Roy L. Pearson, the idiot judge whom everybody now knows as the guy who sued a dry cleaner for a cartoonishly over-the-top amount of money for missing pants, was ruled against today (see Judge Says No Pants Are Worth $54 Million, Rules in Favor of Dry Cleaner.

If he tries to appeal, I hope he gets a major dope slap. We can make fun of the judge all we want, but he represents everything wrong with American culture today. I don't know the Chungs, but I'm sure this has not been easy for them. Running a small business is not easy in America. Not only do you have to pay out the ass for taxes, service fees from other vendors, insurance, and a host of other expenses that crop up daily, but you have to worry about stupid people suing you because they have nothing better to do.

It's almost easier to work for a big company. You can get good insurance for not that much, a steady paycheck, and you don't look over your shoulder for somebody serving papers because satisfaction was guaranteed. This is sad because America was built by entrepreneurs and we are systematically choking the life out of small businesses.

Here's the irony: high taxes, over regulation, and the lawsuits that are so devastating to small business are perpetrated by the same kinds of people who also despise large corporations. They are forcing large companies to be larger as they lobby for legislation that punishes small businesses for existing.

Small businesses have a culture. Sometimes that culture is chaos. I consistently argue that any business culture should be a deliberate construction of the owners and managers. A culture will exist regardless if it is a deliberate construction or the product of a vacuum. The latter is the problem and small businesses that do not pay attention to company culture are asking for a negative culture to develop on its own that could undermine the whole business.

A good friend of mine called me yesterday. He was assaulted at work--physically attacked by another employee. The owner of the company refused to call the police and eventually threatened my friend with termination if he called the police or retained an attorney. He was also told that the attack was between two people and had nothing to do with the business and that he had to cover his own medical expenses. My friend went to the ER and had some injuries that were significant. Today, the owner still maintains none of this is his responsibility and that everybody should shake hands and work together.

Oh, where do I begin with this?

The culture in this small business is toxic at best. Office banter is severe and those with thin skin would not make it more than a day there. Crass sexual humor, racial slurs, and over-the-top insults clog the air. I detected long ago that my friend felt he was defending himself every minute of every day while also having to participate in this environment. Well, as the old expression states: "It's all fun until somebody gets hurt." Somebody is hurt and the company did not fire the aggressor. In addition, the owner did not file a police report and tries to disassociate himself from the violence. Now you can see how such a negative culture existed in the first place.

Corporate America has been taken to the legal woodshed so many times, it's no wonder there is zero tolerance for behavior like that at places like Allstate Insurance, Sears, and SBC. Any well-run company management knows they are there to make money and anybody that is not on board with that is a liability. However, small businesses are a different breed of company. Many of them are managed as if profitability and growth are somebody else's problem and professionalism is something from a magazine. As a customer, I would question my relationship with a company that allows its employees to degrade each other to the point that a fight breaks out. In today's business world, who has time for that crap?

In addition, numerous attorneys have used OSHA as the foundation for defining a safe working environment. In spite of the owner's protests, this altercation happened in his company's facility and only a head made of the densest of wood cannot accept the fact that what employees do on company time in a company facility is his problem. Sweeping this under the rug will not do.

Professionalism is not foreign and it should exist in companies of all sizes and shapes. Small business owners should expect nothing less than the best from their people. They should reward professional, money-making behavior and punish immature, risky behavior.

I'm scratching my head today still wondering why my friend's coworker is still there. I'm also wondering how he will handle this. I told him what I would do in his situation, but I'm not him. The one thing to be learned from this event is to pay attention to where you work.

Small businesses should be run with integrity, professionalism, and pride. If you are working for a small business without those, there are plenty more opportunities out there. Use your own self-respect as a guide to finding the right culture. As for business owners, pay attention to what you let your employees do. You might end up on the wrong side of a lawsuit because you let the culture get out of control.

Sifting through my email, I noticed a recurring question: "What the hell have you been doing?" Sorry the posts have been few and far between. This is primarily due to several business-related reasons. The largest time-sucker has been my involvement in a super-secret company. I've partnered with a friend of mine to put together a software company to sell a unique software package to a specific industry. That's all I'm going to say about the specifics of the company itself. What I do want to share is what's like travel through the bureaucratic swamp when trying to attract investors.

So this business idea came to my friend a couple of years ago. He didn't know me at the time. He believed in his vision so much, I was on a list of random calls he made looking for advice, help, or anything. What struck me was his passion. He was dismissed by many people. However, my friend is the picture of tenacity and he started climbing the mountain of his first venture.

It first started with an accountant who wrote the first draft of the business plan. This was twelve pages that didn't do much other than draw ridicule. I took that plan and tried to build it out some more, but it was a pathetic attempt at best, primarily because the real research hadn't begun.

Lesson One: Don't have your accountant write your business plan.

My friend began to meet with many different people seeking money and advice. I tagged along to many of these meetings. Keep in mind that while I run my own consulting business, I've never sought capital before. My experience with startup companies in the past was after the companies were operational. I was never in on the ground floor of seeking investment, and as a result, I had a lot of misconceptions that I shared with my friend. I go way back to an earlier post about how the 90s ruined our expectations. During the 90s, all you had to do was find some fat, rich guy at a cocktail party with the mayor and tell him you had a great dot com idea in your head. You could walk out of that party with a check and a couple of girls' phone numbers--everybody wanted in on the action.

Since the bubble burst, if you say "dot com" in the wrong crowd, you might end up on a stretcher, so you have to do your research and we did. There were many revisions of the business plan as I pulled in marketing data and another friend helped with the editing of the copy. We continued to meet more people, including some freaky ones; one in particular was really weird about taking notes but then would tell us if he didn't write it down it wasn't said in a meeting. "You didn't say that. It's not in my notes."

The dizzying effect of dozens of people giving you advice on starting a company reminded me of when my wife was pregnant the first time and everybody was suddenly the best parent, even if they never had children. Everybody has business advice on starting companies. Here is a list of people not to seek advice from:

• MBAs fresh out of school
• Consultants (other than me)
• Personal injury attorneys (in other words, just because they have a law degree doesn't mean they know business law)
• Personal accountants
• Businesses for Dummies type books
• Anybody living in a mobile home
• Mr. Tony Robbins (he scares me)

Lesson Two: Seek counsel wisely; too much advice from too many different people will confuse and discourage.

In the long run, if you're seeking private funding for a corporation or partnership of some sort, your business plan, while important, is second to the Private Placement Memorandum. This is an important point because investors will want to see a business plan and a marketing plan, but they won't open those unless the Private Placement Memorandum is there. It's like your college degree when getting a job. You need it to walk in the door because it's proof you are serious about a career. The Private Placement Memorandum should not be written from a template. It must be completed by an attorney (as much as I loath the prospect). A good business lawyer will tear apart your business and marketing plans and scrutinize your concepts in such a way that you will be completely prepared for any investor. This is because not just any law firm will create a Private Placement Memorandum. It's a document that states all of the risks. If not properly done, everybody involved could be sued.

Lesson Three: There are times that attorneys are useful, and one of those times is when you need a Private Placement Memorandum.

The final point is that if you have no cash, don't start your business. A Private Placement Memorandum will cost between $10,000 and $50,000, depending on the complexity of the business and the risk factors to be researched. You will need cash for your escrow account and you will still need to eat during all of this. I learned the hard way that people will not easily give money to a business, especially if they were burned during the bursting of the dot com bubble. They want fundamental proof that you can pull off your ideas and give them a reasonable expectation of return on investment.

Lesson Four: It still takes money to make money.

In the coming months, I will discuss some of these issues in more detail, especially the parts on seeking counsel and what is in a Private Placement Memorandum.

At least sixty percent of my customers suffer from a common problem: growth. I deal mainly with small businesses; as the economy gets better so do their businesses. However, these same businesses react to the growth differently. One of my customers described his business growth as climbing a wall. When he gets close to the top, he has to decide to either go over the wall or climb back down.

Interestingly, many small businesses hang around the top of the wall trying to figure out what to do. This wall is made up of all the work you had to do to reach the top. That work can consist of eighty-hour work weeks or fifty regular clients. What happens at the top of the wall is that either the wall has to be extended to include more hours or clients, or you have to cross over to the other side.

There are several reasons that my customers site that keeps them from crossing over. The most common reason is fear. Fear can be of the unknown: Much of the fear can be related to trusting somebody else with the work. I’ve heard “I’m the only person who can do this” many times. The awful truth is that you are not the only person who can perform your job. It can be learned and duplicated. If you stopped working tomorrow, somebody else would have no choice but to take over your job or take on your clients.

My advice is this: there is safety in numbers. Bring on people you can trust to help balance your workload. The difference between an independent contractor and a company is that the company consists of many people who can do the work. Why do you think companies pay consulting firms their high rates? They do it because they want a level of service that individuals cannot provide. It may be difficult to find the right person you can work with and mentor, but the reward will be that suddenly you can take on projects you couldn’t do by yourself. When that happens you make more money.

Another reason is related to financial limitations. If you feel like going to the next step in your business is fiscally prohibitive, rethink how you’re doing business. You have to spend money to make money--that cliché is true. But learn how to spend money wisely. If you have to buy new technology, then buy it in phases. Work with your accountant to develop a plan for saving and spending your cash on the right things. There are excellent business consultants who can help you focus your spending on the right type of advertising, technology, and resources.

I once knew a CPA who hired a telemarketing firm to help her expand. This goes down as one of the best examples of how not to spend your money. Any experienced marketing consultant could have coached her on how telemarketing only works for certain types of industries, and accounting is not one of them.

When it comes to growth, don’t be afraid to bring in others to help you. When you are at the top of the wall and you have to decide on which side to go down, it’s better to cross over to the other side with help than to go back the way you came alone.

I received a phone call last week from a guy was telling me he had a great e-commerce opportunity for me. Naturally, I was interested since that's what I do. But when I asked him for specific information, I received some vague answers and my scam radar activated. He told me that he really needed to meet with me personally and he would be in town in a week. He also sent me an audio CD via FedEx that he asked me to listen to.

Once I played the audio CD, I knew it was Amway. Since my last experience with them was over twenty years ago, I haven't kept up with the company. They are now calling themselves Quixtar. Their new marketing push is to sell products online rather than physically through distributors. They do it in a way that dumbs down what e-commerce really is and over simplifies consumer buying behaviors and market trends.

Many years ago, when I was in junior high school, my mother and step-father sold Amway products. If you are not familiar with Amway, its a company with its own line of products for just about everything. Their business model is pretty basic: you buy and sell their products while trying to convince your friends to do the same. If its operations were totally illegal, it would have shut down many years ago, but they seem to keep the pyramid scheme image alive by their very business practices. My parents ended up quitting after they crunched the numbers and realized that by purchasing Amway products exclusively, they were doing nothing but lining the pockets of their upline. They also realized that by signing up others, they were asking those individuals to do the same. Their conclusion was that Amway was a way for a large group of people to support a few leaders by purchasing exclusive products. In my opinion, it is a pyramid scheme, but if you know it is and you really, really want to do it anyway, then good luck. Maybe you will make millions, but I think your odds are better at a casino.

So I got on the Web and did a little research. I found this Web site: http://www.amquix.info, which provides an encyclopedia of information related Amway's history, legal issues, and a detailed business case for their business model. The one thing I read on the site was the same thing that my parents discovered many years ago:

There is no magic to the Quixtar compensation plan. It is a highly leveraged plan, paying those at the bottom almost nothing so that their effort is leveraged up to richly compensate the upline. Traditional businesses can't apply the same leverage since they must pay minimum wage and the employer's match of the Social Security tax. Traditional business owners could generate the same "time leveraging" for them selves, if they could just find enough people willing to work for $1-$2/hour, no benefits, and pay for their own training like Quixtar IBOs do for their upline Diamonds. Due to the low sales productivity, Alticor could never afford to pay IBOs even minimum wage for the inefficient way IBOs promote Alticor's products.

I proceeded to arm myself with facts and planned on meeting the the guy from Amway who didn't want to tell me it was Amway. Then I had a customer emergency. I had to cancel. In the end, the meeting wouldn't have been productive anyway. I had been to an Amway convention with my parents, I was very familiar with the model, and I watched my parents go into debt just to maintain a quota. While some things change, Amway/Quixtar is still using the same bottom-up distribution model to keep it's upline fat at the expense of people who are promised a franchise.

Ironically, the very technology Amway is trying to exploit is the same technology that helped me find http://www.amquix.info as well as other information on their lawsuits. Just do a Google search on Amway and Quixtar.

You can dress it up with a Web interface, but Amway is still Amway and a pyramid scheme is still just that.

Even though a small business is comprised of one or a few employees, a culture still exists. Recently I've noticed that small business owners and their employees seem to be oblivious to their company's own culture—causing problems that can cost these companies business.

One of the most significant areas that I've seen, and even had problems with myself is follow up. As a small business owner, I know thing get out of hand. With sales, existing work, accounts receivable, phone calls, status reports, and the daily emergency, following up with a customer doesn't seem like a big deal. However, each customer knows a lot of people. A business cannot afford to have a customer telling others that the business cannot deliver. Things like that will break a small business.

I know a business owner who operates a car service business. He has built a home-grown database for tracking his clients. It's basically a CRM, but it flags each customer when there is an issue requiring follow-up. The owner purposefully spends at least fifteen hours a week called customers from the database and ensuring they have no issues outstanding. He told me that customers are pleasantly surprised because most of them don't expect a follow-up phone call. As a result, 80% of his business comes from happy customer referrals.

In 1997, Tom Peters wrote an important article for Fast Company magazine called "The Brand Called You."

It's time for me -- and you -- to take a lesson from the big brands, a lesson that's true for anyone who's interested in what it takes to stand out and prosper in the new world of work.

Regardless of age, regardless of position, regardless of the business we happen to be in, all of us need to understand the importance of branding. We are CEOs of our own companies: Me Inc. To be in business today, our most important job is to be head marketer for the brand called You.

It's that simple -- and that hard. And that inescapable.

Not only is follow-up important to small business, but projecting a professional image is essential for small businesses. Small business owners have told me time and time again things like:

• "I'm just a small guy, I don't need a Web site."
• "I don't have to look professional; people know who I am."
• "I get all of my business from referrals; I don't need any marketing materials."
• "The kinds of customers I have don't care about image."

This is a small business mentality that seems pervasive. In fact, as my own business has grown, I stopped trying to sell small businesses on Web and marketing services for the simple reason that it takes too much time and effort to change that mindset. The reality is, though, when businesses spend money smartly, they can appear to be larger than they are. Focusing on company and individual branding will naturally draw in new business. As a part of a marketing strategy, branding is essential. Rather than spending $400 for a willy-nilly direct mail campaign, it's better to spend $800 for a professional, targeted campaign with follow-up calls. When people have to choose between businesses, they want to ensure that the company their dealing with is professional, ethical, and competent. There is no other way to convey that than through a solid, well-designed brand.

Not only is the projected image important, but internally small businesses should also focus on culture. Sometimes it's as simple as keeping things positive in the office. Other times it's ensuring that everyone is trained on the company's products and services as well as current technology. In addition, if a small business owner has problems following-up, a change in processes may be in order. There are books available on using technology to improve efficiency (e.g. How to Get Things Done). These types of internal tactics will help with the professional image and culture projected to customers.

The important thing to remember is that no matter the size of the company, culture is important. I highly recommend paying attention to your culture. Do you have a professional, solid brand? Is your brand accurate? Do your customers receive service that matches your brand? Is their experience with you positive? If you answer "no" to any of those questions, I suggest a change. You will see the results on your bottom line.