Starting a Website Biz? 3 Huge Mistakes

Starting a Website Biz? 3 Huge Mistakes
by Sue Basko, esq.

1)  Offering a service or product that is illegal.  I’ve seen a number of website plans where the whole thing revolves around violating other peoples’ music copyright.  And isn’t that how Kim Dotcom allegedly made his fortune – running a website that violated copyrights on movies and music?  It does not have to be this elaborate.  I’ve seen website plans that violate local laws about show booking and job placement.  These things are usually covered by State law, so you need to check it out before you plan it.  I saw an online business offering custom wine labels.  Wine labels are carefully regulated and approved by the federal government, and you can’t just go creating cute ones and slapping them on bottles of wine. 

If your idea has never been done before – there may be some really good reasons why.  And if the funding scheme for your business has never been done before, it is probably illegal.  Not possibly, but probably.  Research and consult. 

I’ve seen people plan web businesses, get funding, build websites, and even start running their businesses, only to be cut short because their enterprise was essentially illegal.  It’s rarely as dramatic and over-the-top as tactical teams in helicopters landing on Kim Dotcom’s driveway, but it may be just as devastating.

IDEA: When you come up with a plan for a web business, research it first.  Then consult with a lawyer or two in the field in which your business would be.  If it’s music, check with a music lawyer, if it’s medical, check with a medical lawyer.  And on.  Whatever it is, before you get investors or put in work, check out the idea.  

2)  Picking a Name that Someone Else Already Owns.   Twitter made this mistake – they picked a name that belonged to another online service.  Eventually Twitter became so rich and powerful they were able to get the trademark on the name, probably with a pay-off to the name owners.  Don’t make the same mistake.  For more on this, see Naming Your Creative Business.

3) Giving Away Big Chunks of Your Business Without Meaning To.  If you saw “The Social Network,” you know that Mark Zuckerberg allegedly gave away a portion of the not-yet-created The Facebook when he accepted money from a couple brothers and agreed to build them a social website. 

Giving away a share of your business can be as easy and casual as a chat in a hallway or an email.  And it is much easier to find yourself giving things away if you are desperate for money.  Think.  Read up. Know some business and legal basics before you begin. Bring on a good lawyer to form any working deals.

If you need a refresher course, watch “The Social Network” again.  

And remember this handy rule: If you don’t make money, no one will bother you.  But the minute you start making money, people will come out of the woodwork claiming you owe them a share.  So you need to think strategically and plan ahead.