How to Protect Your Valuable Business Ideas

Every business has ideas it has developed to do things more efficiently. Or the business owner has come up with a way to produce his product in a manner his competitors cannot copy. Better yet, the owner has devised a variation on an existing product that makes it more durable in the marketplace. A business customer list is also an example. These ideas or innovations are important to a business’s success and allows them to gain competitive advantage over their competitors. 

But how can an idea be protected? They first must be tangible and able to be seen, read, touched or in some other physical form.  If a business owner has no way to protect these new ideas then the chances are they will never see the light of day. The rest of society will not benefit from these new opportunities. There are four legal ways to protect your idea: patent, copy right, trade secret and trademark. 

The first one – patent – is the most common way. Here the inventor files a disclosure on the invention with the U.S. Patent & Trademark Office (http://www.uspto.gov/) to review. This office is responsible for making sure the idea is able to patented.  There are three types of patents: utility, design and plant.  

With an utility patent, you obtain protection on how a product is used and works. 

The design patent then only pertains to the way the product looks.

Finally the plant patent is aimed to protect new species of plants that are bred.  There are some types of plant creation that is not covered so make sure you check into the possibility if you invent some new types of plants.

The second type of protection is a copyright. These protection devices are also managed by the Federal Government at the Library of Congress (http://www.copyright.gov/). This method protects an author’s rights to original creative works. An interesting website on copyright is www.templetons.com where they have an article on the top ten myths of the topic.

Next, we have trade secrets which are handled entirely differently.  They are not protected through Federal registration but through the legal system on all levels – federal, state and local laws. Some factors that determine if your idea is really a trade secret is:

1)      How many people  know it outside the business (hopefully none is the   answer)

2)      How many people, within the business, know the secret (hopefully few)

3)      How is it be safeguarded

4)      How important would it be to competitors

5)      How much did it cost to create this idea

If a business wants to protect information, it should keep in mind the above five questions as those efforts will help a court realize you are serious about this idea. As you can see from the questions above, a trade secret deals with the operations of the business and not information dealing with payroll for example.

The final way to protect your idea is through a trademark. These protection techniques are registered at the state level (usually at your secretary of state office of the U.S. Patent & Trademark Office (http://www.uspto.gov/). Here you are dealing with a recognizable sign, design, or expression that clearly identifies the product or service of a particular company.  An easy example is the Coca-Cola trademark for Coke. Trademarks have their roots as far back as the Roman Empire where blacksmiths would mark their swords. 

So even if you are a small business but have creative ideas, you can gain protection for your ideas. 

Funding for Your Business

“Yes Virginia, there is Funding for your Business…”

Just as the headline refers to the 1890’s news story in The (New York) Sun, there is funding in the capital world for many business if they cannot get it from traditional local or institutional banks. 

A business should always try to go local first in seeking funding either from community banks or the larger regional/institutional banks.   But not every business can fit the criteria of local banks and when turned down, they must go elsewhere.  But where is elsewhere is the question University of Missouri Extension Business Development counselors often get when these entrepreneurs come to our offices. 

After learning about the business, its past financial performance and where the owner wants to go with the new funding, the matching up process for the business against several new opportunities on the lending market can get started. 

One set of new lenders is the nonprofit sector.  While nonprofits have always been around, more and more are starting to lend money to qualified business owners or startups.  The lendee must meet criteria set by the nonprofit but if met, the terms are usually more flexible than a traditional bank loan.  In most cases, the lendee must show refusals letters from banks as proof of need.

Another set is the online environment.  Companies like OnDeck, Lending Club, Street Shares, Source 1 Capital and many others are now competing for local loans as many banking communities continue to have tight lending requirements. Here the entrepreneur goes to the website, completes the profile and the people behind the scenes go to work on matching the request up to potential lenders.  These lenders may be national banks outside of the local market area, financial investors, venture capital firms or other people or organizations willing to lend money to the entrepreneurial marketplace.

A second part of the online lending world are the peer to peer networks.  Here the entrepreneur tells the business’s story, the need for capital and the planned uses for it.  As people read the application, they decide on to invest or not in the opportunity.  Examples of this type of lending are Kabbage, Kiva, Prosper, and Zopa. 

A way gaining popularity amongst early retirees is using their tax-deferred retirement savings to start a business. This method is complicated due to the tax liability and the many maneuvers to avoid tax penalties for early withdrawal.  Guidant iFinance is an example of this type of lending.

One now so new way but more and more people are looking to is credit cards.  The National Small Business Association reported that about 33 percent of small businesses has used credit card financing in the last 12 months to help meet capital needs. Overusing this method can lead to cash flow chokes later on in the life of the business so entrepreneurs really need to plan out their usage of this option.

One final way is membership stores like Sam’s Club or Costco’s are turning to lending to their membership businesses as a way to help grow market share and retain customers.  It is important to know that only businesses can apply for these loans not a consumer.  These loans are traditionally under $25,000 and membership is required for application.  Not all club stores participate in this program so the entrepreneur will need to ask and not assume they do. 

Any questions on this article please call, 573-243-3581 and ask for Richard Proffer or email him at profferrd@missouri.edu. 

RIver Heritage Announces Fourth Annual Farm to Table Dinner

The movement of local foods continues to grow in American and here in the Midwest it is becoming of a very important way to illustrate the importance of local foods to our economy and our food system.

In a continuing effort to increase people’s awareness of this effort in a fun and “foody” way, the River Heritage Association (RHA) has announced the date of its fourth annual Farm to Table Dinner. President Jeff Grunwald announced the date has been set for Saturday, October 12 at the River Ridge Winery in Scott City, MO.

The event will start at 4:30pm with wine tasting from the host winery and light appetizers. The meal, served buffet style, will begin at 5:30pm. Lori Brotherton, event chairperson and association secretary, said “ We are very pleased to have Chef James Cain, of Cape Girardeau’s long time barbeque restaurant Port Cape Girardeau Restaurant and Lounge.” She went on to say, “the menu will feature food prepared from ingredients found within 150 miles of Cape Girardeau and will feature appetizers, cold and hot selections and two desserts.” The meal is served buffet style.

Page 2 Farm to Table Dinner

Chef Cain is a native of Southeast Missouri and finished his culinary training at the Illinois Institute of Art – Chicago in 2008. His family has owned the historic restaurant for over thirty years.

Just in case nature does not cooperate, the group has planned for the dinner to be held under a pavilion at the winery. The structure will house over 70 people so there is room for all.

A limited number of tickets are available for this annual sell out event at the price of $65 person. For tickets, please contact the River Heritage Association at info@riverheritageregion.com or any association member. The listing of members can be found at www.riverheritageregion.com.

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Interviews can be arranged by calling Richard Proffer at 573-243-3581 for more details.