Business Opportunities Abound, Even in Bad Times (NYT)

Business Opportunities Abound, Even in Bad Times

By BRENT BOWERS

JOB losses, falling property values, more people without health insurance. With the current state of the economy so bleak, those are the issues getting a lot of attention. But they are not the whole picture.

Some entrepreneurs are actually doing well in part because times are hard. This is a story about four of them.

One, Craig Brandman, founder of Medilinq, a provider of medical discounts for low-income people, predicted in a recent interview that his company would increase the number of its participants by more than sixfold this year, to 200,000 from 30,000 at the end of 2008.

Another is Peter George, the 49-year-old chief executive and part owner of Fidelis Security Systems in Boston, whose company provides protection against data breaches. Mr. George said sales rose 55 percent last year.

And Charles L. Burckmyer and Scott Noll, co-founders of Knob Hill Partners in Boston, are in the enviable position of sitting on about $500,000 in cash and looking for a company to buy at a favorable price in a weak market.

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Dr. Brandman, a 60-year-old cardiologist who founded Medilinq in Houston in March 2004, described the company’s target customers as the working poor and the self-employed who are both uninsured and ineligible for Medicaid. They pay $24.95 a month for steep discounts on medical bills that the company has negotiated and that, he said, “are competitive with those offered by the Aetnas and the Cignas of the world.” Health care providers support his product, he said, because the company makes sure most bills are paid within 10 days, in contrast to the industry average of 75 days, and because it eliminates the paperwork that can eat up 25 percent of their revenue. “Medilinq is a sort of a Costco and PayPal mode for health care,” Dr. Brandman said.

As the number of people without access to health care grows and as billing headaches become more acute, he added: “We’re looking at having a big year this year. Economic hard times are a good opportunity for us.”

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Mr. George, of Fidelis Security Systems, said that in the past, companies’ loss of digital assets like design documents and marketing plans was generally inadvertent, as the data slipped through holes in the computer system.

But in a recession, he said, there is an increased chance that disgruntled or laid-off employees might purposely disseminate intellectual property to potential rivals.

“The big threat to computer systems until now has been hackers from the outside,” he said. “Data leakage by insiders is the next big threat, and we can stop it in its tracks.”

Fidelis’s orders jumped 99 percent last year, he said. In 2009, “our operating projection is to grow faster.” Fidelis also hopes to add to its work force in the second half of this year. It doubled last year to 50.

Skeptics might suppose that the recession would temper Mr. George’s ambitions. But he says he joined the company last March just as it was completing $22 million in venture capital financing. The timing, he said, was fortuitous — or “plain dumb luck.” That nest egg should tide the company over for the next couple of years, eliminating the need to go out again with cup in hand when options for financing are limited, he said.

A partnership with International Business Machines, which markets his products, helps as well, he said. But however slow the nation’s economic recovery might be, he said, he predicts substantial growth for Fidelis.

There were 19 major data breaches in the United States in January alone, costing companies hundreds of millions of dollars, he said, and the market to protect against such breaches is expected to grow to $1.2 billion in 2011, from $500 million this year.

“My ambition is to build this into a $50 million to $100 million company within three years,” he said.

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Mr. Burckmyer and Mr. Noll, both 32 years old and with entrepreneurial and sales backgrounds, set up Knob Hill Partners last summer and persuaded a dozen investors to provide them with a total of $500,000 in operating capital to look for promising businesses whose owners were interested in selling. They are searching especially for companies with strong growth potential and price tags of $10 million to $30 million in energy efficiency, specialty software or information technology. Once they locate a company, they said, their investors are prepared to contribute the funds for them to acquire it and manage it.

With prices falling, the recession is a good time to be shopping for a business. But Mr. Burckmyer and Mr. Noll say they have a competitive advantage over others who are prowling the market with the intention of re-engineering a company and flipping it after two or three years.

Typically, owners who have nurtured their ventures for decades “want to protect continuity,” Mr. Burckmyer said. “Their workers are like family to them.” Unlike the bargain hunters, he said, he and Mr. Noll promise to stay in their new management roles for the long haul and to avoid layoffs if possible.

He cited inconclusive talks the two men held with the owner of an electronics equipment recycling company. “He wanted somebody who was committed to sticking around,” he said. “Once people understand what we’re doing, we get a better reception.”

Knob Hill Partners is known as a “search fund.” Such funds have been around for a quarter-century, but because they have consistently produced double-digit returns, they are gaining popularity with wealthy people in this recession as an alternative to stocks, bonds, real estate and other traditional investments.

Mr. Burckmyer and Mr. Noll closed their fund in December when they got enough funds to conduct their search. Once they find a company they want — and what their investors, who are savvy business people and their de facto consultants, also want — they will be able to go back to their investors and get the resources to quickly seal a deal.

Nobody enjoys witnessing the pain that the recession is inflicting on ordinary people, Mr. Burckmyer said. Still, the troubled economy offers openings for entrepreneurs with sharp eyes and sharp elbows.

“We’re now in what I humbly concede to be an enviable position of going out to find a business to buy as pricing multiples fall through the floor,” he said.

Stimulus Law Aids Small Business, but Benefits Are Not Easy to Find (NYT)

Stimulus Law Aids Small Business, but Benefits Are Not Easy to Find

By MICKEY MEECE

THE $787 billion recovery package that President Obama signed into law on Tuesday has a little something for most small-business owners, though some complained that the law’s benefits were not easy to figure out.

“Who has time to read it?” said Michael J. Fredrich, president of MCM Composites, a maker of highly engineered composite molding parts in Manitowoc, Wis.

Ethan Siegel, chief executive of Orb Audio, a maker of home theater speakers and systems, said his initial impression was that “there is nothing in here for me as a small-business owner.”

But Mr. Siegel said that as he started to dig deeper, he found a provision that would increase loan guarantees for Small Business Administration lenders. That, he said, would make it easier for Orb, whose main office is in New York, to secure a line of credit. “With a line of credit we can do a lot more with the same amount of capital,” he said, “which is exactly the purpose of the stimulus package.”

Several other items also caught his eye, including one that offers a tax credit for businesses that hire disadvantaged workers like veterans and “disconnected youth,” those who are not in school or working. That credit could be a tipping point between hiring and not, he said. “This is especially true since we build the speakers in the U.S.A., and the people with production skills can fall into these groups.”

Business owners and their tax advisers are finding that a little detective work is needed to reap the full benefits of the law, which includes tax relief for businesses and individuals, as well as spending provisions.

Todd Flemming, chief executive of the Advantor Systems Corporation, a military contractor, for example, said he found spending allocated to military construction. His company, based in Orlando, Fla., makes and installs high-security systems at military installations worldwide. “That’s spending that would be stimulative for us,” he said.

Not everyone will be served directly, said Leonard Steinberg, who owns Steinberg Enterprises, a tax, financial and business advisory company in West Windsor, N.J. His clients, including mom and pop retailers, limited liability companies and S corporations — corporations that elect to have their income pass through to the shareholders — “won’t see the benefits of the stimulus,” he said.

Even so, tax specialists say, those companies may be aided indirectly by the tax relief for individuals, which will give workers more money to spend and will help certain taxpayers avoid the alternative minimum tax.

At the same time, some of the tax provisions for businesses, while they mean well, may not help in the way intended, said Barbara Weltman, a tax specialist and author of “J. K. Lasser’s Small Business Taxes 2009.”

She cited one provision that allows businesses to deduct up to $250,000 for capital investments. “That sounds great,” Ms. Weltman said, “but you can’t benefit from it unless you are profitable.” She added that many businesses were having trouble securing financing, but, if that should free up, the incentive was there.

Another provision gives companies a 50 percent bonus deduction on capital investments made in 2009 that normally would be deducted over many years. “Again, that only benefits those who are making capital investments,” Ms. Weltman said. “So many people are struggling to pay bills that they cannot go out and make purchases.”

One tax measure she likes is the ability of companies to use losses from 2008 to offset profits in earlier years — any full year that is more than two but less than six years ago — and obtain an immediate refund. It is only for 2008, she pointed out, and for companies with annual revenue of up to $15 million.

Mr. Fredrich said he had looked for a silver lining in the law but had yet to find one. “We certainly will have a loss to carry back, but we could do that before the bill passed,” he said. “It does not even move the needle. If you have no revenue, nothing else matters.”

He said he had hoped in vain for a reduction in the highest personal tax rate, a change that would have allowed him to put the money back into his business.

Now that the bill has been signed, he said he had not had time to read all 1,000 pages, but he was not optimistic about finding help for his company, which had its last production day of the week on Wednesday.

Weekly orders at MCM used to generate $100,000 to $180,000, Mr. Fredrich said. Last week, the company took in $32,000, and this week $19,000. “We expect it to be worse,” he said. “You just have to gut it out.”

This article has been revised to reflect the following correction:

Correction: February 21, 2009
The Practically Speaking column on Friday, about benefits for small businesses in the federal stimulus package, described incorrectly a provision that gives companies a 50 percent bonus deduction on capital investments. That provision was extended to investments made in 2009; it is not just for investments made in 2008. The article also misstated the production schedule of MCM Composites, whose president commented on the legislation. Wednesday was its last production day of the week, not the month.

Sales Tips for a Tough Economy (NYT)

Sales Tips for a Tough Economy

By PAUL B. BROWN

There is no shortage of advice about how to increase sales in this tough economy. The problem is that many of the ideas are not new — concentrate on filling a specific niche; let the big companies be the generalists — or are overly specific. (Does handing out free portable computer memory sticks with your company’s name on them really work, if you are not a technology company?)

Still, if you search long enough, there are nuggets worth considering.

MORE EFFECTIVE ADS Writing on the Web site of Peak Consulting, which specializes in statistical analysis and economic forecasting, Bob Leduc suggests a three-part approach to increasing your advertising’s impact.

First, he said: “Always include a powerful offer in your advertising. Offer free information related to your product or service to generate inquiries or Web site traffic. Then, make the most compelling discount or bonus offer you can afford to convert these inquiring prospects into paying customers.”

To convert these prospects, he said you should do everything you can to capture the contact information of the people who respond to your ads and follow up with them, since “most prospects won’t buy the first time they hear or see your sales message.”

Finally, he suggested, “Remove the obstacle of risk.” The major reason why people don’t buy something they want or need, he says, is that they do not want to take the chance of getting something different than they expect and maybe even losing money. “You can eliminate this risk by guaranteeing satisfaction,” he said. “If you sell products, offer a liberal money back guarantee. If you provide a service, offer to continue working without additional charge until the promised result is achieved.”

CUSTOMERS AS SALESPEOPLE Word of mouth is a great way to goose sales. But you don’t have to sit back and wait for people to spread the word about how wonderful you are, argues James Yuille, a marketer.

“Make your customers get excited about your business and they will tell their friends,” he said. “Send them ‘thank you’ letters or cards after they buy. Give them a free vacation certificate, a coupon, etc. when they refer others to you.”

ASK FOR THE ORDER Many entrepreneurs have a hard time asking for the order — saying to the customer words to the effect of, “Should I write up the sale now?”

Duane Marx, writing on Relationship Marketing.com, recommends that you a) not have that reluctance and, b) certainly don’t build it into your Web site, if you are selling products there.

“Have a few places where your prospects can order your products,” Mr. Marx said. “You always want to make it easy for them to buy. By having more order links on your sales page. they’ll be able to buy whenever the urge strikes them.” .

CHARGE MORE One “easy” way to increase revenue is by charging more.

If you think you can’t raise your prices in this economy, think again, suggests Charlie Cook at Marketing for Succcess.com.

That is especially true if what you are basically selling is your time.

“Most service professionals think that they’re already charging as much as they can, because prospects and clients often balk at their existing prices,” he wrote. “But nine times out of 10 when prospects complain about price, it’s not the total cost that’s the problem. The problem is that the price is presented out of context, so prospects don’t understand the value of your services. Without understanding the value you provide, a very reasonable price is going to seem high and become a barrier to sales.”

LAST CALL Words matter, especially when it comes to selling. For a humorous example of things not being exactly what they seem, visit Workjoke.com where they point out what salespeople really mean when they use a specific term.

Here are some of our favorites, quoted verbatim:

¶ New: Different color from previous design.

¶ All new: Parts not interchangeable with previous design.

¶ Unmatched: Almost as good as the competition.

¶ Years of development: We finally got one that works.

¶ Advanced design: The advertising agency doesn’t understand it.

Boost Business with Thank You ECard (Wired.com)

Boost Business with Thank You ECard

From Wired How-To Wiki

Saying "Thank You" is a big secret of dealing with people. Yet, it is often overlooked or forgotten. Though, it's one of the first things we teach our children to say as parents. We were probably taught this as well, I know I was. So why do we, as adults, forget to do it so often in business? "Thank you" works marketing magic because everyone wants to feel important.

Don't on the pretext that you're too busy or believe it isn't necessary. It's very easy to do, and also effective. Just send out personalized Thank You eCards to your customers and express your gratitude for choosing you or your service. You will become renowned for your professional courtesy and acumen.

Thank you eCards can do more than just ensure customer satisfaction and build brand loyalty. A customized thank you eCard can strengthen name recognition, brand message and brand identity. It is really an economical and effective way for your business.

Making customized Thank You cards is a dying art. Unlike writing a thank you note for a gift, a business thank you card must be professional but have a personalized, appreciative tone to it at the same time. Then the problem come down to how to make such professional yet personalized thank you eCard.

Employ some 3rd party company customize thank you eCard for your company is a good stratagem, especially in the short term. If you want to design kinds of eCard for different people, this way will very wasteful in this downturn economy. Take E-Marketing Associates (EMA) for example, you must cost as little as $279 to create a custom Holiday eCard, if you want to create five customized eCard, you should cost $1395. In fact, you have some better solution, through PowerPoint.

As we know, PowerPoint is a power tool to create professional presentation. Music, videos, pictures, and personalized greetings can be very easily inserted to your presentation. Also, the slide transitions and animations in PowerPoint will enhance your presentation. In detail, you could add:

- Company name/logo (strength brand recognition)

- Company's group photos (increase kindness feeling to customers)

- Warmly voice greetings from all your company staff (impress customers with the harmonious and friendly culture)

- Personalized greeting messages (Keep sincerity in mind at first and then writing the greetings from heart, not for the sake of flattery)

- Slide transitions and animations (catch others'eyeballs, and make your company like a pro in anything)

Then convert your presentation to Flash eCard is very easy with some other third party tools, like PPT2Flash. After converting, you could send the thank you eCard to your customers via email or uploading to your company website. Each customer has a different level of satisfaction with your products and services. However, all customers who view the elaborated thank you eCard you design will satisfied that they're important to you. This can determine whether you'll continue a relationship with them and get referrals.

Click to view the demo made by PowerPoint and PPT2Flash

It may be difficult to measure exactly how sending thank you eCard affects your business, but it does make a difference. The results may not be immediate and remember don't expect anything. Just trust that 'what comes around goes around' and what you give out comes back to you in some way.

Who can you thank today? Just make a thank you eCard and deliver to them.

Finding New Business Ideas

• By KELLY SPORS

Q: What opportunities do you see out there for new entrepreneurs? Where can someone turn for new business ideas?

—A.C., Florham Park, N.J.

A: Ideas are everywhere. It's execution of good ideas -- not the ideas themselves -- that makes for successful businesses.

GOT A QUESTION?

Email your questions about starting a business. Please include your name, city and state. If you don't want your name used in our column, please indicate that. Due to volume of mail received, we regret that we cannot answer every question.

For an archive of past Small Talk columns, visit WSJ.com/SmallBusiness.

That said, uncovering real opportunities and fleshing them out requires some foresight and research. Aspiring entrepreneurs should generally stick with industries or subjects they are already well-versed in, since they'll then be in the best position to spot opportunities and take advantage of them, says Bo Fishback, vice president of entrepreneurship for the Ewing Marion Kauffman Foundation, a Kansas City, Mo., entrepreneurial research organization.

"If you don't have a unique skill set in a space," he says, "it's going to be very hard for you to just jump in and compete with everyone else who does."

The best ideas, Mr. Fishback adds, are those that solve vexing problems -- and often spring from firsthand experiences. Of course, some trends, such as the aging baby-boomer population or the boom in online social networking, naturally present lots of opportunities for entrepreneurs.

Mr. Fishback recommends identifying the "smartest" people you can find in any industry you're considering starting a business in and speaking with them extensively about the industry and the issues they face. These people will not only feed you ideas, but can also act as a sounding board for any ideas you have. Closely monitoring the news, blogs and industry Web sites also can help sprout ideas.

The Internet offers plenty of resources as well. Social-networking sites for entrepreneurs, such as ClubENetwork.com, Vator.tv, Entrepreneur.Meetup.com and PartnerUp.com, allow people to swap business ideas and provide feedback to each other.

Other sites like ideablob.com, run by credit-card firm Advanta Corp., let users pitch business ideas and have their ideas voted on by other community members -- with the chance to win cash prizes.

Three Ways to Build Innovation Into a Day's Work (WSJ)

Three Ways to Build Innovation Into a Day's Work

By SIMONA COVEL

Game-changing ideas may abound at your workplace – in the minds of your employees. The hard part is figuring out how to tap into those ideas and make creativity part of the daily routine.

But regularly harnessing your staff's brainpower can provide an important edge to small businesses competing against larger competitors with bigger budgets and deeper resources.

Here are three ways small companies have figured out how to make the most of employee contributions.

1. Awards and Recognition

Allison De Meulder wanted to hear new ideas from employees at her online custom-invitation store. Her staff of 24 rarely made suggestions, but she had a feeling they had more to offer than they were letting on. "People don't always feel comfortable coming into my office," she says.

Ms. De Meulder, who is president of Tampa, Fla.-based Invitation Consultants Inc., bought a white mailbox and installed it in a central spot in the office.

Employees are encouraged to drop in new ideas and lift the red mailbox flag. Once a quarter, Ms. De Meulder and her husband, Olivier De Meulder, the company's vice president, select a winner from as many as 30 ideas. They host a catered lunch and read the top three aloud. The winner is awarded $500 cash and a sculpture resembling a glass-encased electric-blue light bulb.

"I really wanted to do something to motivate people," Ms. De Meulder says. "People are motivated by recognition."

A recent winning entry came from a graphic designer, who pointed out that free photo touch-ups on wedding and graduation announcements can consume a lot of time and energy. The new idea: Charge a few dollars for labor-intensive work, such as removing objects from a background. As a result, Ms. De Meulder says, the company made an extra "couple thousand dollars" during the recent graduation season.

Another recent winner: A vendor-relations manager suggested that brides shopping for wedding invitations should be able to save favorites and send a poll to family and friends, who can vote for their choice. That poll could be landing in the inboxes of other future brides who will need their own invitations one day. Attached to each poll is a coupon code to help drive new business.

Not every idea works. One winning suggestion proposed drop-down menus for customers searching for invitations, a tool that proved too unwieldy to implement. Despite spending fruitless time on that project, Ms. De Meulder says, "I don't give guidelines. I want free-flowing creativity."

2. Required Suggestions

When Talia Mashiach co-founded Eved Services Inc. four years ago, she instituted weekly company-wide think-tank meetings. As her event-services company grew – it now has 27 employees, most scattered at several hotels around Chicago -- meeting weekly proved impossible. Last year, it moved to a monthly meeting. There, each of the company's five teams – grouped by hotel client, plus a support-staff team– is required to present three new ideas. Some ideas are embraced on the spot; others are studied by executives in the following weeks.

Among the ideas adopted: Instead of staff working at hotels wearing their own choice of business attire, they all now wear a black suit with a black or white shirt, along with a lapel pin bearing the company logo.

"It's been a game-changer," Ms. Mashiach says. "Hotel clients talk about it. They say it creates a professional image."

Last year, an employee suggested reaching out to third-party meeting planners who work with corporate clients. Eved had been concentrating on hotels, but now works with 10 such event planners. Ms. Mashiach estimates those connections will bring as much as 25% of its anticipated $10 million revenue this year.

With the constant flow of ideas, Ms. Mashiach says she has to be careful not to discourage people when their suggestions aren't implemented – and to encourage them to keep trying. Some employees may approach her to complain that an idea wasn't adopted, "which is something we watch carefully," she says. "If they don't get the sense you're listening, it won't last," she says.

Those who see their ideas implemented are rewarded with stars, which also are awarded for other performance-related accomplishments. Each year, the top three star earners are rewarded with lunch with the executive team.

3. Online Document Sharing

The test-prep and subject tutors at C2 Educational Systems Inc. rely on stacks and stacks of books and manuals. A few years ago, when they discovered a teaching tool, or a mistake in a book, they'd fire off emails to the Duluth, Ga., company's headquarters, where curriculum staff struggled to stay on top of the suggestions.

"When we had five centers, it was doable," says C2 chief executive David Kim. Today, C2 Education has 110 centers and 440 tutors. "As we grew, it was harder to keep track."

Three years ago, Mr. Kim began posting teaching materials in Google Docs – a free online service that allows people to create, share and jointly edit documents. He and other employees encouraged tutors around the country log in to the tool to check for new resources and share their thoughts about books, classroom activities and teaching tips. Tutors can also post new materials they've found useful.

C2 tutors can log on and add teaching suggestions and other comments from anywhere. Google tracks changes and saves previous versions of the document.

While some of the updates are nuts-and-bolts suggestions -- better ways to teach fractions, for example -- others have the potential to invigorate the business. At the prompting of a tutor who said parents wanted their children to learn persuasive-writing skills, the company posted a teaching document to its Google Docs page. Tutors downloaded it over and over again, and continually made updates and suggestions. One suggestion: Start a formal debate class.

In May, the company rolled out the debate classes at 24 C2 centers. Parents pay $45 and up per hour for their children to attend. The classes are now bringing in about 10% of C2's revenues.

"Parents thought it was a huge benefit to their children, to further those debate-and-writing skills," says Mr. Kim.

Mr. Kim would like to move from Google Docs to a more sophisticated proprietary system, but so far he hasn't found the time or the money. Another potential problem: The more-innovative suggestions tapered off recently, and the majority of new posts are errors in test-prep books and other routine comments.

"We'd like to get some of that rah-rah spirit back," he says. He's considering compensating employees for the best new ideas.

What Business Owners Should Know About Patenting (WSJ)

What Business Owners Should Know About Patenting

By STUART WEINBERG

Thomas Edison once said, "To invent, you need a good imagination and a pile of junk." He might have added a third ingredient: a patent. Without one, inventors can't sell, license or protect their creations. Edison understood that very well: He held 1,093 patents, still a record for an American.

For many small businesses, knowing when and how to obtain patents can be confusing. So, too, can be knowing what to claim in the patent and when to sue over infringement and --when not to.

To help clarify these matters, we spoke to James McDonough, an intellectual-property attorney at Fish & Richardson P.C. who specializes in advising start-ups and small companies on intellectual-property strategy and technology commercialization. Mr. McDonough talks about the current climate for patents and looks at the perils companies face and what steps they should take to protect themselves.

WSJ: Is it more difficult to obtain patents than it was five or 10 years ago?
Mr. McDonough: It is getting harder to a certain degree. The [U.S. Patent and Trademark Office] appears to be rejecting claims at a greater rate the first time through. I think that reflects a backlash in response to some of the problems we've seen with the issuance of poor-quality patents and how they are being misused by patent trolls [a derogatory term for a company whose only business is to buy patents to collect license fees or court-awarded-infringement damages].

WSJ: What does it cost and how long does it take to secure a patent?

Mr. McDonough: It's hard to say with certainty how long it will take, but, depending on the technology that's being patented, it can take anywhere from two to five years for a patent to issue. As far as costs, expect to spend anywhere from $10,000 to as high as $30,000 for highly complex technologies. Patentability searches account for up to a thousand of that, application fees can add up to another couple thousand, and the rest is attorney fees for patentability opinions, initial patent drafting, and [Patent and Trademark Office] action responses and appeals.

WSJ: Who doesn't really need to hire an attorney? Who really should and at what point?

Mr. McDonough: The only time I would not advise an inventor to seek counsel from an attorney is if the act of patent drafting is itself a hobby to the inventor and he has no intention of selling the invention. If there is even a remote chance that the inventor will commercialize the technology, he should get an experienced attorney involved as early as possible in the process.

WSJ: Where do most companies go wrong when they're trying to get a patent?
Mr. McDonough: First, a small company may want to start patenting without thinking through its long-term [intellectual-property] management strategy. Before patenting, you should work with a skilled intellectual-property attorney to develop a plan for building your IP portfolio. A common problem we see is a portfolio that is driven purely by research. A good IP portfolio should be designed in a way that accurately covers the business objectives of the company while protecting the technologies around which the company is built and exploiting niches of the technology field that are not yet patented.

WSJ: What's another mistake companies often make?
Mr. McDonough: An inventor may want to apply for a patent at the wrong time. For instance, it may be too early if the invention is not yet developed to a point that it can be sufficiently described in the patent. It is too late if, for example, the inventor publicly used or sold the invention more than a year ago. If it is too early, an attorney might advise the inventor to spend more time researching and developing the invention before patenting, but if it is too late, the invention may no longer be protectable.

WSJ: I've heard some inventors may claim too little or too much in the patent.
Mr. McDonough: Often, an inventor's instinct is to describe his invention by describing its specific parts, which can result in inadvertently limiting the scope of the patent. As a general rule of thumb, the claims should include all possible versions of the invention, which can be accomplished by using broad, functional language in the patent. The inventor and attorney will work together to refine the scope of the patent to ensure it is as broad as possible while still being able to withstand a lawsuit.

WSJ: Is patent infringement more common than it was five or 10 years ago?
Mr. McDonough: I don't know if there's more infringement, I just think that there's more patenting going on. Also, the value of a lot of large companies nowadays is based on their IP.…So now you're seeing companies actively seeking to protect their assets.

WSJ: If a small company believes a large company is infringing on its patents, should it sue?
Mr. McDonough: That's a difficult choice for a small company. It's become a little easier lately because a lot of law firms out there will take on a plaintiff-side patent case on a contingency-fee basis if they think it's a good case. But generally it's pretty difficult to bring an infringement suit against a really large company because of the amount of resources available to large companies as compared to small companies. It is generally accepted in the industry, that a patent-infringement suit can cost $2 million to $4 million in legal fees. So, it's often not ideal for a small company to try to sue a really large company.

WSJ: What are some alternatives to suing for infringement?
Mr. McDonough: You might approach the larger company and offer a license, or attempt to establish a partnership. If a company doesn't have the means to sue now, it might choose to temporarily ignore the infringement and try to get its product to market first to generate sales. Sometimes you have no choice but to bring an infringement suit.