Preparing a Proper Legal Foundation: A Start-Up Fable

1. Preparing a Proper Legal Foundation: A Start-Up Fable Case 7.1 Group nu 2 Valerie- MA1N0220 David- MA1N0219 BảoBảo- MA1N0230 Amos- MA0N0241

2. Introduction to the case (1/3) • Jack and Sarah: Start-up a business called iUser Accessories (to be revised by trademark attorney before any advertisement) • to sell accessories for Apple iPods and iPhones • 10 kiosks in malls and high-traffic areas • Website • Value-added promotions: Series of short videos (helps to make better use of iPods and iPhones) • Customers will be provided code to access videos from the web

3. Introduction to the case (2/3) • Jack and Sarah: 1st place in university-wide business plan competition • 7500 USD in cash and 7500 USD in-kind services • Completed feasibility analysis • Concept statement • Distributed to 16 people incl professors, electronic store owners, users, parents of young users  positive response • After concept statement: market survey

4. Introduction to the case (3/3) • Start-up capital (1 and 3 year pro forma financial statement)business is viable • 66000 USD funding • According to projection: cash flow possitive after 4 months, no need for additional funding • Projections: • 32 000 USD salary / year /both • 3 000 USD personal contribution of each • 60 000 USD friends and familly • Meeting with attorney • They prepared list of issues with their recommendations • Emailed the list to attorney 1 week prior the meeting

5. Q1: complete Jack and Sarah‘s list for them, incl the issues you think they will place on the list along with their recommendations http://www.sba.gov/content/startups-high-growth-businesses

6. Q1: Which of the issues will stimulate the most discussion with the attorney, and which issues do you think will stimulate the least? In thediscussiontheymust open thequestionsconcernigoftheownershipformandtaxationdifferencies to findthe most suitablesolution Theymustfindoutwhat are the most offenproblemsof start-upcomp., whichotherorderandlawissuetheymustexpect Questionabouttheaccounting, liabilities, financial reporting, guaranteesandagreements IPR – intelectualpropertyconcerningofthe web pages show themthepossiblecombinationoftheFace to Faceselling, E-commerceopportunitiesandServices as a formofthe business http://www.sba.gov/content/self-employed-independent-contractors

7. Q2: Make a list of the things you think Jack and Sarah did right in preparing for their meeting with the attorney. • asked for the reference of the right and good attorney • research regarding the legal issues that they might discuss to understand it better • asked for an advice of experiences businessman (father of Sarah) regarding the meeting with an attorney • created the list of issues together with recommendations • they emailed the list of issues 1 week in advance to attorney in order to allow attorney to prepare well and to lead the discussion efficiently

8. Q3: Comment on the product feasibility analysis that Jack & Sarah completed. Do you think the way Jack and Sarah approached this task was appropriate and sufficient?

9. PRODUCT FEASIBILITY ANALYSIS Developed a concept statement and feasibility study then distributed it to a total of 16 peoples. Responses received: Positive Distribution of videos: Educative Idea: To use iPod and iPhones better Surveyed 410 people in a more conventional manner.

10. Median Age of Target Market: 20 years old Process of Distribution: Approaches their target market, then ask them to complete the survey. Survey design: Large Population 52% of the target market own an iPod and iPhone. the way Jack and Sarah approached this task was appropriate and sufficient because participants are very interested in their feasibility analysis.

11. QUESTION 4 (a) • What advantages do Jack and Sarah have starting iUser Accessories together, rather than one of them starting it as a sole entrepreneur?

12. Sole Proprietorship vs Partnership • Disadvantages of a Sole Proprietorship • The business relies on the skills and abilities of a single owner to be successful • Raising capital can be difficult. • Business losses can be deducted against the sole proprietor’s other sources of income • The business ends at the owner’s death or loss of interest in the business. • Advantages of Partnership • Sarah and Jack pooled their skills, abilities, and resources to run a business • Having more than one owner made it easier to raise funds. • Business losses can be deducted against the partners’ other sources of income. • The business ends with the death or withdrawal of one partner unless otherwise stated in the partnership agreement

13. QUESTION 4 (b) • What challenges do you think Sarah and Jack will have keeping their partnership together? • Liability on the part of each general partner is unlimited. • Because the business relies on the skills and abilities of a fixed number of partners, hiring employees who have additional skills and abilities could be expensive. • Raising capital can be difficult. • Because decision making among the partners is shared, disagreements can occur. • Loss of interest to work with each other • Family and friends intrusion • The business ends with the death or withdrawal of one partner unless otherwise stated in the partnership agreement.