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Old October 31st, 2007, 12:46 PM   #1
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Default Business startup.

Okay, I've got a few good ideas for a business, mostly regarding simple metal fabrication.

If I were to start building things and selling them, what sort of liability insurance would I need?

Patents a good idea, if I'm drastically improving on an existing design?


The stuff I'd be building is used for animal care, although not veterinary.

Any input?
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Old October 31st, 2007, 01:52 PM   #2
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Talk to your insurance folks . Thats the only place you can get a straight answer and check with a few of them . Price can vary a great deal between companies .
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Old October 31st, 2007, 02:08 PM   #3
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Okay, I've got a few good ideas for a business, mostly regarding simple metal fabrication.

If I were to start building things and selling them, what sort of liability insurance would I need?

Patents a good idea, if I'm drastically improving on an existing design?


The stuff I'd be building is used for animal care, although not veterinary.

Any input?
With Pfizer human health leaving Michigan there will only be limited in-state customers for your product from the sounds of it. You may consider contacting some of the animal care facilities at Pfizer Animal Health in KZOO and MPI, also in Kzoo / Mattawan and see if they would be interested in your idea. At least then you'd know if you could sell it once you build it.

Just my $0.02
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Old October 31st, 2007, 02:23 PM   #4
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Well, I know there's a demand, I'm just not sure if there's enough of a demand to justify production. Also, I'm not sure if the demand is just "Oh, neato", or "I'd like to place an order"...

And like I said, it's not veterinary stuff, although vet offices could probably take advantage of the versatility as well. (just change one surface to stainless steel)

For those that didn't know, my girlfriend is a dog groomer, so that's the target clientele.

Oh, and freight shipping would be probably the best way to get these products delivered. (as 90% of the rest in the industry already are)
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Old October 31st, 2007, 02:32 PM   #5
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First, find a lawyer that is familiar with small businesses. Form your own LLC. Then find yourself a high quality CPA that deals with small business owners primarily. These two people will be your best friends. Talk to other LLC owners in your local area for recommendations for both professions. There will be 2-3 names that are recommended by multiple people. These are the people you want to talk to. Interview each one and then go with who you feel you can work the best with. You will want business insurance, so again, follow the same process as above for recommendations. I am not sold on patents for small target market audiences. If someone copies your product, it costs money to fight them and you probably will not come out even in the end. Be the best at customer service and you don't need to be too concerned with competitors copying your ideas. Most of all, read up on starting a small business. Know your tax advantages. Understand why not making money in your business can be a great thing. Understand what records you need to keep. Know what start-up costs you can claim. I have an LLC and may be starting my second here shortly. It is well worth the time and effort if you do it right. But, don't skip the attorney or CPA. These people are worth every penny they charge you.
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Old October 31st, 2007, 02:36 PM   #6
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First, find a lawyer that is familiar with small businesses. Form your own LLC. Then find yourself a high quality CPA that deals with small business owners primarily. These two people will be your best friends. Talk to other LLC owners in your local area for recommendations for both professions. There will be 2-3 names that are recommended by multiple people. These are the people you want to talk to. Interview each one and then go with who you feel you can work the best with. You will want business insurance, so again, follow the same process as above for recommendations. I am not sold on patents for small target market audiences. If someone copies your product, it costs money to fight them and you probably will not come out even in the end. Be the best at customer service and you don't need to be too concerned with competitors copying your ideas. Most of all, read up on starting a small business. Know your tax advantages. Understand why not making money in your business can be a great thing. Understand what records you need to keep. Know what start-up costs you can claim. I have an LLC and may be starting my second here shortly. It is well worth the time and effort if you do it right. But, don't skip the attorney or CPA. These people are worth every penny they charge you.
Thanks for your input. I hadn't even really considered the CPA and attorney.

I know my product will be of the highest quality, so would the attorney be able to help write a specific warranty that covers my arse?

Also, I know you can't give a specific answer on this, but what would you consider the range legal and accounting costs to be, and what should be expected as a minimum?

Oh, and an old friend of mine is a CPA, I'll have to give him a call and see if he'd be willing to help.

If the business is set up as an LLC, that can be a partnership, correct? To save on startup costs, is having a silent partner a good or bad idea?
I don't currently own a welder, so that's a minimum of $2K to MIG everything together.
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Old October 31st, 2007, 02:48 PM   #7
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Your lawyer can help you with a sales contract that would cover or at least limit your liability. The LLC helps with that as well. Just be sure to keep business assets seperate from your personal assets. If you use business assets for personal stuff, you can lose some of the protections from the LLC. In your case, this probably doesn't make much difference though. You just don't want a pissed off customer that had a dog fall off your product and break it to be able to sue you for your personal assets.

The attorney I used in Jackson charged me a flat fee of $300 to do all the LLC and DBA paperwork and submit it to the state. My CPA charges different rates depending on who does his work. His rate is around $150/hour, but his lower level staffers are about $75/hour. My taxes are usually about $400, but that includes my wifes personal taxes, my personal taxes, and the business taxes. I tried to do them myself the first year. I spent MANY hours and thought I had it done right. He reviewed my work, found several issues, and my bigger refund more than offset what he charged me.
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Old October 31st, 2007, 02:51 PM   #8
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Your lawyer can help you with a sales contract that would cover or at least limit your liability. The LLC helps with that as well. Just be sure to keep business assets seperate from your personal assets. If you use business assets for personal stuff, you can lose some of the protections from the LLC. In your case, this probably doesn't make much difference though. You just don't want a pissed off customer that had a dog fall off your product and break it to be able to sue you for your personal assets.

The attorney I used in Jackson charged me a flat fee of $300 to do all the LLC and DBA paperwork and submit it to the state. My CPA charges different rates depending on who does his work. His rate is around $150/hour, but his lower level staffers are about $75/hour. My taxes are usually about $400, but that includes my wifes personal taxes, my personal taxes, and the business taxes. I tried to do them myself the first year. I spent MANY hours and thought I had it done right. He reviewed my work, found several issues, and my bigger refund more than offset what he charged me.
Cool....
My personal assets aren't really anything, however. I own a $500 beater car, a couple computers, hand and power tools, and that about sums it up.
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Old October 31st, 2007, 02:54 PM   #9
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Patent research is a royal pain. Try this site. http://www.uspto.gov/ See if you can find what it is you plan to build and see if someone has already patented it.
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Old October 31st, 2007, 02:55 PM   #10
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But, that won't always be the case. If you buy a house and run a business without setting up the LLC, there is no distinction between you the home owner and you the business owner. If someone sues you, they can take your house and personal assets. The LLC just builds that wall that keeps them from anything other than business assets. That is why I will have 2 LLC's. That way if I am sued as one business, they can't take the assets of the other business either.
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Old October 31st, 2007, 02:57 PM   #11
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Google has a good patent search engine as well. Off their homepage, click the dropdown labeled more, then click the patent link.
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Old October 31st, 2007, 03:59 PM   #12
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Dont run out and buy a welder till you know it will sell and be profitable. You can pay any number of people to weld it up for awhile and use your 2k for other things like advertising ect. Oh, and if you need anything cnc plasma cut let me know, I like helping inventors refine their product.
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Old October 31st, 2007, 04:34 PM   #13
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Dont run out and buy a welder till you know it will sell and be profitable. You can pay any number of people to weld it up for awhile and use your 2k for other things like advertising ect. Oh, and if you need anything cnc plasma cut let me know, I like helping inventors refine their product.
I can't exactly run out and buy anything, yet. I'd be getting financing from family to start it up.

Speaking of which, I emailed you a CAD file of stuff to be plasma cut, but I won't need it anymore. GF's manager said she couldn't use it, so it would be pointless to build anymore.
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Old October 31st, 2007, 04:44 PM   #14
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I can't exactly run out and buy anything, yet. I'd be getting financing from family to start it up.

Speaking of which, I emailed you a CAD file of stuff to be plasma cut, but I won't need it anymore. GF's manager said she couldn't use it, so it would be pointless to build anymore.
Really? I'll have to check my spam folder cause I didnt get one. Once in awhile new emails get chucked to spam till I approve them. But I guess it doesnt matter anyway Let me know if I can help any other way. fwiw I weld too.
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Old October 31st, 2007, 09:02 PM   #15
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to clarify a little bit, an LLC only protects you from debt liability. (If you take out a small biz loan and later default, or lease equipment, or have investors, etc) For general liability (a customer suing you for shody workmanship, broken product etc. you will need a general liability policy.
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Old October 31st, 2007, 09:44 PM   #16
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I know I would need liability insurance, and I already knew the LLC is only designed to prevent personal lawsuits.
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Old October 31st, 2007, 11:51 PM   #17
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Not to pee in your wheaties, but....

Liability insurance for manufacturers is NOT cheap. It will get cheaper as your business matures (track record). You can do without it if you really think your products won't kill anyone.... Depends what the product is.

Next bubble burster is that most businesses (I think the number is 96%) that are younger than 8 years old will fail.

So, my advice is, depending on your product, go without the insurance until the business gets big enough (if) to purchase insurance. There are many insurance agencies out there that specialize in liability insurance for product manufacturers but you'll need some number to give them.

If your product is something that can be relied upon to keep someone safe, then there really is no other option, unless you have really deep pockets. The people out there making bumpers, sliders, and the like are pretty safe from product liability if they have a disclaimer to go with it. If you're manufacturing suspension components or something along those lines you'd really need insurance.

It's much more specific than all that, but that's just a basic guideline.
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Old November 1st, 2007, 06:43 AM   #18
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GF's manager said she couldn't use it, so it would be pointless to build anymore.
So what is it? Why couldn't she use it? Is there still a niche out there?
My wife has owned her own grooming shop for 10 years and has seen everything. Just like for cars, there are cool and useless tools.
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Old November 1st, 2007, 06:51 AM   #19
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So what is it? Why couldn't she use it? Is there still a niche out there?
My wife has owned her own grooming shop for 10 years and has seen everything. Just like for cars, there are cool and useless tools.
Has she seen this?

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Old November 1st, 2007, 07:48 AM   #20
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to clarify a little bit, an LLC only protects you from debt liability. (If you take out a small biz loan and later default, or lease equipment, or have investors, etc) For general liability (a customer suing you for shody workmanship, broken product etc. you will need a general liability policy.
Not exactly. If your product kills or injures someone, the LLC prevents them or their heirs from taking your house, retirement funds, or other personal assets. Except under rare circumstances, they can only go after the assets of the business. The liability insurance would just protect the LLC from the lawsuit.
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