso.

It's an open growth process, we've been enjoying it very much but I can't take any credit for it all like the Mastermind, how to figure stuff out, no, it's just a bunch of books and I just keep working on it. It's from "The Lean Startup," a build as you learn system where you just build something, whatever it is, and then test that product or test that service, test whatever it is  and then collect the data from there, you make the pivots on how to make that even better.

[Alex]: Absolutely, I think people that have seen some of my first Lawyer Talks can realize that we all do the same thing. Try it, learn from it, make it better. What are the books that you're reading right now or that you have read that you found the most impactful for people who are starting a business? 

[Storm]: Oddly enough, I think the psychology behind a lot of it is what you really need to know; the mindset on starting a business. I would start with Napoleon Hill, Think and Grow Rich. I would definitely recommend starting with the mindset because once you understand the fundamentals and because things are going to go wrong, you'll have a better idea of how to fix it. Things always go wrong, almost every day is going to be something that pops up, but you have to understand how to adapt and overcome those things.

Start with that book and then go more into technical things such as what applications to use? What websites to use? And I read books like the 4-Hour Workweek by Tim Ferris. That book was one of the first ones I read that inspired me to just dig deep and learn about outsourcing. Branding and 99designs blew my mind when I found out about that website.

[Alex]: That's awesome! What's super interesting too is along with figuring out what kind of entity you want to be, LLC, sole proprietor, is you have to think about the tax considerations and any time you're an LLC or sole proprietor, claim your taxes on a schedule C. Any of your business expenses are coming off your personal tax returns, which is pretty sweet because none of us have any extra money to give the government right now in taxes. Oh! And don't forget records like applying for a sales tax license or doing your franchise tax report.

Yes, I know it's going to make you cry because in order to have a business, you got to be able to do all of those things regardless of what kind of entity you are. If you're selling products, you have to apply with the Texas Comptroller for a sales tax license, even at a farmers market. All of you that are not charging sales tax for your products at the farmer's market, you are breaking the law. It costs nothing to apply for that license, I can do a video on how to do that. It's super simple, you'll get the license and then you have quarterly reports where you have to pay your sales tax. If you don't pay your sales tax, it's a $50 fine each time, even more if you get caught selling things and not reporting it so you have to keep good records. 

Now, about intellectual property (IP). 

This is one of those times you take your client, as a lawyer, and slap them a little because is that logo trademarked?

[Storm]: No! Don't judge me!

[Alex]: I'm not judging but the whole point here is we have some amazing businesses that don't take advantage of legal protection. A trademark is so that somebody doesn't steal or dilute your brand. If somebody came through and had something similar but their product was trash; the whole point of s trademark is so that their trash product doesn't dilute your amazing brand. You can trademark a logo but you can also trademark a phrase, "Snap It and Forget It" for example, which is what I use for my app, that's a trademark that I own.

You can trademark taglines or words; those are called standard character marks. If I chose to use "Snap It and Forget It" with any type of logo I could. If I change the logo, the words are still trademarked, it doesn't lock you into a particular logo. If you have a design mark, that's more something like this (GrownTogetherMeals logo), then the entire design along with the words are protected.

In trademarks, you've got to be selective. You don't get protection in every category for all of time. You pick Products or Services, once you pick Products, then you have to pick an international class that it falls into, so if you want to trademark meals or a cookbook or something like that with this design, that's cool. However, it's not going to cover you if you start producing shirts with that design; you would have to trademark your logo in the International class that covers clothing. If you have a brand that you're afraid of being diluted or you have a really cool or inventive phrase or design, get a trademark.

So, Storm, you obviously have a website.

[Storm]: Yes.

[Alex]: Did you guys design that yourselves? Or did you outsource it?

[Storm]: I actually designed it. 

[Alex]: That's awesome because that is their IP, their ownership, you own the URL, right? 

A lot of people like to go into things together but it's important to have a partnership agreement. Absolutely everything must be set up, even if you're not going to be an entity like LLC or Corporation or something like that, you have to have some sort of written understanding that both of you sign so you know how to operate. Businesses are like marriages. They can go great, they can go poorly and when the DIVORCE happens, it's drama. It's drama, it's litigation, it's feelings hurt, it's crazy. Have a written agreement!

Same thing, if you have employees, if you're going to have an employee, even if it's one part-time employee, you need employee handbooks, standard operating procedures, non-disclosure agreements. You don't want people stealing your recipes or unintentionally disclosing or telling people about information that you don't want people to know.

Several months ago, I was seeing a lot of non-tech-savvy individuals partnering with somebody and saying, "Hey, I'm going to handle, for example, the meal prep side of it" and the other guy's like, "Okay, I'll buy the URL and I will design the website." Sounds like a good deal, right? But then the portion that you work on blows up, and that guy is says, "Well, I get a portion of these profits and I own the URL now, you don't, the business doesn't, I do, so you have to purchase that from me," which gets really expensive. Never partner with somebody who's only going to provide website build services without a very strict written agreement.

[Storm]: Definitely want to make sure that it's all yours!

[Alex]: It's also why having partnership agreements and wills is really important because if, heaven forbid, something happened to one of the partners, that business is an asset that passes either to other partners or to the person's family, all of these things are tied together.

Now, what's your biggest piece of advice for my followers? 

[Storm]: Recently, I saw this quote where the young man goes up to the guru and asks him, "What's more important, the final destination or the journey?", the guru responded, "The company."

[Alex]: I absolutely love that! What are your one or two last takeaways to my followers about being a business, starting a business from the business owner's perspective?

[Storm]: I would say that a good piece of advice is that problems are good sign, problems are inevitable and you're always going to run into problems, and the only people that do not have any problems are actually in the grave. So if problems are what are frustrating you, learn to understand that those are just building blocks to your final destination.

  1. Look for the problems and iron them out immediately. It's kind of like a "fail fast, fail forward, or fail often" concepts. Everything is a learning process, don't get upset with yourself when you do find that problem because everything is just a process of getting familiar with whatever you're doing. 
  2. Be patient and then just keep trying that stuff because you're only going to keep getting better as long as you keep trying your best.

[Alex]: Thank you for being with us today. Follow GrownTogetherMeals on Instagram, check out their videos, and order their food!! I am telling you it is amazing for people who are busy and don't want to cook and want to have a little bit of a healthier lifestyle.

Thank you Storm!

[Storm]: Thanks for coming out,  I appreciate it!