Not sure if you’re underpaying or overpaying? Third-party salary surveys can help.

Thomas, San Francisco
I have a video production company with five full-time editors. I'm always stressed thinking I'm either overpaying them and I'm going to go broke, or underpaying them and am going to lose them and/or they're going to get resentful. Because of this, I realize I manage them nervously, which is not good management. How does one determine pay parity? I would like to pay them fairly so I can stop worrying and pay and manage them with confidence.

By Rose Fox, CNNMoney.com contributing writer
There are plenty of resources out there for both workers and employers who want to make sure that staffers are getting paid neither more nor less than they're worth.

To start with, look at free sites like Salary.com, PayScale.com, and CareerBuilder's CBSalary.com. You can also check the Bureau of Labor Statistics site at bls.gov. For more in-depth data, consider purchasing reports from survey companies that do research in your field. Salary surveys exist for almost every industry. Amy Kaminski, manager of marketing programs for Compdata Surveys, suggests sticking with surveys that get their data from employers: "This will help ensure the accuracy and reliability of the results."

Look for data that's applicable to the type of business you run as well as the type of employee you want. Ted Turnasella of WageLINK.net offers three helpful rules of thumb:

1) Make sure that the job being reported is a match for the job at your company. A good rule of thumb is for the job summary in the survey to represent at least 75% of the duties being performed by employees in the company.

2) Look at the effective date of the data and adjust it for the passage of time. For example, for data that is several months or years old, factor in an annual wage inflation rate of 3%.

3) If the data you are using is national data, it will need to be adjusted to your local market. Salaries in New York City are much higher than those in Brownsville, Texas.

Once you have all that information, consider how it applies to your company, factoring in regional and personal differences that may not be reflected in the numbers. "If a good editor is difficult to find, you may need to pay above market in order to keep these key employees," Kaminski says. "On the other hand, if you offer valued benefits such as flexible hours or above-average health insurance, you may be able to pay at or below market while still keeping your employees happy."

Jennifer Grasz, a CareerBuilder spokeswoman, agrees that soft benefits can matter as much as cash. "Companies are looking beyond salary and incorporating more flexibility into their packages to stay competitive in their recruitment efforts,” she says. “For example, we see more companies offering telecommuting opportunities, compressed workweeks and other alternative work arrangements."

Finally, if it becomes clear that a current employee's salary needs to be renegotiated, don't be shy about showing them the numbers that helped you to reach that decision. "Salary market data moves any pay discussion onto a less confrontational footing," says Dr. Al Lee, director of quantitative analysis for PayScale.com. "Yes, your employees may still look for work elsewhere, but it won't be higher pay that draws them away."

Give us your advice: Check out recent “Ask & Answer” questions.

How to keep laid-off workers honest

Fair pay for you and your partners

What to pay the boss's bosses

A guide to breaking big in Apple's very crowded market.

Keeven Kuate Konga, Tempe
What steps do I take in order to make a big jump in the iPhone application industry? I have found an app designer. I know the basics, but is there any other information other than what's given on Apple's Web site?

By Kathleen Ryan O'Connor, CNNMoney.com contributor

Imagine being crowned the valedictorian of a class of 50,000. That's a bit of what's it's like to capture the #1 spot in Apple's iPhone app store — only a lot more lucrative. A hot iPhone app is the Holy Grail of mobile software development.

For all the dings Apple takes for its dealings with outside developers, the price of admission into its iPhone app program is pretty straightforward: $99 for basic access to the software development kit (SDK). Apple ditched its wildly unpopular nondisclosure requirement back in October.

Once your application is ready for launch, the approval process generally moves fast. According to Simon Pope, an Apple spokesman, 98% of iPhone apps submitted to the store are reviewed in seven days, and 96% are approved.

Then comes the hard part: Getting noticed by legions of passionate iPhone users. Competitive pressure has driven the cost of most of Apple's almost 50,000 iPhone apps to $1.99 or less, according to 148Apps.biz, an independent site about iPhone apps with a good "marketing 101" section. That means volume is king. For your app to make money, customers must find it, like it, and above all, download it.

"It takes making a great game, but that’s just one element of it," says Adam Sussman, vice president of worldwide publishing for EA Mobile, which created top app The Sims 3. The mobile version of the popular game zoomed to #1 within 18 hours of its release on June 2.

"And we did that at $9.99," Sussman says.

Jumping off a wildly popular and established brand helps enormously, but Sussman says marketing is a factor, no matter your size.

"The app store is so crowded," he says. "How do you drive discoverability? It’s not the case that you just do a game and that’s it." EA's strategy was to build excitement for The Sims 3 by releasing all its platform versions — PC, Mac, iPhone and more — on the same day across the world.

One way to get noticed on a shoestring budget is to try to have your app reviewed by some of the dozens of sites that have sprung up to chronicle All Things iPhone, like AppScout. The blog Online Marketing Rant has a handy list of relevant publications.

And while the unfortunate Baby Shaker app produced a lot of press, no expert thought silly or scandalous was the way to go. The best apps leverage unique iPhone features, like the device's accelerometer and touch screen. A rich and addictive user experience is the difference between being a one-hit wonder or creating something with staying power, Sussman says.

Also critical is knowing your audience, says Jonathan Sasse, senior vice president of marketing at Slacker Radio, a popular free online radio station that released its own iPhone app in January.

"We did our best to make sure the iPhone experience is close to the full Slacker experience, so you can go back and forth," he says. Slacker went for a rich-media feel, but developers need to be mindful to keep their mobile apps from growing too complicated.

Try not to get caught up in the frenzy to be #1, Sasse recommends. Concentrate on building a great experience.
Mark Bradshaw, director of development for Stratogon Entertainment Corp. in Plantation, Fla., knows what it's like to be in your shoes. Stratogon now concentrates heavily on the iPhone app market, and will have several apps ready to go live in the next month.

"We think it’s about making a great game that's really quick and fun," he says. "People are going to be sitting at the bus stop — it's something they get in and out of pretty quickly."

So how big a deal will it be if your apps break big?

“It’s a huge deal,” Bradshaw says, especially for those on tiny budgets.

A bestselling iPhone app can easily move 300,000 units in the first three months. At $1.99 per unit, that's almost $600,000. Apple takes a 30% cut, but when you're creating your product on a shoestring upfront investment, that's still a lot of upside. As Bradshaw puts it: grossing "half a million dollars isn't bad."

Give us your advice: Check out recent “Ask & Answer” questions.

iPhone U: Learn how to code

The iPhone music maker: How Ocarina scored a hit

How to get your video game into retail stores

Finding buyers when sales are sluggish

Have a hot idea for an educational software product? Here's how successful entrepreneurs have cracked the market.

Ernest L. Leisner, Buffalo
I have created a word game that I would like to transform into an educational video game. I believe it can go a long way to help improve the dismal illiteracy rate in our schools. I have many aspects of a proposal in place and I’d like to find a government grant to help. I have tried searching the Internet, but there are scams all over the place.

By Kathleen Ryan O’Connor, CNNMoney.com contributor
Finding a grant to develop a business idea is nearly impossible. Scams abound, and legitimate grants from foundations and other philanthropic groups are almost exclusively for non-profit groups or educators, not private inventors. The only genuine place to search for U.S. government grants is grants.gov, but those rarely go to sole proprietors. (See "Business grants: Sorting out the scams.")

But there are still ways for a novice with a great idea to crack the educational software market. The first step is to get your product or proposal in front of people who know the market and can help you sell it.

There are two options: Create, publish and market the software yourself, focusing on either the retail or education market, or license the product to an established company.

Entrepreneur Margaret Johnson chose the do-it-yourself route for ItzaBitza, a computer game that helps kids learn to read through interactive art.

Johnson knew plenty about kids and software: She's a mother and spent nearly two decades at Microsoft. But what she didn't know was retail, which turned out to be the name of the game.

"For an entrepreneur, retail is tough. You are sitting on inventory … it takes a while to ramp up awareness," says Johnson, who left Microsoft to sell ItzaBitza through her educational games firm Sabi Inc. "Awareness is huge. That's tough for a little guy to get."

First, make a list of all the publishers in the educational game space – Johnson mentioned Microsoft (MSFT), Sesame Street and Nickelodeon, but look on the shelves at your local Best Buy or a similar store for more ideas. Then, make it a point to attend their conferences or find them at trade events. You won't need an appointment, but this is where shyness is not allowed.

"I basically stalked people," Johnson says with a laugh. She'd sometimes wait as long as two hours to talk with the right person. "I showed them the game right there." Johnson ultimately made the decision to self-publish – a riskier move, but a more profitable one if you are successful.

If you self-publish, the next step is to get your game into stores. That requires making contact with buyers. At small, local stores, you can approach owners directly, but if you want to crack a national chain, they won't usually field calls from unknown businesses. They work with major retail distributors – who also prefer to deal with larger companies with established sales histories.

Johnson had little luck approaching major distributors abut ItzaBitza, but from them she was able to get the names of several reputable distribution aggregators. Aggregators are companies that take on several smaller clients. Johnson used Channel Sources Distribution Co. of Brookfield, Conn, but there are plenty more out there.

Distributors will take care of logistics and paperwork for you, but their biggest asset is their network. "They have a sales force, and they call on Toys R Us," Johnson says.

ItzaBitza is now available on retail shelves in stores including Best Buy (BBY) and Office Max (OMX).

Despite the recession, the educational software market is poised for growth. Educators staring out at classrooms filled with kids raised on Nintendo and Xbox are more open than ever to incorporating software and video games into their curriculum.

John Rice, an educator specializing in instructional gaming who writes a blog devoted to the industry, points to games that started as purely entertainment that have been repurposed for educational use. The Civilization series, for example, has been adopted by teachers for sociology and history courses.

"Likewise, The Sims can be used as a language-acquisition tool when students play it in another language," Rice says.

That opens the door for direct sales to schools and other educators. Like the retail channel, though, that market has its own challenges and quirks.

"Education, as a market, is extremely homogenous – [schools are] structured roughly the same, with the same purpose – which is good from a business point of view," says Mark Jones, president of Echo 360, which offers technology for recording lectures. Jones describes his product as "TiVo for the classroom."

He recommends you find the early adopters or "visionaries" among educators or education institutions. Is there a school that consistently seems to be in the forefront of new technology? They might be more receptive to a pitch than a place still in love with the chalkboard.

If you can get them on board, "they will become a viral network for you," he says. Education is a very peer-driven field; administrators often rely on colleagues at other departments or schools for product recommendations.

If you're really strapped for the up-front capital to create your product, licensing could offer you the most bang for minimal bucks.

"Think about what kid brand is out there with established credibility and pitch the game as an extension of that brand," suggests Andrew Mininger, CEO of Mada Design, a New York-marketing firm that works with clients in the games, education and licensing arena.

The best and fastest way to reach representatives of major brands is through expositions like the International Licensing Industry Merchandisers’ Association's annual conference. This year, it's set for June 2-4 in Las Vegas. You'll have to pay for a ticket to the show, but it's open to anyone. Prices range from $180 for a basic floor ticket to a full package for $1,170 that will allow you to attend seminars such as "Basic Training for First-Time Licensees" and "Getting Your Brand Ready for Licensing."

Before you approach someone, do your homework. Have a pitch ready about exactly how your game can extend their brand. Do they already have educational books on the market? A software component could be a natural extension. Are they lacking an educational tie-in their competitors already offer? That's also an excellent way to get attention.

You might also want to take a look at developing the game for a particular platform like the Nintendo Wii or Sony's PlayStation Portable. "Everyone is trying to get more exclusive, like Microsoft with Xbox," Mininger says. Everyone wants to make their product the hottest one around, and "education is integrated into that experience."

Give us your advice: Check out recent “Ask & Answer” questions.

How to get your product on retailers’ shelves

When to pay for an advertising campaign

What fair use protects – and doesn’t

Experts reveal the best ways to keep company information in the building when the employees exit.

Tom Goll, Owner, U.S. Diversified Tech, Nashua, N.H.
We always hear about what employees should do to prepare for layoffs. But what should employers do to ensure that company data, contacts and customer lists don't walk out the door with terminated employees?

By Adriana Gardella, Fortune Small Business senior editor
You can take several steps to prevent or deter misappropriation and to bolster your legal position should you find yourself embroiled in litigation, says labor and employment lawyer Chris Arbery of Hunton & Williams in Atlanta. Arbery advises employers to implement a clear policy on confidential information, specifying that all business data, media, equipment and networks are company property. Let your employees know that any unauthorized use or disclosure of company information will be taken seriously. And be sure they sign confidentiality agreements to safeguard your trade secrets and other potentially sensitive data such as customer lists.

You may also wish to consider incorporating a noncompete agreement into your employees' severance packages, says Elizabeth Milito, a lawyer with the National Federation of Independent Business in Washington, D.C. Such an agreement, which must comply with state law and be reasonable in geography and scope, will prevent your former employees from working for your competitors or striking out on their own.

Because these measures may not dissuade the most determined sneak, Arbery also counsels, "Work with a network-systems specialist to secure electronic files to prevent – or at least trace – unauthorized downloads to flash drives and the like."

This column provides general information only and is not intended to replace the services or legal advice of an attorney. Always consult a lawyer regarding any specific legal concerns, as laws vary from state to state.

Give us your advice: Check out recent “Ask & Answer” questions.

Related links:

Fair pay for your and your partners

To fire or not to fire – the ethics of a layoff

'I signed a noncompete – but now I want a new job'

Is a court likely to uphold a restrictive noncompete agreement? It depends on where you live.

Ryan H. from Fort Wayne, Ind.
When I started my current job, I signed a noncompete agreement without really reading it. After reading it in full, I discovered that it sounds like they're trying to keep me out of the entire Web design industry, anywhere in the U.S., for two years after leaving. I am looking for a new job right now – should I be worried about this? Would a judge ever uphold such a sweeping contract, in spite of my signature on it?

By Kathleen Ryan O’Connor, CNNMoney.com contributor
A business has the right to protect its intellectual property, but the terms must be reasonable. Unfortunately for employees looking for clarity on their noncompete deals, what counts as “reasonable” is often left up to a judge’s discretion.

On your side is the current legal trend against overly broad noncompete agreements. California courts, where Silicon Valley litigation over top tech talent often ends up, have led the charge by effectively making such covenants unenforceable. The most high-profile recent case was that of Dr. Kai-Fu Lee, a former Microsoft IT executive whom Google hired away in 2005 despite a one-year noncompete agreement. The two software giants battled it out in California courts all year, until a private settlement was reached.

To find out about issues that might be specific to your geographic area, we spoke to Sam Hasler, an attorney in Anderson, Ind.

“Let’s assume they do business in the Marion County,” Hasler says of your former company. If you try to serve clients in the same area before your agreement runs out, having a lawyer at the ready is a wise move.

“I know people hate hearing that, but an ounce of prevention is worth a pound of cure,” he says.

But if you are trying to establish a relationship with a client in, say, New York, and your previous employer has never done business there, you have a very strong argument for a judge that preventing you from pursuing that work is simply punitive.

For workers thinking of using the soft job market as a catalyst to fly solo and launch their own business, are noncompetes an obstacle? A group of academic researchers studying the issue say there's some evidence that their use inhibits entrepreneurship.

"It’s the chilling effect," says Matt Marx, a doctoral student in business administration at Harvard. Very few companies actually take former workers to court over the agreements, but simply having them in place can discourage ex-employees from launching new ventures. “They think, 'I better play it safe. There is no upside for you; you have to protect yourself.'”

Marx and two co-authors published a 2007 study examining commerce in Michigan before and after the 1985 repeal of a state law barring noncompete agreements. By studying investors' patent records, they found a significant drop in employment mobility after the state began enforcing noncompetes.

The issue is a personal one for Marx, an active inventor in the speech recognition field.

Before embarking on his Ph.D., he worked at a Boston company and was bound by a noncompete agreement when he was recruited by another firm. Because the new employer was in California, he was able to disregard the contract. But, in an ironic twist, when Marx returned to Boston years later to attend business school, his original employer wanted to hire Marx as a consultant but couldn't because of his concern that Massachusetts courts would enforce the noncompete deal that the California company had Marx sign.

“You have California at one extreme and then you have a bunch of states at another extreme,” says Lee Fleming, a Harvard professor and one of Marx's co-authors. He and Marx believe businesses would be better served by ditching noncompetes and focusing their energy on enforcing covenants that specifically protect trade secrets.

The researchers hope the economic pressures of the recession will help weaken noncompetes. Companies are laying off workers en masse but insisting that those workers respect their noncompete deals, they say. That's a hard position to defend.

“Is that reasonable?” Fleming asks. “Do we really want to prevent [job seekers] from getting work where they can be productive?”

Give us your advice: Check out recent “Ask & Answer” questions.

When an entrepreneur dies, loved ones are forced to make tough decisions.

Ann Gaspar, Fairview Park, Ohio
I recently inherited a small computer servicing business due to my husband’s passing. I am looking for reading material on learning/managing an established business and can’t find any titles. Can you recommend anything that will help me step into this role and excel in it? I am a registered nurse, so the business world is new to me. There are six employees that have kept the business going fairly well in the year of my husband’s illness, so I’m not on my own entirely.

By Kathleen Ryan O'Connor, CNNMoney.com contributing writer

Even with the best of planning, it's devastating when the owner of a family business suddenly dies. The employees wonder if the shop will close, new managers have to be quickly trained, and the bills never stop coming. And, of course, there’s grieving.

Josephine Geraci barely got to enjoy being a newlywed before she was thrown into the chaos of a medical crisis. In 1996, she married Jerry Cantwell, her longtime boyfriend and the man with whom she had built a thriving, boutique Wall Street analysis firm. But less than a week after they returned from their Caribbean honeymoon, Jerry inexplicably forgot her nephew’s name. Then, a week after that, “the doctor is telling me he has two months to live.”

Cantwell died the next year of a brain tumor. He was 52.

Geraci found herself tossed headlong into two desperate and disparate worlds: grieving spouse and surviving business partner. She discovered is there is no guidebook for either.

Prior planning can help with many problems. Business owners should work out and discuss with other managers a Plan B for what happens if the main proprietor is unable to carry out their duties. Who will run the business? How will cash flow be managed? How will estate tax liabilities be minimized? Who in the family is prepared to take over – and if no one is, how will the transition to outside control be handled?

Brian Raftery, a lawyer with the New York firm Herrick, Feinstein LLP who specializes in succession planning, says it’s easy for small business owners to get so consumed with growing their business that they put off making plans for the long-term future. But without a plan, things can go south quickly – particularly if there isn’t a will. Without one, the state gets to decide who gets what chunks of the business.

In New York for example, the surviving spouse doesn’t automatically inherit the entire business. If there are children, half goes them – and if they're minors, they will need a court-appointed guardian.

But plenty of business don't have contingency plans, leaving the survivors to sort it out from scratch.

There is no reason why a spouse, even if they have never been that deeply involved in the business before, can’t make a go of it if they desire. Sometimes that fresh perspective can be a welcome change, says Charles Matthews, professor and executive director of the Center for Entrepreneurship Education & Research at the University of Cincinnati's College of Business.

You have two main sets of issues to resolve: ownership succession and management succession.

“She could easily take over as owner and not take over as operator,” Matthews says. That's the ideal role for someone who isn’t interested in day-to-day management but who still wants to keep the company in the family.

Other options include selling the business outright to a third-party, selling it over a period of time to one or more employees, or retaining ownership and formalizing a management structure.

While books on managing change can be helpful – Amazon.com has a lengthy list of business self-help bestsellers – gaining the advice of a seasoned business professional is probably going to be more useful in the long run. The Small Business Administration's SCORE centers offer free counseling. The closest one to you appears to be in Cleveland.

One option worth considering to help you get through the first few months: You could hire an interim CEO.

Mark Rittmantic, founder of the Northbrook, Ill.-based temporary CEO firm ForteCEO, says the most common reason owners seek out his business is that their company grows to the point where it requires leadership skills the current managers lack. But a sudden death is also high on the list: “Number two is 'there is no succession plan,'” he says.

In too many cases, the business begins to fall apart and is sold in a distress sale, giving the owner or his or her family a less-than-optimal price. Rittmantic recalled one charismatic woman who built a collections business up from scratch, eventually employing more than 100 workers. She was the driving force behind the business and was quite generous, supporting three generations when she died of ovarian cancer, he says. After her death, “that company went out of business in six months.”

So who is in the best position to step forward in the short term? Our experts agree it’s probably not the surviving spouse. A trusted lawyer, accountant or family friend – even someone with very little business experience – can be invaluable.

“Choose someone who knows what they don’t know,” Raftery says. “If they think they know all about investing and financing but lost their shirt over the past 10 years, they can be more dangerous than someone who recognizes they don’t know everything and will ask the expert.”

Looking back, Geraci, now 43 and living on Long Island, says trying to keep running the business was too much for one person to handle on their own, emotionally or professionally.

“I should have had someone watching over me,” she says. “You are not thinking straight. You don’t care about money.”

She ultimately decided to shut down Lionheart Research, one of the industry's first niche firms specializing in aerospace and defense equity research. “I kept the clients in the loop,” she says, so that when her husband’s health worsened they had an idea they were “at that point.”

Still, she says, “Everything hit all at once. I was forced to make many of the big decisions right away.”

Kelly Trieglaff of Fort Wayne, Ind. decided to forge ahead with her husband’s dream of running his own business after his death last year. She discovered along the way that even someone with very little experience running asmall business can succeed – albeit with a lot of help.

Kelly Trieglaff and her family

Kelly's husband Mike was in the restaurant business, but had always dreamed about doing something entrepreneurial built around their family’s passion for baseball. In 2006, they jumped at the chance to buy an Extra Innings training center franchise. The couple was just getting their new business off the ground when Mike received the dire diagnosis of stage-four bladder cancer.

Despite her grief, a new role as single mother to three boys and a full-time job she still holds at a biotech company, Trieglaff says she felt a huge responsibility to honor her husband’s dream.

“There was no question we were going to continue with the business,” she says. But the reality of running a new business still very much in the red was daunting, to say the least. “That’s when I started to think, I don’t know what I’m going to do.

“I contacted an attorney, worked with a CPA, and asked ‘What is the right thing to do?’ It’s a seasonal business, and summer and fall is tough,” she says. “I was going through the whole grieving process and couldn’t really focus on anything … the CPA and the lawyer, they were honestly advising me to close.”

She brought in a friend of the family as a partner. With the help of everyone from the landlord to the franchise company, Extra Innings is now supporting itself. Even with her degree in nursing, Trieglaff found she could draw enough from her experience in pharmaceutical sales to get her through.

“I’m very bossy,” she laughs, “so that was not a problem for me.”

Josephine Geraci remarried and became a mother of three, which prompted a return to the world of entrepreneurship. She founded My Mom Knows Best, a company that manufactures disposable hand covers for kids to use in germ-filled public places.

She doesn’t regret selling the Wall Street business. What helped her the most, she says, is funneling a lot of her grief in those early days into raising money for brain-tumor research.

“I just took that grief and that real deep sadness that I felt and said, ‘I just have to help one person.’ That’s how I got through my days,” she says. “I didn’t want my husband to die unnoticed.”

Give us your advice: Check out recent “Ask & Answer” questions.

Related links:

Selling your business and keeping the gains

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Offering a product too cheaply can devalue it for customers. Here's how to zoom in on the right price point.

Emil G., Santa Monica
Is making a service free more counterproductive then selling the same service at a low cost? We recently put together a highly defined service in which we analyze the conversion rates of Web sites and make strategic suggestions – which we were already doing, it just wasn't separated out into its own service like it is now. Our plan was to begin offering it for free initially while we worked out the kinks, but since dropping the price to zero, it seems we've stripped the value in our clients' eyes. I expected the opposite. Any suggestions?

By Kathleen Ryan O’Connor, CNNMoney.com contributing writer

The concept of "no free lunch" is so ingrained in the business culture, you can’t really blame customers for looking askance at a free service. After all, if it’s so great, why aren’t you charging for it?

“Pricing is a part art and part science, and how you price a service will have a massive influence over what people perceive the value of your service to be,” says Mike McDerment, CEO and founder of FreshBooks, an online invoicing service that uses a “freemium” business model. FreshBooks' basic products are offered for free, but customers are charged for advanced or premium features.

“From the start, you need to set your clients’ expectations that the service is in fact worth paying for,” McDerment says. “If they have used it for free or with limited capabilities, then they should understand the value of the service and therefore be willing to pay. If they are not willing to pay after trying the service, then they never would have paid.”

He suggests that your first step going forward should be to tell your clients that you will soon start charging for the service. You can set expectations: Tell them the new rates will take effect in 30 or 60 days, or will kick in after they cross a designated usage threshold. “Step two, start charging them," McDerment says.

The pricing issue isn’t unique to the Web, says Mary Wolfinbarger, a professor of marketing at California State University Long Beach.

“When consumers don’t know how to value a product, price becomes a signal for the value of the product,” she says. “Digital products are in a class of products that consumers may find difficult to determine the value for.”

Haroon Mokhtarzada, CEO of the social media and Web hosting company Webs.com, has firsthand experience with the value of perceived premiums. Like FreshBooks, Webs.com uses a "freemium" model, but it recently changed its name from Freewebs.

For your service, conversion-rate analysis could be part of what you offer for free, but given its importance these days, you should make the service's value clear by holding back some of your insights. For instance, you could offer just one or two suggestions from a battery of 10, and let customers try out your tips to see the results, Mokhtarzada suggests.

“The whole game on the Internet is to improve those flows and that’s what every company is looking to do,” he says.

So is any damage permanent?

Nope, our experts say. Peter Boritz, president of Real Data Management, a New York City technology and consulting firm, recommends recasting your free offering as a limited beta test, open to clients you trust to help you incubate your ideas.

“Consider them to be part of a pilot,” he says. “Get feedback and testimonials.”

“Most of their potential clients haven’t heard of them yet," Mokhtarzada says. "That’s the great advantage of the Internet. You have a new release, a new push. With the Internet, you just change it the next day and it’s different.”

Give us your advice: Check out recent “Ask & Answer” questions.

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Looking to sell your business? Some technology investments are worth the cost.

DC Kirstein, Softcare Computer Consulting Co., Pittsburgh
Do you have any articles that link updating your company's technology and selling your business? I believe that simply improving a company's technology can help increase its resale value. Is this true?

By Christina Crapanzano, CNNMoney.com contributor
It's easy to measure the effect remodeling or upgrading infrastructure like windows or plumbing has on the resale value of a typical home. Not so with a small business – there are very few metrics on how to quantify the value of a company. The Small Business Administration does not keep data on small business sales, according to spokesman John McDowell.

A technology investment that directly helps a business's bottom line will pay off for a seller – but only once it's already paying off for the business. The number-one thing most potential buyers will care about is a company's cash flow.

“Buyers pay for what you have already built, and they buy it so it can grow,” says Domenic Rinaldi, managing partner of Chicagoland Sunbelt Business Brokers.

Mike Handelsman, general manager of sales site BizBuySell, backed that assessment. “It depends on whether the technology relates directly to the ability to impact revenue or cash flow,” he said. “For example, adding a technology can allow you to tap into a new customer base, increasing revenue.” But what buyers will reward is the new revenue stream, not the underlying infrastructure behind it.

Why it is so hard to value a business? Many of a company's best assets are intangible: Its brand recognition, its staffers' skills, its supplier relationships. The motives of the buyer also come into play.

"There are a lot of moving pieces," says Dick Leslie of San Diego's SCORE, a businesses counseling organization. "Are they buying your customer base? Do they like your location?"

Even without statistical evidence of higher resale prices, small business advisors recommend keeping the technology you need for your daily operations current and investing strategically in systems and equipment that will add value. This is especially key for companies in the information technology (IT) field: "If you’re trying to sell technology, you really need to be at the forefront," Leslie says.

Ramon Ray, a small business technology advisor for AllBusiness.com, notes that technology is only one element of business growth. To get the most from your IT investments, you need good leadership, efficient business processes and savvy financial management. Well-implemented systems for managing your company's finances, employees, vendors and clients can pay off handsomely – but botched deployments of new systems are expensive and frustrating mistakes.

Fast working computers for your office and good security systems are must-haves these days. If you have those basics covered, Ray recommends looking at your customer relationship management (CRM) system as a good investment opportunity.

"Without customers, you have no money," Ray said. "Overall, systems that affect how you work with customers – order fulfillment, for example – are of particular significance."

Except in specialized fields, equipment is a commodity. Investments in software and systems will pay off more than sinking cash into the latest-and-greatest in office PCs or printers. Fortunately, software investments don't have to be expensive. Leslie recommends that companies look into "Web 2.0" applications: Web-based systems managed remotely. Salesforce.com (CRM), NetSuite (N), and Google Apps (GOOG) are examples of online business-management applications popular with small companies.

"Those things can be bought pretty inexpensively," Leslie says. "Web 2.0 applications that allow clients to interact with the company are of significant value."

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Scott Everett, Synxe Solutions, Flower Mound, Texas
I have recently started an IT consulting firm in a potentially uncompetetive market. How can I acquire small and medium size business clients? Cold calling just seems too pressure-filled and most clients are immune to those old techniques.

What do you recommend? Leave a comment below with your answer.

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How to handle a breach of loyalty.

C.G.
My business partner and I own our tech company (an S corp) as fifty-fifty shareholders, and we each hold board positions. Recently I learned that until two years ago, my partner was getting paid by one of the corporation's clients, through a local university, to work in exactly the same technology that our company focuses on. This strikes me as a conflict of interest. What should I do?

By Adriana Gardella, Fortune Small Business staff writer
Dear C.G: Your instincts are correct. Directors and officers, such as your partner, are obligated to put the corporation's interests above their own.

"One type of loyalty breach involves a director who takes advantage of an opportunity that should otherwise have come to the corporation," says David Sokolow, who teaches business associations courses at the University of Texas School of Law in Austin. Because your partner's extracurricular activities focused on the same technology your firm was developing, the chances seem high that the payments he pocketed could constitute such a breach.

Esther Barron, clinical assistant professor at Northwestern Law School in Chicago, says you should also find out whether your partner used any of the jointly owned company's property or resources to perform his outside work. "To the extent he did, you may have ownership claims to any resulting developments or inventions," she says.

As for next steps, Barron urges you to have a lawyer determine whether you have a cause of action and may be entitled to damages. Don't delay: New York's statute of limitations for a fiduciary-duty breach can be as short as three years. Also, consider ending your relationship. Says Sokolow: "Who wants to work with someone like that?"

This column provides general information only and is not intended to replace the services or legal advice of an attorney. Always consult a lawyer regarding any specific legal concerns, as laws vary from state to state.

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Pooyan Toussipour, Melbourne, Australia
Hi, I run a small Web design and video production business called Eagle Eye Productions in Melbourne, Victoria, Australia. My target is small businesses looking for Web design, IT backup and more. I also shoot videos for occasions such as weddings and memorials. My brother runs a small business fixing laptops and computers. If I join him, we could do quite well in my mind, but I do not think we can promote the business ourselves because we are not native Australians. Do you think that we need to hire Australian sales people to promote this business? Should we merge these two small businesses to get more jobs?

What do you recommend? Leave a comment below with your answer.

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Broadcast business is booming, thanks to dwindling production costs.

Victor Musco, St. Petersburg, Fla.
My sports production company deals with high schools. Do I need a written agreement?

By Kathleen Ryan O’Connor, Fortune Small Business contributor
Dear Victor: The short answer is yes – any commercial production work that you are doing with high-school sports teams and students would most likely involve some contractual agreement with the subjects spelling out access, legal rights and payment terms.

It might be helpful to ask what’s been done in the past or to reach out to companies doing similar work outside of your immediate competitive area. Sports production is enjoying a time of major transformation and expansion, thanks to the dramatic drop in the cost of video production and the beauty that is broadband.

Gone are the days when you’d have to front $1.5 million for a video production suite and spends hundreds an hour to work with a video editor, just to get your business off the ground.

“Today you can get broadcast quality for just $84,000 – literally, I’m not kidding you,” says Geoff Allen, chairman and founder of Anystream, a top software company based in Dulles, Va., that specializes in streaming-media encoding technology for clients such as ESPN, Fox News, Foxsports.com and NFL Films. “The cost of production has fallen through the floor. It’s insignificant to your business model now.”

So if you want to produce local sports highlights or develop a business creating video packages for local athletes to send out to recruiters, the Internet and broadband technology have created an pathway to build an audience inexpensively.

Two major trends to consider, Allen says, are interactivity and the integration of metadata.

Imagine seeing footage of a game on your screen along with statistical updates in real-time, or content that incorporates your own fantasy-football league.

“That’s impossible to do with television,” Allen says.

That said, you still have to be able to produce a quality product. Allen mentioned the well-worn axiom: “Garbage in, garbage out.”

One avenue to consider is individual accounts with talented local players, says Tom Bruno, co-owner of the Long Island-based T & D Sports Video Productions with Dave Stempel.

They produce video for teams and individual players to use as coaching aides, keepsakes or for players to create scouting packages.

With budgets down and the cost of travel up, college coaches and scouts no longer have the luxury to scour the country for players. Blue-chip stars? Sure. But average talent now has to take on some of the marketing duties themselves. And that often means high-production value video.

Bruno says they started small and kept the focus on the clients.

“Don’t try to diversify too fast,” he says. “Make sure you are servicing your client in the right way.”

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For a moonlighting techie, a second business necessitates more licenses.

Lacy Taylor, Charlotte, N.C.
I have a business license for PC repair. I have been making small loans to some of my customers and charging interest. Do I need another license for this in Mecklenburg County, North Carolina?

By Myrlande Davermann, Fortune Small Business contributor
Dear Lacy: While your clients may delight in both of your talents – who wouldn’t love a computer doctor who doles out cash? – you’re going to have to differentiate the endeavors in the eyes of the law.

According to Bob Edwards, an economic developer with the North Carolina Business License Information Office, you’ll need to take several steps in order to operate your side business legally. Otherwise, he says, “You’re going to get in trouble for charging for loans without a license.”

First, inform the Mecklenburg County Register of Deeds that you have a second business operation in which you charge interest on loans. Obtain documentation from them if you’re a sole proprietor. If you’re running the loan business as a corporation or LLC, contact the Secretary of State instead.

Ha Nguyen, a public information officer for the North Carolina Office of the Commissioner of Banks, says you’ll also need to procure a license with her organization if you charge over 16% interest. If you’re making direct loans or cash advances and charging under 16% interest, you don’t need an NCCOB license.

She notes that you have the option of choosing what type of license you want, depending on the size of the loans you’re making and their interest rates. You should file for a 53-173 license if you intend to lend up to $3,000 at up to 36% interest; if you want to make loans of up to $10,000 with interest rates of up to 30%, you’ll need a 53-176 license. Nguyen adds that you may need other documentation depending on the type of loans you’re making, and she encourages you to read the North Carolina Consumer Finance Act and contact the NCCOB for more specific advice.

Nguyen also advises you to seek counsel from yet another government agency: the North Carolina Department of Revenue. Sounds like an excess of red tape? Just think of the legal tangles you’ll avoid in the future – and the profits you’ll ring up as a two-business entrepreneur.

This column provides general information only and is not intended to replace the services or legal advice of an attorney. Always consult a lawyer regarding any specific legal concerns, as laws vary from state to state.

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Michael Stewart, Clinton, Mo.
I am creating an Internet cafe/ISP/IT consulting company called CyberNation USA. I have been trying to find a business partner that I can really trust to help me expand my business. I can't seem to find people with as much drive and determination as I have. I want to start offering stock as capital, but I'm afraid it will grow faster than I can handle. I really do need some advice. Am I way too pushy, or not aggressive enough? What am I doing wrong?

What do you recommend? Leave a comment below with your answer.

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A software inventor checks with Ask FSB's experts for advice on whether a 50/50 split with a sales and marketing partner is a reasonable deal.

Eugene, Santa Monica, Calif.
I have a software product that I developed myself. I found a company that is willing to sell the product, and they would like a 50/50 deal: They’ll be responsible for advertising and selling and I’m responsible for continuing development of the software. Am I giving them too much of the profit?

By Shara Rutberg, Fortune Small Business contributor
Dear Eugene: To  figure out the right split, you’d need to divulge a lot more information, says Chris Gill, president and CEO of the Silicon Valley Association of Startup Entrepreneurs, a nonprofit group that aims to empower software entrepreneurs.

"For example, who’s your customer? Consumer or business? How much does the software cost?" Gill asks. "A consumer product selling for $30 requires a very different sales and marketing approach than that of a business product with an annual per-seat license of $10,000."

A 50/50 split could be a reasonable one, according to Gill.

“In my experience, sales and marketing are equally, if not more, as important as product development to the success of a business,” Gill says.

On the other hand, it could be a lousy deal, says Judy Orfao, a member of the steering committee of the Great Nashua Software Entrepreneur’s Group. Orfao ran the Nashua Small Business Development Center during the boom years, when hundreds of tech companies launched annually in the area.

“It depends on the type of software and the strength of the group you’re getting involved with," she says. "When you’re entering into this type of agreement, you’re really taking a big step.”

The first thing you should do is find an excellent corporate attorney with software industry experience.

“Most of the time entrepreneurs and developers are pennywise but dollar-foolish and don’t feel they need expertise. But they do,” says Orfao. “When we’re talking software, it can easily mean a 70% to 80% gross margin. That’s a pretty hefty return. You want to make sure you’re dealing with someone who knows the business, because it’s easy to get trapped when intellectual property’s involved.”

The attorney’s experience might be costly, but “it’s extremely, extremely worth it,” she emphasizes. Your local trade organizations can recommend experienced, specialist attorneys who can take you to the next level.

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Orna Sabbah, Union, N.J.
We operate an authorized Sprint sales & repair center in Union, N.J. Sales have been declining for some time now. Union is not the most happening city commercially, but we are located on the main business street. The repairs bring in traffic, but not new activations or upgrades, which is the meat of the business. Since our address is listed on the Sprint Web site, customers come to us to make payments, but not for new activations. What services can we offer to beef up business?

What do you recommend? Leave a comment with your answer.

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A small business owner wonders where his marketing strategy should go next.

Alex Diaz, Houston, Texas
I run a website design firm, www.toptechexperts.com. We offer a unique, affordable and complete website design package catered to small businesses. We want to grow and get more clients. My question: Should I invest more money in promotion and advertising, or hire some salespeople to reach out to new customers? I’m a great salesperson, but my time is limited, between designing and managing. Any advice?

By Kathleen Ryan O’Connor, Fortune Small Business Contributor
Dear Alex: Your question resonated with several folks in the website design world who have found themselves in a similar position: I’m doing great work, but what’s the best way to let the world know?

There isn’t a one-size-fits all answer

Damian Bazadona of Situation Marketing in New York City grew his web design company from one to thirty-five people in a couple of years. How? By recognizing that web design is essentially a people business, he says.

You are selling your creativity, not just a bundle of technical options. That means it will be hard to find anyone who can match your passion when pitching. He thinks your time and money would be well spent promoting and advertising, not training a salesperson likely unfamiliar with your exact vision. “I’d rather invest time in doing things to get clients to tell their friends,” Bazadona says. ”It’s all word of mouth.” He also recommends focusing on retention and getting more work from existing clients. “If you treat them great, they are going to find more money to spend with you.”

Spend time, define your market

Are you trying to convince local merchants with no existing web presence to use your firm to build a no-frills site? Then maybe hiring a salesperson or two doing cold calls might actually make sense. But if your product is more sophisticated, focusing on higher-level customer contact is likely to work better.

Dana E. Nybo, academic director of web design and interactive media at the Art Institutes International Minnesota wonders, ”What is his strength? He may be a great salesman, but if he’s a great designer and that’s where his heart lies, then hire a salesperson.”

Of course, all that business is worthless unless you have someone in the firm to follow through. Nybo says that Douglas Brull, a colleague at the institute, is going through the same type of issue. Brull, faculty for web design and interactive media department at the Institute, helped launch the web design firm Grandpa-George one year ago, but they are growing faster than anticipated, with three partners, four interns and two contractors.

He wonders if they should be going after specific clients or launching a more wholesale advertising campaign. “We are going back and forth on that,” Brull says.

For now they are trying to use scarce dollars creatively for targeted marketing and for building a community around the Grandpa-George aesthetic. He points out that money is no longer the sole currency for visibility. Viral marketing can build a brand without a fat corporate budget. The beta launch of their new site a few weeks ago was viewed in 46 countries and garnered “amazingly positive” feedback. “We’re investing in ourselves,” Brull says. “We are trying to use what we have the most of and that’s ideas and talent.”

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Have you recently added partners to your business? Share your advice with Victor.

Andy asked for marketing advice for his new e-store. Have you used an outside agency to market your web site? Give Andy some advice.

Michael asked how to begin building a website for his business. Have you started a website for your business? Did you hire a company to design it for you? Share your experiences here.