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Benm2
Posted on Friday, October 05, 2007 - 10:20 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

A few years ago, I developed a racing part specific to Buells. I have tested it myself, and have given samples to some people I trust to test it. There have been issues, but I have done my best to address them. While development continues, I've got one KEY problem: Insurance.

I've contacted more than one insurance agent, some of whom are close enough friends that I don't belive I'm being run around. The general consensus is that insurance for "motorcycle racing parts" is either "nonexistent" or "outrageously expensive". Most of the answers I've got have tended more towards unavailable rather than just expensive.

I'm absolutely unwilling to post my house, home & family up as bait in the lawsuit pool, so the product stays off the market. I really don't like that, since making & selling racing parts is (more or less) a dream of mine. So, for the time being, I continue with my "day job".

I know there's more than a few who post here that make their living off the motorcycle industry. Does anyone have any sage words of advice as to how to sell racing parts in this environment? Please?
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Spiderman
Posted on Friday, October 05, 2007 - 10:26 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

Contact Al from American Sport Bike
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Toona
Posted on Friday, October 05, 2007 - 10:35 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

Maybe you could talk to another mfg in the same "market" and see who they use for ins. coverage?

Option #2: Sell it (the idea/part) to them and work a royalty deal to generate some income for you... Probably not what you wanted to hear, but you could take the income from this product and invest it in your shop's infrastructure to develop the next best "widget".

It will sound kind of odd, but it's not always best to bring the best you have to offer to the marketplace the first time. If the "standard" is too high, how or what could you improve upon for the next item.

It is a fine line, it needs to be good enough to create a demand for the part, but leave room for development/improvement. Look at the 1125R, it's a great bike - creating demand, but they left the door open to bring out an "S" or "X" (Uly) line in the future, instead of bringing them all out the first production year.

As a mfg myself, I don't have to deal with HUGE ins as my parts are purely cosmetic and have no safety concerns involved.
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Benm2
Posted on Friday, October 05, 2007 - 10:50 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

I thought about selling the idea, but haven't really persued it. I've had people very interested in selling the parts retail, but the whole idea of giving these items out WITHOUT coverage is absolutely terrifying. I've really no issue with contract manufacturing, its really the exposure I'd like to avoid.

Toona, if you don't mind, can I pick your brain offline?
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Benm2
Posted on Friday, October 05, 2007 - 10:52 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

Spidey, thanks. I'll try contacting Al next week. This has been on a shelf for too long.
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Swampy
Posted on Friday, October 05, 2007 - 11:07 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

One word:




Corprate umbrella
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Toona
Posted on Friday, October 05, 2007 - 11:07 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

Ben, PM sent
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Swampy
Posted on Friday, October 05, 2007 - 11:08 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

One word:



501C3
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Toona
Posted on Friday, October 05, 2007 - 11:11 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

ONE Word??
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Toona
Posted on Friday, October 05, 2007 - 11:14 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

501C3 only works if you plan on being a NON or not for profit entity IIRC, not the reason to be IN business.

Maybe an LLC, would be more in order, I dunno, I didn't sleep at a Holiday Inn last night

(Message edited by toona on October 05, 2007)
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Johnnylunchbox
Posted on Friday, October 05, 2007 - 11:25 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

I think Swampy hit the nail on the head. Incorporate and look into some kind of liability insurance.
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Swampy
Posted on Friday, October 05, 2007 - 11:26 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

I have witnessed(remember what I do)501C3 organizations operating as for profit organizations and they are "Untouchable"
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Toona
Posted on Friday, October 05, 2007 - 11:49 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

Sorry, but I don't know what you do. They may be untouchable, but I think that goes against the spirit of that classification.

Legal? maybe. But I like to sleep at night.
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Swampy
Posted on Saturday, October 06, 2007 - 12:00 am:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

Ok
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Benm2
Posted on Saturday, October 06, 2007 - 08:37 am:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

I'm already established as an S-corp.

I've the (unfortunate?) pleasure of being married to an attorney. Now corporate law & litigation is NOT her area, so she only helps me out by giving me broad stroke warnings about how attorneys will attempt to "pierce the corporate veil" so they can go after personal assets. At this point, I'm not big enough to have absolute separation between The Corp and The House.
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Pammy
Posted on Saturday, October 06, 2007 - 01:25 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

It's a burden all business owners bear, but it is getting desperate in the motorcycle industry. Unfortunately this litigious world we live in is making it hard to do what we do. Cycle Rama is with Lloyds of London, absolutely no other options. Because it mentions 'performance' on our website, we have to re-qualify every year. And what ever you do don't get canceled or let your policy lapse...that is the kiss of death in this industry. You can't get coverage at that point. I truly feel sorry for people trying to get started in this industry. Especially since it is the best work in the world. I can't even imagine doing anything else. My blood is 20/50...well since I live in Florida, more like 10/40...

Anyway, Good luck to you.
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Benm2
Posted on Sunday, October 07, 2007 - 03:54 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

Pammy,

At one point I was told that Lloyds MIGHT provide insurance, but it was doubtful. Good to hear that they DO offer it still, but it might just be a question of getting there from here.

Mind if I call to discuss with you?

Ben
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Lost_in_ohio
Posted on Sunday, October 07, 2007 - 06:33 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

Sub s is bad for this. You are still liable, I know, long story.
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Etennuly
Posted on Sunday, October 07, 2007 - 06:38 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

The best thing to do is own nothing, this way you have nothing for anyone to come after. PM me and I will tell you how to put all of your personal assets in my name before you loose them in a frivolous law suit.
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Ft_bstrd
Posted on Sunday, October 07, 2007 - 11:48 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

Product litigation is going to be very difficult.

You might check Property and Casualty companies for "Errors and Omissions" coverage and see if you can get it to cover your corporate activities.

The problem is going to be that because there are no reasonable tort limitations, any sympathetic jury can provide an award against you.

Who knew you could dump a cup of scalding coffee in your crotch and get $13M?

I would consult an attorney for sure. A C-Corp will be much better than an S-Corp for separating your personal assets from your company. The main problem you are going to have is that small companies rarely have sufficient credit to be able to secure financing without a personal signature. As a result, there is selective penetration of even C-Corporations.

The 501C3 route will be difficult to limbo past the smell test. Not For Profits turn a tidy profit, but there must be a legitimate benefit provided for a charitable or religious purpose.
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