The media is making a lot out of the demise of a small but popular DC restaurant, supposedly done in by a Groupon deal gone bad. Back Alley Waffles plight has been spotlighted on CBS This Morning, in the Washington Post and on FoxNews.com. But who is really at fault here, the big Goliath Groupon, or did the restaurant owner bite off more than he can chew?

Only three months after opening, Craig Nelson, the owner of Back Alley Waffles, signed up for a Groupon deal to try to bring in new customers. The problem is, Groupon's discount  worked too well.  Too many hungry bargain hunters overwhelmed the small waffle shop--and Nelson couldn't keep up. The biggest problem was paying for all the extra ingredients the new customers were consuming. It wasn't like he had a lot of money in the bank to begin with. We were “basically starting a restaurant with no money.” Nelson told CBS This Morning. The waffles may have been great, but Nelson's financial planning wasn't exactly a recipe for success. 

In my book, How to Build Your Business and Sell it For Millions, I discuss how sustainability is a key factor for any business owner. Does your business have what it takes to make it in the long haul? A big factor for that is capital. Lack of capital is the biggest reason new businesses fail. Too many entrepreneurs tell themselves, “I have enough money to open the doors. I’ll figure out the rest later.” Nelson found out rather quickly he didn't have time to figure things out "later."

As he told CBS This Morning, “[we couldn’t afford the] cost of food and labor to satisfy Groupon holders and we were so tight financially that we couldn’t bear the cost of that and if forced us under.” He failed Sustainability 101.

But that wasn’t the only factor for the failure of Back Alley Waffles. Groupon has a very extensive contract detailing the dates of the sales, payment times, and terms. When accused of being responsible for the closing of Mr. Nelson’s business, Groupon countered with, “We scheduled his feature on his terms, on a date he selected, under a contract he reviewed and signed.” The information in the contract certainly could have helped Nelson, had he done a better job of going over it. But in an eye-opening admission, Nelson told CBS This Morning, "I didn’t read it carefully enough… their fine print got me.” 

It's rare that people admit that on camera. But not reading a contract is all too common in business. Ever click "accept" to the terms of new software without reading any of the agreement, or sign a car rental agreement without a second glance? In my recent article in SmartCEO magazine, “Read the Contract”, I discuss the importance of reading the fine print and always knowing what you are signing. 

Every day, all across the country, thousands of businesses put their companies in jeopardy when they rush to sign contracts. They don’t read them, they don’t understand them and they are not prepared for the consequences. It’s the opposite of I came, I saw, I conquered: I rushed, I signed, I regretted.

For Nelson, the Groupon payment schedule clearly stated that he would receive his payments in three installments, dating anywhere from one to three months after the deal closed. Nelson claims the checks took longer than expected and the company dragged out the check processing- ultimately leading to the lack of funds to pay his creditors. Even if you take Nelson at his word that the checks came late, the real question the media should be asking is, was it Groupon or Nelson himself who really killed Back Alley Waffles.

One bad deal can cost you the profits from 10 good ones – or even your entire business like it did, Mr. Nelson. Build in sustainability. Read your contracts. To learn more about starting a business, you can find more of my articles in the Articles section of this site or you can find my book, How to Build a Business and Sell It for Millions on Amazon.com.

Every day, companies sign important contracts, honor their part of the bargain and then discover that the other side isn't living up to its end of deal. Most businesspeople go into agreements under the assumption that the other party has the same intentions and ability to honor the contract. Without taking the proper precautions, you may find yourself at on the losing end. In my latest Legal Edge article in SmartCEO magazine, I explain the steps every business owner should take.

1. Practice Due Diligence: Background checks, obtaining financial statements and references are the best way to check and re-check the financial integrity of a possible partner. You also want to make sure they are not a habitual “retrader”-- someone who locks into a deal then tries to renegotiate the terms instead of honoring them.
2. Take the Proper Protections: Drafting a contract with business terms as well as protections is of the utmost importance to protect yourself in case the other side does not deliver. Having a skilled attorney to draft clauses entitling you to reimbursement of your attorney’s fees if you prevail is recommended.
3. Establish Collateral: Establishing deposits, mortgages, deeds of trust and personal guarantees all are good forms of collateral in the case of a breach of the agreement.
4. Third Party Protection: Sometimes proposing a deal between two parties is not enough to really protect yourself. Getting a third party involved that can oversee the agreement can make you and your company more secure. Letters of credit from an established bank or bonds that require a third party’s signature are both great ways to ensure third party protection.
5. Prepare for the Fight: How many times have you heard the phrase, ‘always be prepared’? Even when you are entering a partnership or bargain that you believe will be mutual and both of you will have the highest level of integrity, it cannot hurt to live by those words. Be prepared for a possible fight. Save evidence, send proper notices and always fulfill your end of the bargain so they cannot argue mutual abandonment of the deal.

One bad deal can wipe out the profit of ten good ones. Although taking the aforementioned steps may seem tedious, obtaining protection and preparing for the fight are measures that may make all the difference in preserving the benefit of your bargains. To learn more about protecting your bargains, read my article here.

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SmartCEO magazine recently held a roundtable with Washington DC’s top attorneys to discuss the state of today’s businesses and regulatory agencies and how it all affects you. Jack Garson was invited to participate and weigh in on a few crucial topics - from real estate to intellectual property.

The first topic was today’s ‘good news’ for business in the DC area.

“We’re seeing a surge in apartment construction and metro-oriented construction fed by the demographic shift.” Jack explained.

This is a wonderful opportunity for the people of Washington, DC, Northern Virginia and Maryland. With the recent construction of the Silver Line, Northern Virginia has opened up a lot of metro-oriented projects as well as the free flow of capital to the area. The greatest news about all of the improvements being made in the area is that banks feel comfortable enough to finance them.

As the discussion continued, questions turned to a more advisory feel, speaking about intellectual property, real estate and overall business tips. Jack spoke about maintaining your intellectual property and how to avoid leaving it at risk of exposure. His most important tip was to do a full search of the names and registration information you want to use for your service or product. This is crucial to ensure you do not encroach on anyone else’s IP. It is also important, that after you obtain your name and registration, that you monitor the use of your IP as to avoid others using it.

The next topic discussed was, business and real estate. When expanding your business, you may need more space in which to work, but leasing or buying is a big deal.

 “Your real estate should satisfy the needs of your business… Do what’s best for the business. The business is your golden goose. In most cases, you’re making your money on a thriving business, not on the real estate.”

 As the program progressed, more topics were covered including mistakes made during hiring, contract workers, interview protocol, financing, and salary exemption. Whether you are ready to start a new business and need to protect your IP, you are ready to expand, or you are hiring, Jack offers his professional advice in SmartCEO magazine every month in the Legal Edge section. To learn more about ways to improve your business, click here to listen to the entire Roundtable event podcast:

Washington Attorneys Roundtable 2012

Business is no longer a “build it and they will come” affair. To create and maintain a profitable business, you need a competitive edge. Your competitive advantage can both drive more business your way and – critically – protect you against copycats.

In my latest Legal Edge article in SmartCEO, I point out the keys to distinguish your business from others while fending off imitators and keeping you On The Edge of the competition. In order to identify your competitive edge you first must:

- Figure out what makes your business different and profitable.
- Make sure you are attentive and responsive to your customers, especially when providing services.
- Understand your customers.
- Build your advantage based on what your customers want and protect it.
- Stay current and fresh.

Protecting a competitive edge can take a variety of forms. It may be as simple as a restaurant that not only has good food, but is meticulous about cleaning its bathrooms. It also could be as straightforward as training your staff. Often your advantage may come in the form of what most companies identify as their most valuable assets-- their employees. If you keep your employees happy- with more than just a paycheck, your customers will be happy and in turn, you and your business will be happy. But don’t forget, you have to protect that happiness to be successful. Protect yourself, your employees, your customers and your entire business by implementing important employment policies, necessary legal protections, contracts, and customer agreements, etc.

Keeping your business and advantage fresh is critical to success. Your advantage today can be your disadvantage tomorrow if you don’t protect and manage it. Stay current and remember, the only thing that remains constant in business is change. So keep an eye on your competitors and stay ahead of the curve. To find and build your competitive edge, read my article here.

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