Thoughts on Law and Life

The Official Blog of Astrab Legal Services LLC

Centers of Influence

Any successful small business owner is going to need to establish several Centers of Influence (COIs) in order to maintain long-term success.

  • What are Centers of Influence? They are individuals well-established in their particular practice area or social sphere. A COI can be an attorney, a CPA, a financial planner or simply a ‘social butterfly’ who knows everyone.
  • Why are Centers of Influence important? COIs are important in all aspects of a business. They can help jump-start a new venture by providing instant referrals. They can assist a business owner with practical advice on a particular topic or by simply acting as a sounding board for ideas or rants. They can be your very own unpaid sales force if kept in the loop of your business.
  • How do I find Centers of Influence? COIs can be individuals already existing in your business or social pipeline or they can be individuals sought out after careful research. They don’t have to know that they are a ‘center of influence’ for you…the term Center of Influence is not really a title that is bestowed upon someone officially…it is more of a relationship that develops on its own over time.
  • Do I need to repay Centers of Influence with referrals or gifts? That depends on each individual relationship…some folks like to help out and expect nothing in return. Others have a ‘quid pro quo’ in mind when giving advice or referrals, and this is an area where the start-up business owner must be careful, as that expectation is often implied but seldom demanded. If a COI expecting a return referral does not receive that benefit from you, then your relationship may suffer over the long-term. My best advice is to simply ask the person in some variation of the following: “Thanks for sending Bob over to me…is there any particular type of business that I should be looking out to send over to you?” If the person responds affirmatively and gives you some examples, you should darn well be on the lookout to return that favor in the future. If you don’t ever come across that particular target, make sure that you take the time in the future to remind the person that you are looking, but nothing has come up. This will reassure them that you understand that they are looking for help as well.

This is pretty basic advice, but I hope that it serves as a starting point for thinking about broadening your social networks to ensure that a lot of people know who you are and what you are doing!

Don’t ever hesitate to send me an e-mail or refer my blog to your friends, family members or business associates.

Mike Astrab is the owner of Astrab Legal Services LLC, a general law practice located in the greater Cleveland, Ohio area. Mr. Astrab is working to concentrate his practice on business consulting, estate planning and criminal defense. More information can be found at www.astrablegal.com.

This blog post is for informational purposes and should not constitute legal or business advice that can be relied upon by the reader, as each individual or business has unique issues that must be explored before concrete advice is offered!

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June 25, 2009 Posted by | Financial, Law, Legal, Life, sales & marketing, small business | , , , , , , , , , , | Leave a comment

Getting Back on Track

Things have been hectic over the past few weeks, and I truly have neglected by blog posts, which were a stalwart of my business plan. I am promising myself to get back on the wagon again and start posting, as professional and personal consistency are necessary prerequisites to any successful business person.
I ask those of you who read and enjoy my posts to comment and yell at me if nothing come up for a while…while ultimately the postings are my responsibility, it does not hurt to have others kicking me in the rear end when I slack off!
For today’s post I urge all of you to look at your own businesses and planning – Are you being consistent or have you also slacked off in certain areas? In order to succeed, each and every one of us must have not only a viable plan but also the internal drive to maintain that plan and modify it where and when necessary…by ‘modify’ I don’t mean drop things if they become an inconvenience, but to take a hard look at what is working and what is not working. If you are not doing something in your plan but have no data to show that by not doing the item you are helping or hurting your business, then you need to start it up again until you can gather enough facts to make an informed decision.
With my blogging, I honestly and simply slacked off – I had a seemingly consistent group of readers that was slowly growing, so there was no reason (nor any excuse) to stop. That is why I am going to get back up on the horse and start riding again!

Mike Astrab is the owner of Astrab Legal Services LLC – his company’s website (currently under construction) is www.astrablegal.com.

June 25, 2009 Posted by | Financial, Law, Legal, Life, sales & marketing, small business | , , , , , , , , | Leave a comment

Card Check Legislation

The buzz around legal and small business circles of late has been the Card Check legislation that is going to be introduced into Congress any day now. I am going to write a detailed blog in the next day or so regarding facts on Card Check and my opinions on what it might do to small business if passed. If you have any thoughts on Card Check or unions in general, please let me know by posting a comment and responding to the poll that I have attached.

March 11, 2009 Posted by | Financial, Law, Legal, Life, sales & marketing, small business | , , , , , , , , , , , | Leave a comment

Small Business Seminar Ideas

I’d like to hold a working seminar for small business owners in the Northeast Ohio area in the near future. Please pass along suggestions as to concepts/ideas that you would like to see discussed and that might draw you to the event. I’m looking at topics such as business plan drafting, budgeting issues, finding financing, insurance matters, retirement savings, etc.
Just post your responses as comments to the site to allow others to respond as well!

March 2, 2009 Posted by | Financial, Law, Legal, Life, sales & marketing, small business | , , , , , , , , , , , , , , | 1 Comment

Starting Your Own Business Series (Part III-Be Careful!)

“Work from home! Make thousands of dollars a month just sitting at your computer!”

Too good to be true? Chances are pretty darn good that the ad is either a complete scam looking to separate you from your money or is an opportunity that could work if you sit at said computer 24/7 for ten years. Either way, “opportunities” such as this need to be avoided when considering a start-up business, in my opinion. As I mentioned in my last entry, you should perform some introspection and discover your passion, then find a way to work that passion into your business.

If, however, you are dead-set on working with a “business-in-a-box” type of opportunity, it is essential that you perform due diligence and I would strongly recommend bringing an attorney and accountant into the mix. Before handing over any money, in-depth research needs to be undertaken – I would start with a simple Google search of the company to discover what others are saying about the credibility of the business. The next step are phone calls to the Better Business Bureau and your state Attorney General’s office to determine if any official action has ever been taken against the company or individuals running the business. A call to your local county recorder’s office can tell you if the company has outstanding judgment leins against it, indicating potential financial or legal problems.

If you are still interested following these steps, then it is time to ask the company to provide you with information on its finances, such as balance sheets, tax returns and credit ratings (if applicable). If the company is serious about doing business with you, then it should not be difficult to obtain these documents. If the company sets up roadblocks or outright denies you financial information, these are clearly ‘red flags’ and your interest in the opportunity should stop immediately. If you are able to obtain copies of the financial documents, you should hand them off to your attorney and/or accountant to perform further high-level due diligence.

Another step in the due diligence chain, depending on the level of investment, is a visit to the company’s headquarters. What appears to be a well-run operation in a nice suburban business park could actually in real life be a sloppy mess tucked into the corner of a basement. You’ll never know if you don’t check it out!

Finally, if there are red flags from your due diligence, or if your professional advisors recommend against investing in the opportunity, please listen to their advice and ask more questions as to how they formulated their opinions. If you want a second opinion, get one. I can tell you this – if an attorney and a CPA come to me and tell me that they’ve looked into things and that they do not believe all is on the up-and-up I would most likely drop the thoughts of associating myself with the opportunity at that point.

Once again, I am keeping this very simple, but just passing along the basics to get you thinking about the dangers of failing to properly investigate a situation or opportunity before jumping in head-first. Just think – if more people had properly investigated Bernie Madoff before investing with him he might not have had as many victims.

My office can perform these due diligence investigations for you. I also have relationships with CPAs and can team up to investigate from both a legal and accounting viewpoint. Please contact me at (216) 577-0013 if you are interested in sitting down and discussing a legal matter!

Michael K. Astrab is the principal attorney for Astrab Legal Services LLC, located in Cleveland, Ohio. He may be reached at (216) 577-0013 or via e-mail at astrablegal@sbcglobal.net. This blog is designed for informational purposes only and does not constitute legal advice. You should ALWAYS seek out the advice of an attorney and financial professionals before starting a business.

February 28, 2009 Posted by | Financial, Law, Legal, sales & marketing, small business | , , , , , , , , , , , , | 1 Comment

Starting Your Own Business Series (Part II-Passion)

After a long absence due to business development work and other issues, I am back to blogging and will make my best efforts to maintain a daily post on this site. I had a post a couple of weeks ago that was the start of a series on starting your own business and discussed buy-in issues with regard to a spouse or significant other as a critical issue that must be addressed before any further planning is contemplated.

Today’s blog deals with deciding what to do with the business that you want to start. This may seem like common sense, but in the quest for easy money it is an area often overlooked and can doom a start-up business if not thought out properly.

My advice is to take a self-inventory and think about what you have done in the past on both a personal and professional level that has really brought out your passion. I believe that having passion is a primary key to developing a successful business. If you have no passion for something, but are merely excited about the concept, you will burn out quickly and wonder why in the world you decided to pursue the venture in the first place. Take a look at the mortgage industry – I am willing to bet that in your town a significant percentage of empty storefronts in strip malls were formerly occupied by mortgage brokers. In most instances, a wannabe entrepreneur took a look at the business environment a few years ago and saw that folks in the mortgage industry were making lots of quick easy money. The thought of “I want to be there too” came into the person’s mind and he or she quickly threw together a business. The mistake here was that the person did not look beyond the quick buck to see what was going on in the industry, such as market saturation and the clearly apparent bubble that was beginning to form in the sub-prime market. The result became that Joe, who used to work as a cell phone salesman and had no experience at all selling mortgages, got a couple of similarly inexperienced friends together, obtained a license and threw up a shingle. When the market took its inevitable downfall, selling mortgages was no longer appealing, and as the group had no collective passion for the industry, they simply gave up and folded the business.

We’ll use Joe again for a more positive example. Joe, in addition to being a cell phone salesman, was also a black belt martial artist. When he was not selling cell phones he was at a training facility not only learning but also teaching his art to less experienced students. He had a passion for the sport and knew it inside and out. What Joe should have considered was opening his own small martial arts training facility where he could use his experience and passion to not only teach his art, but also make some money while doing it. This is a pretty simplified example and does not take into consideration Joe’s business skills, market research, start-up costs, etc. What it does take into account, however, is his passion. If you have the passion for something then the rest of the pieces can fall into place much easier.

Take some time and think about why you want to start your small business…Is it because you truly have a passion for the point of the business or is it because you see the potential for a large, quick monetary gain? There will be rough times in any business – it will take your passion to get you through those rough times and onto the next level. Instead of reaching your monetary goals in six months it may take two or three years, but the trade-off is worth it!

If you are considering starting your own small business, I’d like to help. I have assembled a multi-disciplinary team that includes representatives from the accounting, insurance, banking and financial services industries to aid you in getting started, building on what you have in place already or saving what you have built from impending financial disaster. I can be reached at (216) 577-0013 or astrablegal@sbcglobal.net. There is no question that the economy is in danger – don’t let your business or dream go down because some Wall Street goof-offs could not get their houses in order!

Michael K. Astrab is the principal attorney for Astrab Legal Services LLC, located in Cleveland, Ohio. He may be reached at (216) 577-0013 or via e-mail at astrablegal@sbcglobal.net. This blog is designed for informational purposes only and does not constitute legal advice. You should ALWAYS seek out the advice of an attorney and financial professionals before starting a business.

February 26, 2009 Posted by | Financial, Law, Legal, Life, sales & marketing, small business | , , , , , , , , , , , , , , | Leave a comment

Blog Slacker

Sorry all…I’ve been extremely busy on multiple fronts for the past few days and just have not had a chance to update the blog. I’m working on ideas for new content and want to continue the small business series, so please stay tuned for updates!

February 25, 2009 Posted by | Financial, Law, Legal, Life, sales & marketing, small business | , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Starting Your Own Business Series: Family Buy-In

I am concentrating my law practice on small business consultation – I want to see small business thrive, as I believe that these companies are the life-blood of our economy. My goal is to help start-ups and existing companies get off the ground and make it through the current economic crisis. An attorney should be a crucial part of your business – it is folly to rely on pre-printed business forms or software to handle your legal needs. These documents may get you going, but it is very easy to make mistakes along the way that ongoing consultation with an attorney could have avoided. The role of a business owner is to run and grow his or her business, be it a single-person company to a multiple employee enterprise. There is no reason for a small business owner to be reviewing or drafting their own contracts, drafting employee policies, negotiating deals and/or leases and handling other matters that an attorney could easily take on and free up the owner’s time to market the business.

I am starting an in-depth series on starting up a small business. Today’s topic will be short but is one of the most important concerns – ‘buy in’ from a spouse or significant other. If the life partner of a prospective business owner is not on board, the business could not only be jeopardized from the start, but the relationship could become damaged as well.

Taking on a small business will definitely mean family sacrifice. If the prospective owner is giving up a salary to get started, the family will be missing that income until the enterprise can get up and off of the ground. In addition, the ‘burn rate’ of the family’s cash will also increase as necessary start-up costs are introduced into the family’s already weakened budget. I will use a spouse as an example in this article, but long-term non-marital relationships are also extremely relevant as well.

What are the issues that need to be discussed? Here is a laundry list that barely scrapes the surface:

  • Type of business to be started: Is this a business that the prospective owner is familiar with or is this a completely ‘out-of-the-blue’ venture?
  • Funding for the business: Will the money be coming from savings or will a line of credit be sought?
  • Liability issues: What is the potential impact upon personal assets should the business fail?
  • Business plan: What is the structure of the business? What is the time frame to reach profitability? How will the business attract clients/customers?
  • Location: Will the business be run out of the home or will an office be necessary?
  • Time commitment: How will the business affect the prospective owner’s ‘at home’ time? Will responsibility for family activities be placed on the spouse?
  • Role of spouse: Will the spouse have a place or say in running the business? If not, why not?
  • Income replacement: How will the lost income be replaced in order to keep the family solvent? When will the prospective owner ‘cut loose’ from his or her salary to devote full time and attention to the business?

I could go on for pages with talking points, but I think this list can serve as a starting point. A key is total transparency with the spouse – the prospective owner cannot hide problems from his or her spouse and communication must be constant. An idea would be to schedule monthly update meetings with the spouse to provide specific operational details regarding the business. If growth is shown, it might make a nervous spouse a little more at ease with the situation.

An attorney meeting with the prospective owner and his or her spouse can go a long way in achieving buy-in. If the spouse knows that there is a third party, especially one geared to help set up and protect the business, on board, it could help calm fears. My practice would assist the family with addressing the above questions, working on setting up a family budget and staying on board to assist with ongoing business issues.

Bottom line: Do not walk in the door one evening and tell your spouse that you have quit your job and started a new business. Utilize total transparency and make the spouse a partner, either direct or indirect, from day one. Without spousal Buy In, a start up is damaged from the onset…don’t make this mistake!

I am available for consultation on these issues. Please do not hesitate to contact my office at (216) 577-0013 to set up a time to get together and discuss starting your own business. After meeting with the prospective owner, the next step would be to set up a meeting with the spouse and go over the business planning issues that have already been covered and address questions/concerns from the spouse.

If you are considering a start-up, get planning, but do it smart!

Michael K. Astrab is the principal attorney for Astrab Legal Services LLC, a general practice law firm located in Cleveland, Ohio. He may be reached at (216) 577-0013 or via e-mail at astrablegal@sbcglobal.net. This blog is designed for informational purposes only and does not constitute legal advice.

February 16, 2009 Posted by | Financial, Law, Legal, Life, sales & marketing, small business | , , , , , , , , , , , , , | Leave a comment

IRA Confusion Regarding 2009 RMDs

Good Evening! Its been a busy few days, so I’m going to borrow again and post an article that appeared in today’s Wall Street Journal regarding a topic that has generated much interest – the new IRS ruling allowing investors to forgo required mandatory distributions from IRA accounts in 2009. There is much confusion out there, and this article does a pretty good job of touching base on some areas of concern:

New IRA Law Bewilders Investors

Break From Mandatory Withdrawals, Meant to Protect Savings, Leads to Mixups, Ad Hoc Responses; ‘It’s All So Confusing’

By KELLY GREENE and ANNE TERGESEN

A new law that was intended to give retirees and their battered nest eggs some relief is causing aggravation instead.

Owners of individual retirement accounts and 401(k)s who are over age 70½, and those who have inherited such accounts, must withdraw a minimum amount from those accounts each year, based on their life expectancy. In December, lawmakers suspended that requirement for 2009, hoping to give investors a chance for their accounts to rebound after a brutal year in the markets.

Yet that seemingly simple idea — a one-year reprieve from mandatory withdrawals — is giving headaches to investors, financial planners and retirement-plan custodians. Retirees are getting mixed signals from IRA custodians and other retirement-plan administrators about how to go about suspending withdrawals — and whether they’re even allowed to do so. Administrators of 401(k) plans are worried that the participants in their plans may not be allowed to suspend their withdrawals, and say that the Internal Revenue Service and Treasury Department have yet to provide adequate guidance.

A number of IRA custodians are trying to establish procedures, especially for investors who receive automated payments each year from their retirement accounts, that will allow account holders to suspend or trim required minimum withdrawals. But some don’t plan to send letters outlining changes for 401(k) holders until April. In the meantime, some custodians are still mailing checks — even to retirees who may not want them. Other custodians are stopping payments unless account owners ask for the funds.

There is a backstop for retirees: the “60-day rule.” IRA owners can generally roll unwanted withdrawals back into their accounts, as long as they do so within 60 days. To do so, you can simply write a check to the IRA custodian for the same amount you received. You’re allowed to do one rollover per account once every 12 months. Otherwise, the distribution is taxed. It’s not uncommon for people to miss that deadline, and the IRS in recent years has been reluctant to approve requests for extensions.

“It’s all so confusing,” says Connie White, a 73-year-old retiree in Plainfield, Ind. “You have to stay on top of it.” She and her husband Paul, also 73, received a check from an IRA annuity that they had set up to generate automated payments before they thought to call to change the amount.

The Whites sought help in late January from their accountant, Martin James. Three days later, Mr. James got an email from the couple’s IRA custodian, Lansing, Mich.-based Jackson National Life Insurance Co., explaining how customers like the Whites could suspend their payments. With financial advisers’ help, Jackson National is working with customers whose automated payments already went out to return any unwanted withdrawals, says John Koehler, the company’s vice president of retirement and wealth strategies.

Some retirees, like the Whites, aren’t waiting for their IRA custodians to contact them first. But consistency is in short supply. ING Groep NV’s U.S. operation at first told IRA owners that it would continue to pay distributions that had been set up on a systematic schedule. Recently, though, the company said that, instead, it will suspend such payments unless customers ask to continue them.

“The legislation was not yet signed by the president when we issued a preliminary communication,” ING said. “Once the law was signed, we … concluded that this was the best way to be compliant and serve our customers.”

Security Benefit Corp., based in Topeka, Kan., stopped payments to IRA owners who withdraw only the required minimum each year, but it has continued payments to those who take out larger amounts. “We suspect that those people [who take out more] are probably living off that income, so we are not going to turn those withdrawals off,” says Thomas Granger, sales director to qualified plans at Security Benefit. In January, a “handful” of customers got distributions they had intended to skip this year, he says.

Gloria Guth, a 73-year-old retiree in Coconut Creek, Fla., called her IRA custodian, TIAA-CREF, in early January to see if she could take half the amount normally required. The answer, she says, was “no, or maybe.” Later, when she asked again, she was told she could do so. A TIAA-CREF spokesman says its call center handles 12,000 clients a day, “and we strive for all of those conversations to help enhance our customers’ financial security.”

The rules for 401(k)s and other workplace-sponsored retirement plans can be even murkier. Some 401(k) plans — for the moment, at least — are still requiring participants to make withdrawals. The reason: Plan sponsors have to get the documents governing their plans approved by the federal government, and some fear that allowing any suspension of payments will violate those documents. Others worry that suspending systematic payments will run afoul of their plans’ governing language.

As such, administrators are trying to figure out whether they first have to amend their plan documents, and get those amendments approved by the IRS, before they can suspend withdrawals.

“There’s confusion over whether amendments are necessary, whether you can continue payments unless the retiree opts out, or stop the payments unless the retiree opts in,” says Jan Jacobson, senior counsel for retirement policy at the American Benefits Council, a Washington, D.C., trade group.

On Friday, the council sent a letter to the IRS and Treasury Department asking for guidance on how plans can suspend distributions and how retirees who already received unwanted payouts can put them back without penalty. (People age 70½ and older who are still working aren’t required to take distributions from their current employer’s retirement plan.)

The good news: The majority of 401(k) distributions don’t go out until later in the year, “so there is time to wait for clarification,” says Terri Hale, a spokeswoman for Principal Financial Group in Des Moines, Iowa, an IRA custodian and 401(k) administrator. (Account owners who have already received payments can roll them into an IRA and possibly back into their 401(k) or other tax-deferred account, as long as they do so within 60 days.) Principal is joining with industry trade groups in asking the Treasury Department to streamline the “administrative burden” involved in suspending retirement-account withdrawals, Ms. Hale says.

Financial planners are urging investors to keep the following points in mind:

Don’t wait to hear from your IRA custodian or 401(k) administrator. If you wish to suspend distributions in 2009, or ensure delivery of payments, contact your plan and ask what steps, if any, are required.

Similarly, ask whether you will need to submit a request in 2010 — after the law authorizing the one-year suspension expires — to get automatic distributions started again. Some companies say they plan to resume distributions; others will require written requests.

If you do suspend retirement-account withdrawals this year, you may want to roll traditional IRA assets into a Roth IRA. Of course, you’ll have to pay income taxes on the amount you convert. But Roth IRAs have no required distributions and generally no tax on future earnings.

Are you the beneficiary of a trust that holds an inherited IRA? If the trust instructs the trustee to pay you only the “required” IRA distribution, you may get nothing this year, says Natalie Choate, an estate-planning attorney at Nutter McClennen & Fish LLP in Boston. If you need the money, see if the trust authorizes the trustee to pay you “additional amounts in the trustee’s discretion.”

If you were supposed to take your first distribution in 2008, and you waited to do so in the three-month grace period that ends April 1, you still have to make the withdrawal (and pay any tax due). But if you turn 70½ in 2009, you’re off the hook for your first-year withdrawal, and would have to make your second-year withdrawal by Dec. 31, 2010.

February 11, 2009 Posted by | Financial, Law, Legal, Life, sales & marketing, small business | , , , , , , , , | Leave a comment

Add Value Everyday

When I first started this blog I intended to simply write on legal issues. Taking into consideration today’s environment, however, it has morphed more into a forum on building and maintaining your business. Small business owners face huge challenges, not only from corporate competition, but also from lack of consumer liquidity, overdue accounts payable and rising costs all around. I want to offer tips and open discussions on ideas to help small business owners move forward in this economy. In addition, my firm is putting together a small business consulting practice to provide essentially a team of experts to act as a guide to business owners in all areas, including but not limited to business planning, marketing, taxes, cash management and, of course legal issues. If you want a consultation, please contact me at (216) 577-0013.

Today’s topic is on adding Value. This applies to both existing and prospective customers/clients. It is uber-critical to keep our existing customers and the best way to do that is to go overboard with customer service and attention. If you normally take a week to get a job done, do it in half the time if possible. Return phone calls immediately. Start an e-newsletter and e-mail campaign on topics not only related to your business but also to big current event issues of the day. The goal is to keep the customers engaged and maintain ‘top-of-mind’ awareness of your company amongst those customers. This will not only maintain your current base, but hopefully will grow referral opportunities.

As to prospective customers, keep pushing and make every effort to bring them on board. Always be moving, within reason, towards the sale. Offer them a door into your business by including them on your customer mailings or set up a breakfast/lunch meeting if you feel that it might help close the business. Always return their phone calls as soon as humanly possible. Understand that you are not the only business looking to bring them on board and seek avenues to place yourself above the competition.

There are many, many ways to add value to your customer/client relationships, and the methods vary from industry to industry. The bottom line is that you need paying customers in order to stay in business, so start thinking outside of the box to keep and obtain those customers.

Michael K. Astrab is the principal attorney for Astrab Legal Services LLC, a general practice law firm located in Cleveland, Ohio. He may be reached at (216) 577-0013 or via e-mail at astrablegal@sbcglobal.net. This blog is designed for informational purposes only and does not constitute legal advice.

February 4, 2009 Posted by | Financial, Law, Legal, Life, sales & marketing, small business | , , , , , , , , , , , | Leave a comment