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Two Critical But Often Ignored Business Plan Ingredients

Brainstorming conceptWhen entrepreneurs write business plans, most will leave out two areas that are key for obtaining outside funding. Don’t make that mistake in your plan.

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Each year literally hundreds of thousands of entrepreneurs and business owners will develop a business plan. Most will incorporate the 10 key sections most business plan templates include. But even then, most miss two ingredients that are crucial, particularly if you are seeking outside funding for your plan.

Let’s go through these two items so you don’t fall victim to this mistake.

1. Be sure to cite past accomplishments in your business plan

Lenders and investors are making a bet when they fund your company. They are betting you will have future success. And if they are correct, they will earn a healthy return. So, what is the best indicator to someone you will have future success? The answer is past success.

Past successes are so powerful that many multimillion dollar checks have been written to Silicon Valley entrepreneurs who don’t even have a firm idea. That’s because if you’re an entrepreneur who has sold or taken multiple companies public, investors know the chances are high you’ll do it again; they will fund whatever venture you conceive.

Because past successes are the best indicators of future successes, be sure to document all past successes in your business plan. For established companies, think about the difference between your company when it started and where it stands now. Then document all the positive changes that have occurred such as:

  • Sales milestones you’ve reached
  • Hiring milestones (e.g., hiring your first, fifth, twentieth or even hundredth employee)
  • Partnership agreements you’ve signed
  • Customer relationships you’ve secured
  • Products you’ve developed or patented
  • Marketing campaigns you’ve launched

Importantly, even if you’re a startup, you’ve accomplished goals both in your career and in your new business. With regards to the new business, maybe you’ve:

  • Signed a lease
  • Secured a partnership
  • Forged an agreement with a customer
  • Hired an employee
  • Built an advisory board or found a mentor
  • Conceived a unique business name
  • Built a website

Essentially, every key goal you’ve accomplished should be listed in your business plan as each will lend credibility that you’ll be successful going forward.

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2. Document why you’re uniquely qualified to succeed

Many entrepreneurs get hung up on not telling their business ideas to others since they think doing so will ruin the success of their business opportunity. Rarely is this the case, and if it is, it’s only when the idea is a completely new concept for which you can be the first mover.

But, if you’re not the first mover on a new concept, you’re only going to be successful if your company has unique qualifications. For example, let’s say you have an idea to open a pizza shop in your town. The question to ask then is why are you uniquely qualified to run a successful pizza shop. Here are some potential answers:

  • You have 15 years experience running a pizza shop.
  • You have relationships with equipment suppliers who can get you great equipment at below market prices.
  • You have secret recipes that allow you to make high-quality pizza.
  • You have relationships with product suppliers that your competitors don’t, allowing you to offer products competitors can’t.
  • You have 10 years of social media marketing experience that will allow you to effectively promote your pizza shop.
  • You have 12 years experience managing a team of retail employees and maximizing their productivity.

A good way to think about your unique qualifications is to ask yourself what would happen if someone launched a pizza shop next to yours. Would you or your new competitor win the battle? The winner would depend on the unique qualifications of you and your competitor.

If you don’t have unique qualifications now, use this exercise to figure out what you must do to gain them. For example, maybe you need to hire a new employee or consultant to give you unique qualifications. Or maybe you need to create and sign exclusive agreements with vendors, partners, or customers so once you secure them your competitors can’t.

Citing your past accomplishments and making sure your company is uniquely qualified to succeed are sure to vastly improve the chances your business plan successfully raises outside funding. And the process of identifying accomplishments and unique qualifications will get you thinking about how you can build the company of your dreams.

So start doing this today.

RELATED: Write a Winning Business Plan

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Preparing Your Emergency Sales Plan: What If You Couldn’t Work for 30 Days?

man with broken legBeing kept away from your normal sales routine can be a big disappointment for high-energy sales professionals. Be prepared with an emergency sales plan ready to go.

The post Preparing Your Emergency Sales Plan: What If You Couldn’t Work for 30 Days? appeared first on AllBusiness.com. Click for more information about Maura Schreier-Fleming. Copyright 2020 by AllBusiness.com. All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of AllBusiness.com.


What if you weren’t able to work for 30 days? Do you have an emergency sales plan? Thankfully, I did. My husband tore his Achilles tendon. What was first diagnosed as an injury that could be fixed with physical therapy turned into one requiring surgery and one month of not being able to put any weight on his ankle.

Think about all you do with both feet. Now think about how dificult your mobility would be if you only had the use of one foot. Falling, for one, would be a real issue. So, in my husband’s situation, I had the choice of either hiring a nurse or becoming one—I chose the latter. Because I couldn’t work for 30 days, I had to implement my emergency sales plan. Luckily, I was prepared beforehand.

Here are three important things to consider when developing your own plan:

1. Familiarize yourself with technology tools

After your ability to work stops is not the time to starting embracing technology solutions. You had better be ready to implement technology tools when your time and abilities are limited.

I had meetings scheduled before my work situation changed, so I changed those my meetings to Webex meetings. When I myself had a hand injury and was unable to type on my laptop, I learned how to use voice recognition software. Android and iOS have excellent voice recognition software built in. Learn how to use these kinds of tools now, before you need them. You don’t want to be learning the technology on a day you’re feeling overwhelmed giving care or in a brain fog. Learn the technology now.

No matter where you are stuck working, remember that your phone is an excellent sales tool. You can easily pick up the phone to call customers and prospects instead of arranging face-to-face sales meetings. When you call your customer, explain the situation you’re in, and you may even end up learning more about your prospects and customers on the phone than you would during a typical sales call.

Let’s be clear here: it’s not your job to sacrifice your personal recovery for your customers. But if you are able to continue working during this period and explain your situation to customers, the empathy they feel for you could strengthen your business relationship (and might even translate into more sales). The fact that you took the time while caregiving or during recovery time to call your customers demonstrates your personal concern for them.

2. Prioritize what’s most important

You’ve heard the expression “First things first.” However, when your time and your abilities are limited, your new expression should be “First things only.” Other less critical tasks can wait until your schedule is back to normal; now is the time to go over your to-do list and determine what is and isn’t essential.

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Do you have any reports with firm deadlines? Are there tasks that others are depending on you to get done for them? The way to determine whether a task is critical or not is to think about what would happen if you didn’t do anything for a few weeks. Would anything serious happen? If not, you can forget about that task for the time being—it’s simply not that critical.

When you’re out of the office during this time period, your only job is to make sure that the most essential and critical selling tasks are taken care of. You will be better able to evaluate which tasks are critical if you can think clearly and have the time to make thoughtful decisions.

3. Learn how to better delegate your work

You must learn how to delegate critical tasks. Think now about which people you could delegate certain tasks to. You may even want to discuss these kinds of back-up plans with those people now.

Be specific when you ask for help. You are more likely to receive it when the person you’re asking for assistance clearly understands what is expected of them. But you might get pushback, which is why now is the time to find out if they would be willing to help you should you need it later.

Having an emergency sales plan gives peace of mind

Being kept away from your normal sales routine can be a big disappointment for many high-energy sales professionals. Disappointment, however, will not serve you well as a caregiver or as a recovering patient, so banish the “woe is me” attitude. You will have peace of mind if you have an emergency sales plan ready to go.

You may also end up finding out your that your business flourishes with the help of others. And it would be wonderful to learn that people value you just as much as they value your products or services.

RELATED: 10 Ways to Keep Your Business Running Smoothly While You’re on Vacation

The post Preparing Your Emergency Sales Plan: What If You Couldn’t Work for 30 Days? appeared first on AllBusiness.com. Click for more information about Maura Schreier-Fleming. Copyright 2020 by AllBusiness.com. All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of AllBusiness.com.


Opportunities Abound for Businesses Targeting Women Home Buyers

Happy young woman moving to new homeMore single women are buying homes, which means business opportunities for entrepreneurs who sell home services, products, or the homes themselves.

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Most Americans would rather pay a mortgage than pay rent—that’s one of the findings in the latest Homebuyer Insights Report from Bank of America. Owning a home makes people happy; in fact, 93% of people say they’re happier because they purchased a home, while most (83%) of the homeowners attribute their joy to an improved lifestyle and the variety of hobbies that come with owning a home.

And that’s where the opportunity for small businesses comes in—75% of homeowners started pursuing new hobbies, including: 

  • Landscaping/gardening—47%
  • Cooking/baking/grilling—45%
  • Interior design/remodeling—33%

Buying a home is like having a baby—it starts a constant cycle of buying “stuff.” So, whether you sell home décor, kitchen or gardening supplies, or homes themselves, or are in the home services business (plumbers, roofers, contractors, etc.), you need to know who today’s homeowners are and what they want. 

According to House Beautiful, one of the fastest-growing groups of homeowners today are single women. The National Association of Realtors (NAR) says single women comprised 17% of home buyers last year, while single men bought 9% of homes—and that’s despite the fact women, on average, earn less money than men do.

Bank of America’s 2018 Homebuyer Insight Report showing that 73% of women value home ownership more than getting married (41%) and having children (31%) was one of the inspirations for House Beautiful and Marie Claire magazines to study the trend. 

Who needs Prince Charming?

When trying to define the market, age matters—but not as much as you might think. While NAR stats show the median age of single women home buyers is 54, the House Beautiful survey showed 34% of the women purchased their first home when they were between the ages 18 to 29 and 40% were between 30 to 39.

Part of the reality of U.S. demographic behavior today is millennials are getting married later in life. And they’re not waiting for Prince Charming to come along before they make major life decisions concerning love, marriage, and children.  

Being a single mother also factors into the home buying decision. Jessica Lautz, Vice President of Demographics and Behavioral Insights for the National Association of Realtors, told House Beautiful that “the act of caregiving [is] a significant factor for single women buying homes, whether they’re caring for children or aging parents.”

Money matters

According to the NAR, the average price of a woman’s first home is $166,370 (compared to men who pay an average $180,570). 

The women House Beautiful talked to purchased their homes for varied reasons, including:

  • “I’m making enough to afford a mortgage on my own”—31%
  • The market was favorable—29% 
  • “Real estate is always a good investment”—26% 
  • Buying after a breakup or divorce—15%

The women aren’t tackling home ownership worry free. According to House Beautiful, they’re concerned about being able to afford the mortgage alone (30%) and taking on the responsibilities of repairs/renovations alone (24%). 

One of the women the magazine talked to advised other women home buyers, “You have to do your research, have your finances together” and be aware of hidden costs. These needs show there are also ample opportunities for accountants, realtors, and financial advisors to target and serve this market. 

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Home trends

If you’re already in or thinking about starting a business in one of the industries that serve the home market, you need to be aware of the latest trends. 

According to Houzz, an online community that caters to the architecture, interior design and decorating, landscape design, and home improvement industries, 10 “rising” design trends for 2020 are:

  1. Wood cabinets amid painted cabinets
  2. Shower ledges instead of niches
  3. Dining rooms with personality
  4. Bathroom seating (not the toilet)
  5. Tiled bathtub aprons
  6. Softly colored kitchens 
  7. Double floating vanities
  8. Colorful laundry rooms
  9. Fully wrapped powder rooms
  10. Painted interior front doors

White kitchens are the choice of more than 40% of renovating homeowners (not gender-specific). 

The National Association of Home Builders says the most in-demand remodeling projects are (in order):

  • Floors & ceilings
  • Sinks
  • Small kitchen appliances
  • Windows and doors
  • Water heater
  • Roofing
  • Lawn/landscape
  • Air conditioning
  • Minor bathroom fixes
  • Electrical work

And one of the hottest home trends today is plants. In fact, the National Gardening Association says houseplant sales rose 50% in the last three years to $1.7 billion, driven by millennials, who are plant-obsessed. These consumers are increasingly turning to gardening websites to learn more about plants and how to take care of them. Specifically, Americans ages 18 to 34 make up 29% of all gardening households. Overall, the average household is spending slightly more than $500 on lawn and garden supplies for a total $47.8 billion.

The future is “single”

Again, when it comes to the single market, the future looks bright for businesses serving this demographic. NAR’s Lautz told House Beautiful, “I think what we’re going to see in the future is more single people overall—females, males, unmarried couples. It doesn’t matter if you’re married; you want a place of your own.”

RELATED: How to Build a Construction Business From the Ground Up

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How Busy Are You, Really? Here Are 5 Ways to Find Out

man on hamster wheelIn today's always-connected world, many claim they are too busy. Are you really busy, or just busy bragging? Learn five ways to get a more accurate picture.

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Are you busy, or just busy bragging?

You might feel personally attacked by this question, but it’s a legitimate one—and one that’s been on minds of most bosses in all industries, especially in the past couple of decades. According to one study of 10,000 adults across 28 different countries, 42% of adults admit to habitually overstating how busy they are, with 60% believing their peers overstate their levels of busyness. Given that this is a self-reported survey, we can probably assume those numbers are even higher.

Why might you exaggerate how busy you are? There’s a chance you could get out of doing work if your boss already thinks your schedule is full, but in most cases, it’s due to competitive pressures. Being busy is something of a status symbol; claiming you’re busy makes you seem more diligent than your peers, and makes you seem more indispensable.

So, what can you do to find out how busy you really are?

1. Use a time-tracking tool

First, try to get a relative gauge of how busy you are by using a time-tracking tool. There’s a chance you’ve succumbed to the temptation of busy bragging, and you might have convinced yourself you have more responsibilities than you actually do. Start by using a time-tracking app such as Toggl or RescueTime to track your activity throughout the day. You can also ask your peers about things like how many hours they spend working each week, how many projects they’re handling, and what their expectations are.

2. Compare your past and present responsibilities

Pretend like you’re writing a job description. Take inventory of all the current responsibilities you handle, and approximately how much of your time those responsibilities eat up. Get yourself fully familiar with how your role has evolved, as well as the sum total of all the tasks and responsibilities you handle on a regular basis. To get a perspective on how your responsibilities have changed over time, compare this list of responsibilities to the job description for the position you originally filled, the job description of one of your peers, or the responsibilities you had when you first started your business.

3. Measure your email activity

Email is a strong indicator of how busy you are, and for several reasons. First, email takes time out of your day, so the more emails you’re sending and receiving, the busier you are (in general). Second, for many modern jobs, almost everything you do is tied to email in some way, whether you’re sending and receiving emails about a new project or reaching out to a team member for an update. Perhaps most important, email is unalterable; you can’t claim to have sent 200 emails in a day unless you have the records to back it up. Check out this list of Gmail extensions that will help you measure and improve your productivity.

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4. Track your time in meetings and scheduled events

You probably keep a detailed record of your work schedule, including formal events and meetings, which take up hours of your time—and meetings probably take up more of your time than you or your boss realize. According to a ReadyTalk infographic, employees spend about a third of their total time in meetings. This can help you drive home just how many hours you’re spending in the office—and where those hours are being spent.

5. Measure your achievements

Finally, consider estimating your busyness in terms of the results you’re able to achieve, since actual achievements are the real bottom line. This is going to vary based on your industry and position, but may include things like sales, leads generated, traffic increased, bugs fixed, or articles written. Even if you can’t prove that you’re spending more time than the average worker, you can prove that you’re worth more than the average worker. You can measure your results using one of the productivity-tracking tools on the market.

Having the evidence to support how busy you are is important, but so is the way you present that evidence to your boss. Use these tips to determine key takeaways and goals beforehand, and frame your conversation in the context of action items and suggestions.

For example, you might show how much of your time is consumed by meetings, and suggest that these meetings be shortened (or, in some cases, canceled altogether). Or, if you’re proud of how busy you are, you could position this as an opportunity to delegate more responsibilities, ask for a raise, or ask for a new title to reflect the significance of your new workload. This is your chance to make something meaningful happen, so take it.

RELATED: The 6 Biggest Time Sucks for Entrepreneurs—And How to Avoid Them

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5 Things to Know About the Upcoming S Corporation Election Deadline

Meeting Seminar Conference Business Collaboration Team ConceptIt’s not too late to elect S Corp status for your LLC or C Corporation. Learn more about the tax benefits of becoming an S Corp and this year’s deadlines for filing.

The post 5 Things to Know About the Upcoming S Corporation Election Deadline appeared first on AllBusiness.com. Click for more information about Nellie Akalp. Copyright 2020 by AllBusiness.com. All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of AllBusiness.com.


The new year is moving along swiftly. Martin Luther King Jr. Day has passed, the Grammys have come and gone, and many a person has already given up on their well-intended New Year’s resolutions. Fortunately, if requesting S Corporation tax treatment for your business in 2020 is on your list of resolutions, there’s still time to make it happen.

Why consider S Corporation election?

S Corp election is a tax treatment option available to eligible limited liability companies (LLCs) and corporations (C Corporations). You should discuss with your attorney and accountant or tax advisor whether the S Corporation election makes sense for you. For the right companies, it offers some advantages, including:

LLCs—By default, an LLC is a pass-through tax entity. That means that all of an LLC’s profits flow through to its owners’ (called “members”) personal tax returns. LLC members pay income tax and self-employment taxes (Social Security and Medicare) on all of the business’s profits. By electing S Corporation tax treatment, however, only income paid to LLC members through payroll are subject to self-employment taxes. Any profits paid as distributions to LLC owners are not subject to Social Security and Medicare taxes. So, LLC members may be able to lower their personal tax burden by electing to be taxed as an S Corporation.

C Corporations–Without S Corp election, a C Corp pays tax on its profits at the corporate tax rate, and some of its profits undergo “double taxation.” This occurs as some of the corporation’s profits get taxed when the C Corp earns that income and then again when the C Corp distributes those profits as dividends to its shareholders. (Note that dividends are not tax-deductible.).

So, after the corporation pays tax on that income, shareholders also report and pay tax on it on their personal tax returns. As an S Corporation, however, a C Corp’s profits and losses flow through to its shareholders’ personal tax returns and are taxed (according to the shares of ownership) at the applicable individual tax rates.

Just as with an LLC that elects S Corp treatment, owners (shareholders) that are employees of the C Corporation only pay self-employment tax on the wages or salaries they receive from the company. Dividend income is not subject to Social Security and Medicare taxes. 

5 facts you should know about the S Corporation election deadline for 2020

1. Time is of the essence if you want S Corporation tax treatment for the full 2020 tax year

Existing LLCs and C Corporations with a tax year that began on January 1 have until March 15, 2020, to file IRS Form 2553 (Election by a Small Business Corporation) to request S Corporation status for the tax year. Businesses that have a fiscal year other than the calendar year have until two months and 15 days after the start of their fiscal year to complete their S Corp election form. Entrepreneurs who launch their LLC or C Corp in 2020 have two months and 15 days from their date of formation or incorporation to file for S Corporation tax treatment for their entire 2020 tax year.

2. LLCs have an extra step to make before submitting their S Corporation election request

Existing LLCs must submit Form 8832 (Entity Classification Election) to elect to be treated as a corporation before filing Form 2553. 

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3. If you drag your feet, you may have to submit two separate tax returns at the end of the year

Typically, if a business files as an S Corporation after the deadline, it will be taxed as one type of entity for part of the year and then as an S Corp for the remainder. For example, if XYZ Architects LLC files for S Corporation election on June 3, 2020, the company will be taxed as an LLC from January 1 through June 2, and then as an S Corporation from June 3 through December 31. That means it must prepare two sets of tax forms.

4. If you have a good reason for filing after the deadline, the IRS might cut you some slack

If a business has a reasonable cause for not filing Form 2553 on time, the IRS may approve the S Corp election retroactive to the start of the LLC’s or C Corporation’s tax year. The business owner must explain on Form 2553 why the filing was submitted late.

5. You have flexibility if you want your S Corp election to take effect for the 2021 tax year

If you want your S Corp tax treatment to take effect starting with the 2021 tax year, you can file your Form 2553 anytime in 2020. Kudos to you for planning ahead!

Do your homework before stepping forward with S Corp election

S Corporation election is advantageous for some entrepreneurs but not for all. Make sure you discuss all of the legal and tax ramifications of S Corp status with a trusted attorney and tax professional. Also, learn more about S Corporation eligibility requirements and what it means from a tax perspective via the IRS website.

RELATED: 15 Major Legal Mistakes Made by Startups

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6 Tips for Using a 0% APR Credit Card for Your Small Business

Businessman pay by credit cardFor business owners with excellent credit, a business credit card with a 0% introductory APR period can be a smart option. Find out if it’s right for you.

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Every small business owner knows the power of a good business credit card. You can use your card to rack up rewards points, access perks like insurance and purchase protections, and give yourself a little cash flow breathing room when you need to make a big investment. 

For business owners with excellent credit, a certain class of business credit card—those with a 0% introductory APR period, typically lasting between nine and 12 months—is particularly powerful. 

APR is annual percentage rate and it represents a holistic look at the cost of using a loan or line of credit like a credit card over the course of a year. It includes annual interest rate as well as other fees, like origination fees. 

So a 0% APR for a certain amount of time means that you’ll be charged nothing—zero—for using the card. Even if you carry a balance from month to month, you’ll owe no interest payments or extra fees (as long as you pay a minimum balance and pay off what you owe by the time the offer ends). 

At the end of the day, no other small business financing option offers such generous terms. Bank loans, SBA loans, long-term loans—they will all charge you some sort of interest. 

If you’re able to qualify for a 0% APR credit card offer, you’ll have a limited window in which you can make the most of it. Here are six tips for using this type of credit card to the biggest advantage possible for your small business. 

1. Make sure you actually need it

You accrue interest on your credit card purchases when you carry a balance from month to month. If you are able to pay off your balance completely before your due date (typically about 25 days after your bill becomes available), then you don’t owe the credit card company a dime in interest. 

What a 0% APR credit card offer does is give you a break from worrying about paying off your bill in full by the due date. If you typically carry a balance, that can be a welcome relief. 

But if you’re not? If you tend to pay off all your debts each month with ease and don’t foresee a large upcoming purchase or two that could change that pattern, then there’s really no point in having a 0% APR card. 

In fact, at that point, you may be better off with a different credit card, with benefits and perks that align better with your needs (such as increased airline miles or cash back). 

2. Be ready to use the credit card to the fullest

If you’ve decided that now would be a good time to take advantage of a 0% APR offer, make sure that you’re ready to maximize that offer to its fullest potential. For example, plan to open up your new credit card just before making some major purchases, such as equipment upgrades or bulk orders of inventory, that you expect you’ll need some extra time to pay off. 

The worst thing you can do is start the timer on your limited-time offer, and then just let that offer sit unused. Try to line up a run of large (but ultimately manageable) purchases for when you’ll have your 0% APR offer ready to go. Remember, depending on the credit card issuer, this may last anywhere between nine and 12 months, so check your terms and conditions. 

3. See if you can use the credit card for balance transfers

A balance transfer is when you bring existing debt (in this instance, the balance of another credit card) over to your new account. If you’re currently carrying a balance on another credit card—and paying hefty interest fees each month—see whether the 0% APR credit card offer you qualify for includes balance transfers. 

If it does, you can transfer your existing debt to your new card and enjoy an interest rate of 0%, giving you a bit more wiggle room and time to pay it off.  

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4. Don’t max out your available credit

Don’t mistake 0% APR with “the ability to spend money freely with zero consequences.” For one, you don’t want to overspend and put yourself in a hole you can’t dig yourself out of by the time the card’s standard APR kicks back in. 

Additionally, spending to the point of maxing out your available credit line on that card messes with your credit utilization ratio. This ratio shows how much money you’ve spent relative to the credit available to you—and lenders use it assess how responsible you are with credit. 

Typically, lenders are wary of business owners who have a credit utilization ratio of over 30%. Try not to carry a balance well above that number for too long, or you’ll find lenders will turn you down if you seek a larger chunk of financing via a business loan.  

5. Pay your minimum balance

This has already been referenced, but it’s worth emphasizing again. You still need to pay the minimum balance owed to the credit card issuer each month. In some situations, failing to do so can mean losing your 0% APR offer altogether. Make sure you budget for these payments each month, as well as for paying off the balance in full by the time the introductory offer ends. 

6. Know when your offer ends

Don’t let the end of your offer sneak up on you. Read the terms and conditions and speak to your credit card company when you first receive your card, so you know exactly when purchases will begin accruing interest again. 

That post-introductory APR may be higher than what you’d pay on a more affordable business loan or line of credit, and you can very quickly put yourself into debt without another 0% APR lifeline to help pay it off. 

Final thoughts on 0% APR credit cards

As a small business owner, it’s your duty to know and understand all the financial tools available to you. A credit card with this kind of offer is truly elite and should be used carefully in order to maximize your chance of succeeding with it. Follow these tips and you’ll be in good shape to obtain another low-cost financing product, such as an SBA loan, once your offer ends.

RELATED: 5 Business Credit Card Myths That Can Cost Your Business

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8 Practical Ways to Manage Client and Customer Expectations—And Keep Everyone Happy

giving thumbs upKeeping up with client expectations can be tough, especially when the relationship is new. We share advice for making sure everyone’s on the same page.

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Keeping up with client and customer expectations can be difficult at times, especially when your relationship is growing and evolving. It can sometimes feel like you’re treading water, but there are ways to make sure you and your clients are on the same page when it comes to goals and processes. To help you, we asked a panel of Young Entrepreneur Council members the following question:

Q. What is one practical way of keeping up with client or customer expectations? What advantages does this method offer?

1. Ask how your value will be graded

It is crucial to clarify with a client what a successful engagement looks like and how will they be assessing the value of the relationship. As a digital marketing agency, it is very easy to get pulled into secondary projects for clients that deviate from what they value, and it is crucial to know that you risk taking your eye away from what matters—the client’s expectation of you. —Matthew BardenIndustrial Marketing

2. Create a weekly action plan

We have weekly meetings with clients to go through weekly “action plans.” The meetings are 30 minutes—concise and to the point. The action plan contains the top action items for the week. It covers what our team is working on and what is needed from the client. If we can’t meet with the client, we send them the plan so they always know what is happening for that week. —Reb RistyREBL Marketing

3. Be proactive and share project road maps

In the client-services world, we’ve found that being proactive through regularly updated strategy and project road maps has been a great way to remain in front of shifting expectations. We’ve found that it casts an overall efficiency to our own output, and that sometimes our regimented process rubs off on partners to help them with their own workflow stability. —Justin MoodleyLASANAN

 

4. Tailor communications

We provide reports that include deliverables, ROI, campaign data, and any pending items. This is a great way to track everything in a snapshot. We hold ongoing meetings as needed. With that being said, each client has a unique preferred communication style, so we tailor communications to that. Some prefer weekly, monthly, or just quarterly meetings. Some prefer to email as much as possible. —Angela DelmedicoElev8 Consulting Group

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5. Practice empathy

Clients have personal lives outside the work environment. Give them peace of mind by delivering quality services in a timely manner by “skating to where the puck is”—which means you have to already be there with the solution they were not expecting. Empathy puts you in the shoes of your client, increasing your sensitivity to their needs ahead of time. —Odin Liam WrightTRUE

 

6. Train your staff well

We train our staff to understand, anticipate, and help customers out when needed. And, we train them to always show empathy and confidence. If there are suggestions or better ways of doing things, we make note of it and assess if that aligns with our company mission. For the items and tasks that do, we make an effort to implement to better our process and improve customer satisfaction. —Jessica BakerAligned Signs

7. Lay out clear processes

To keep up with client expectations, create clearly laid-out processes. If it’s not in your contract, project management docs, sales onboarding, etc., then you’re not doing it right. Learn from client experiences and put in place or update your process. For example, we work on complex projects where clients sometimes feel lost. To fix this, we created custom client portals tailored to our process. —Ryan MeghdiesTastic Marketing Inc.

8. Ask for their definition of success

Ask clients up front what a successful project looks like for them. People find a direct approach refreshing and it will give you something concrete to define success by. By asking up front about expected outcomes, clients know that someone is personally invested in what is important to them, which helps build trust. It’s much easier than trying to read their mind or stay two steps ahead of them! —Kristine NeilKristine Neil Studio

RELATED: Get Organized! Choosing the Best Project Management Solution for Your Business

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How Cloud Communications Can Transform Your Relationship with Customers

cloud conceptFor today’s digital businesses, offering a great customer experience (CX) is a key differentiator and the best way to compete in the Digital Age.

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By Kevin Rubin

The way that consumers and companies communicate with each other has undergone a drastic change in recent years. For instance, last year former pro football player Steve Gleason tweeted Southwest Airlines that some of the airline’s employees were unwilling to accommodate customers like him who need to fly with power wheelchairs and specialty equipment. Southwest responded quickly and apologetically to Steve, and other Twitter users took note.

As technologies like smartphones and social media platforms like Twitter have become a part of people’s daily lives, consumers have come to expect businesses of all sizes to be open to communicating with them via these modern channels. Clear and effective communication is key to maintaining any kind of relationship, personal or professional. So catering to your customers’ preferences in terms of which methods they want to use to connect with you is paramount to your organization’s overall success.

If you want to stay ahead of the competition, it’s time to embrace new technologies that allow you to talk to customers on their terms.

The growing importance of customer experience and digital transformation

The experience customers have when they engage with customer service reps is becoming increasingly significant for businesses of all sizes and across all industries. Analyst firm Gartner has declared customer experience (CX) “the new marketing battlefront.” The 2017 Gartner Customer Experience in Marketing Survey found the majority (upwards of two-thirds) of marketers responsible for CX reported that their companies compete largely based on that factor.

The interactions people have when they reach out to you with a question or problem are a big part of CX, and a system where customers’ only option is to call in or wait a long time for a response isn’t ideal. In fact, 44% of Americans would rather clean a bathroom for half an hour than spend 30 minutes on hold with customer service, according to survey data released by Helpshift last year. The survey also found that 76% would prefer to get customer support via chat-based messaging if they were guaranteed to get an immediate response.

Although many people still prefer to call customer service, more people (i.e., millennials and Gen Z) see chatbots and instant messaging as normal methods of communication. This trend will likely continue as individuals who grew up during the digital age come to represent a larger percentage of American consumers.

Businesses will need to adapt and undergo digital transformation—the process of leveraging new technologies to improve business processes and enhance CX—to stay afloat. Failing to accommodate customers’ desires for alternate communication channels will frustrate them and inspire them to turn to competitors willing to oblige them.

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How cloud-based solutions can help you deliver exceptional customer service

For organizations looking to modernize how they connect with clients, cloud-based products like Unified Communications as a Service (UCaaS) and Contact Center as a Service (CCaaS) have emerged as useful solutions that support communication across various channels like texting, email, and instant messaging. These platforms—which consist of software delivered over the internet by cloud providers—allow customers to reach you using their preferred method, leading to a better and more personalized experience with customer service.

Here are a few more notable advantages of using a cloud-based communications solution to address client questions and concerns:

  • Analytics and insight into performance—Cloud communications software commonly provides you with key stats related to performance, such as how long people are on hold, how many calls get dropped, and so on. This shows you where your service reps might be running into issues and how you can improve your clients’ experience when they contact you.
  • Background info provided for more personalized service—Many cloud phone or contact center interfaces integrate with CRM software, and when you’re talking with a customer, will show you notes and background information about that particular client. This allows you to understand their situation and address their issue as speedily as possible.
  • Ability to connect with customers at any place and at any time—If your clients can only contact you via a phone on your desk, you’ll miss their calls if you have to step away for any period of time, whether you’re going to an off-site meeting or grabbing coffee. Cloud solutions are often accessible via web browsers and mobile apps, which means you can stay in contact remotely and on the go using your smartphone.
  • Scalability—One of the major benefits of cloud solutions is they can easily scale up or down to match your needs. If you anticipate expanding and hiring more customer service reps, for instance, it’ll be simple to add more agents to the cloud-based platform. This is a big plus for small but growing companies.

How to find the right cloud solution for your business

If you decide to install a cloud communications solution to improve customer service and CX, it’s important to do your research and ensure you find a provider that’s a good fit for your company. These are factors to keep in mind:

  • Cost—In general, cloud platforms help keep overhead tech spending in check. However, that depends partly on the vendor and platform you choose. Be sure to look at the various options available and compare pricing.
  • Performance and uptime—Look at each cloud provider’s track record in terms of outages and performance issues. Maximizing uptime is crucial if you want to provide exceptional customer service.
  • Security—Does your organization need to comply with industry-specific regulations like HIPAA? If so, your cloud provider also needs to adhere to those rules. Even if compliance isn’t an issue, you should still make sure any vendors you work with have advanced cybersecurity measures in place to protect your data. A data breach not only could result in monetary damages, but could damage your reputation and drive customers away.

Ultimately, mobile devices, the Internet of Things (IoT), artificial intelligence (AI), and other emerging trends have already transformed the way we talk to and connect with one another. Businesses that fail to change the way they approach communications and customer service will eventually die out. Embracing change by leveraging new tools like cloud communications software is the path to strong customer relationships and overall success.

RELATED: 5 Ways to Turn Your Customer Service Team Into a Secondary Sales Force

About the Author

Post by: Kevin Rubin

Kevin Rubin is the president and chief operating officer of Stratosphere Networks, a Chicago-based multifaceted IT managed service provider focused on delivering comprehensive technology services and solutions to meet and exceed always-changing, diverse business needs.

Company: Stratosphere Networks
Website: www.stratospherenetworks.com
Connect with me on Facebook, Twitter, and LinkedIn.

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The Beginner’s Guide to Protecting Your Online Business Reputation

Reputation Management conceptIt’s time to get serious about your online business reputation. Learn how to direct the online conversation around your brand.

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By Keith Kakadia

With the internet playing such a major role in the current marketing era, protecting your online reputation is more important than ever. Even if you don’t have a social presence, that doesn’t mean people aren’t talking. And if people are talking, rest assured, the word is spreading.

What’s the word about your business and who is hearing it?

It’s time to get serious about your online business reputation and take charge of the direction the conversation around your brand is going.

Don’t pretend people aren’t talking

Believe me—they are.  If you put your head in the sand, you’re going to end up with thousands of unhappy customers and a pretty good reason to remove your public pages. Ignoring the problem just gives it permission to blow up. And after the explosion, it becomes significantly more difficult to maintain a good reputation, even among your biggest fans.

Instead of pretending that certain conversations aren’t taking place, respond to the negative and positive reviews and do your best to isolate the damage. Easier said than done on social media, but the sooner you take care of the problem, the less it will spread. Remember that.

Assess your online business reputation: What’s the news?

Social listening is an incredibly powerful way to find out what’s being said about and around your brand. There are tools you can use to help you out with this aspect of the brand reputation process, so don’t be too discouraged if you’re entirely unfamiliar with the idea of social listening.

Monitoring your own social media is a great way to keep an eye on both positive and negative conversations around your brand and gives you an opportunity to step in when someone has questions, concerns, or complaints.

If you haven’t done so recently, Google your brand name and see what comes up. It’s possible that you can diffuse any negative comments you see and it will also give you an insight of what people are seeing when they are Googling you after initial introductions.

You’ll also want to do this quite often—maybe once or twice a month—to keep up on the ever-changing search results. If the top results are negative feedback about your brand, you’re in trouble and will want to act fast.

The truth about bad publicity

By now, we probably all have heard the famous words of P.T. Barnum: “There’s no such thing as bad publicity.” But the truth is this is rarely the case—especially with the introduction of social media into our everyday lives.

Let me introduce you to the concept of a reputation bomb. These can be things like negative reviews, hate sites, and even negative media coverage. These types of things aren’t easily dealt with and can cause huge issues because they’re the type of things that show up in Google results over the more positive information.

And the worst part? There’s no way to get rid of it. Why? Just read Article 19 of the Universal Declaration of Human Rights: “Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.”

Social listening can be hugely beneficial. And if you’re not putting a little time and money into it, you’re going to pay the price later because even the best companies may rub people the wrong way sometimes, and it’s much better to have a system and plan in place for disasters rather than panic at the first sign of chaos.

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Take control of your online presence

If you want to stay in control of the conversation, you have to take control of your online presence. As we have already explained, social listening allows you to know what’s being said. But what can you do to really take control of the conversation?

  • Make people respect you. This is one of the most important things you can do because trust is 1) not easily earned; and 2) it gives your audience something to relate to when it comes to how they can expect to be treated and cared for.
  • Be transparent. Transparency plays into the respect and trust area. When you make a mistake, be open and honest about it, perhaps offering a way to make amends. This can include things like discounts, coupons, and free items or services.
  • Be a first (and fast) responder. When it comes to criticism, comments, questions, anything, make sure you’re ready with answers. Also be polite. You’d be surprised at how far a simple “I’m sorry” can go online when it comes to negative interaction.
  • Address criticism directly. Free speech doesn’t mean its okay to make false accusations. Legal action is sometimes necessary, and in the cases when it isn’t, address the criticism directly. Shying away from it only makes you look guilty and won’t earn you any sort of brownie points with your audience.
  • Run a business you’re proud to be part of. If you aren’t proud of your business, there isn’t a chance your reputation is going to reflect anything else.
  • Speak in your brand’s voice. This is an excellent way to keep your audience on the same page, too. That way, impersonations are easier to spot and you can hold onto the trust of your audience through clear and specific communication.

Protecting your online business reputation is vital

Protecting your online business reputation is not only important, it’s also vital if you plan on growing and thriving as a business. If you and your employees are serious about being the best, start by creating a business that is worth investing in, and then invest your time and effort to give your audience an experience they can’t help but share about.

Protecting your online reputation is about more than just addressing the criticism of your company. It’s standing up for what’s right and shaping your company values into things people outside of your company can get behind.

RELATED: Could Your ‘Facebookonality’ Be Hurting Your Business?

About the Author

Post by: Keith Kakadia

Keith Kakadia currently runs one of the top social media agencies, Sociallyin. His company helps medium-sized and large brands tell compelling stories and sell through social media. Keith enjoys helping people and helping companies grow.

Company: Sociallyin
Website: www.sociallyin.com
Connect with me on Facebook, Twitter, and LinkedIn.

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10 Great Ways to Attract New Customers to Your Business

lead generation conceptWas one of your resolutions this year to increase your customer base? These 10 tried-and-true tips will help you attract more customers.

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Was one of your resolutions this year to increase your customer base? Here are 10 tried-and-true tips to help you attract more customers.

1. Offer new customers discounts and promotions

Consumers today are still looking for value and deals. Lure them into your business by offering introductory discounts, or have specials such as buy 2-get-1-for half-price or free gift wrapping for the first three purchases. Bargains like these can attract new customers who have been considering doing business with you but needed an incentive to actually change their shopping habits. Then track what they buy and which offers they redeemed so you can better target them with future marketing messages that will cement their loyalty.

2. Ask for referrals

Once you gain a customer’s loyalty, put that to work for you by asking them for referrals. Current customers are one of the best sources of new customers. But you can’t be passive and wait for your them to bring colleagues, friends and family to your business. Instead, take control and create a systemized approach to actively solicit referrals from your satisfied customers.

Build referral-generating activities into the sales process. Send follow-up emails to make sure customers are happy with their purchases, and then follow that up with another email asking for referrals. Consider offering incentives if the sale price warrants it. This approach works will for real estate agents, as an example.

3. Recontact old customers

Go back to your lapsed customers contact list and market to former customers who haven’t done business with you for a while. Create a regular schedule to do this, say quarterly, and select customers you haven’t seen in six months. Reach out to them via email, direct mail, text, or phone with a “We miss you” message, offering some type of deal or promotion if they’ll come back.

4. Network

There’s no better way to raise brand awareness than meeting new people, telling them who you are and what you do. Join your trade association, your local Chamber, and networking organizations. Attend Meetup events. If you own a local business, even going to PTA meetings can be a good networking opportunity. Approach networking with a “How can I help you?” attitude, rather than thinking, “What’s in it for me?”

5. Update your website

Online search is the primary way both consumers and B2B buyers find new businesses. That means your website has to do the heavy lifting so customers can find you. Review your search engine marketing and search engine optimization tactics and techniques, including making sure your site is mobile-friendly.

Even your site design makes a difference. Too many graphics can slow your site’s load speed, which is a customer turnoff. If you don’t have the expertise in-house, hire a website design company and/or SEO expert to help.

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6. Partner with complementary businesses

Teaming up with businesses that have a similar customer base, but aren’t directly competitive, and then strategizing how you can market to one another’s customers to drive new business is a smart way to attract new customers while not spending a fortune. For instance, if you sell baby products, working with a business that sells maternity clothes would be a great partnership.

7. Promote your expertise

You can generate interest, and even create buzz, attracting new customers and getting more business from your existing client base by showcasing your industry expertise. Volunteering to speak on industry panels, giving a webinar or workshop, speaking at industry events or to groups your target customers belong to, or holding educational sessions are just a few ways you can make a good impression on potential new customers and clients. This technique works particularly well for B2B business owners.

8. Take advantage of online ratings and review sites

Consumers, both in the B2B and B2C worlds, frequently turn to online ratings and review sites before they’ll do business with a company they are not familiar with. So make sure you monitor those sites and respond to any complaints. Make the most of positive reviews by linking to them on your website. Post signage in your store, office, restaurant, or other location encouraging customers to add their perspectives. Social proof is powerful, and new customers are more likely to give your business a try if they see others praising it.

9. Participate in community events

Surveys show most people like to support local, independent businesses. Raise your profile in your community by participating in charity events and organizations. Sponsor a local fun run, organize a holiday “toys for kids” drive, or supply a Little League team in your city with equipment. All this raises your profile which helps attract new customers.

10. Bring a friend

This idea is similar to referrals but requires customer participation. Offer 2-for-1, “buy one, get one free” or “bring a friend” deals to get your loyal customers to introduce their friends and colleagues to your business. For instance, a restaurant could offer a “buy one entrée, get a second for free” special to attract more customers.

Think of these strategies as a starter list. Add your own ideas. The key is to get started now, so when next year rolls around, you’ve expanded your customer base. 

RELATED: How to Benefit From Customer Complaints

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15 Ways to Effectively Communicate Company Goals With Your Employees

Mature Businessman speakingCommunicating clearly with your staff about the company’s goals ensures everyone is on the same page and working as a team to turn those goals into reality.

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As a leader, it’s important to understand the goals and vision of your company. It’s arguably even more important to convey that information to your employees, who play a huge role in turning those goals and vision into reality.

Strong lines of communication ensure everyone is on the same page, leading to greater growth for your business. To help you do this, we asked Young Entrepreneur Council members the following question:

Q. What is your preferred method for communicating company goals and vision with your employees?

1. In-office lunch meetings

We have a small team, so I like to communicate company values and goals in the office in a conference room or during an in-office lunch hour. For those who work remotely, we conference them into all meetings in real time. —Kristin Kimberly MarquetMarquet Media, LLC

 

2. Weekly team meetings

Weekly meetings are one of the most effective ways to communicate company goals and touch base with your employees on their projects. We hold weekly meetings for each of our teams where we discuss updates, open the floor up for questions, and communicate our weekly, monthly and quarterly goals. —Chris ChristoffMonsterInsights

 

3. Weekly newsletter plus a team meeting

My preferred method for communicating company goals and vision with my employees is sending a weekly newsletter with remarks and holding one 30-minute meeting a week. I also believe it’s highly important for leaders to show great attitude and enthusiasm as they communicate company vision and goals as this will create a positive vibe among employees. —Alfredo AtanacioUassist.ME

4. Slack announcements

We use Slack as our main communication portal. We have several channels for different teams and purposes. We share important updates and communicate our goals and visions on the general Slack channel that everyone is subscribed to. These announcements are also backed by changes to the website and mentioned in weekly meetings. —Syed BalkhiWPBeginner

 

5. Sharing customer and team stories

I often share stories of customer success or examples of how our team went above and beyond for our customers. These real-life stories demonstrate our company motto, “People First,” in action. Sharing these stories with our team reminds them of our company goals and vision and how we can put those goals and visions into action every day. —Thomas GriffinOptinMonster

 

6. Company culture

I believe people learn better from experience and immersion. Just like it’s possible to learn a foreign language by spending some time in the country, it’s possible to pass the values on through company culture. We start thinking about it at the recruitment stage and only hire people who already have a lot in common with the team, get the general vibe, and share similar work ethics. —Solomon ThimothyOneIMS

 

7. Internal company hub

Our company uses an online hub where we keep all of our employee information, processes, mission statements, etc. New employees use the hub as their main resource to get in tune with their work schedules, tasks, projects, and more. On top of that, we also post our values and mission statement on the hub so employees have direct access to it 24/7. This seems to be an effective method. —Stephanie WellsFormidable Forms

8. Team retreats

Team retreats are my favorite place to have everyone together and give an overview of where we started, where we’ve gotten, and where we’re going. I like to start the event with this, as it tends to bring people together and get them excited to spend time with each other, and of course afterwards, to get back to work and work towards these goals. —Karl KangurAbove House

 

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9. Workshops

Regular workshops that revolve around the core values and long-term vision have a positive, ongoing impact on the organization. Real-time, live (or Zoom) engagement is more personal than a policy pinned on your site. Day-to-day problems can shift the perspective in the wrong direction, which is why recurring workshops around the business values can void any hesitations across the organization. —Mario PeshevDevriX

10. Short videos

I like to use videos to explain goals and vision because it’s the preferred method for our employees, so they pay attention more. That means they take in what’s being shared rather than get distracted and miss what they need to know. —Serenity GibbonsNAACP

 

 

11. Town hall meetings

I like the town hall format for sharing this type of information because everyone knows they have the floor to ask questions and get clarity around anything they don’t understand. I also get real-time feedback on what I’m saying so I can see where everyone’s mind is at. —Peter DaisymeHostt

 

 

12. A mission statement document

I have a mission statement document that I share with all employees. This document outlines my company’s origin story, notable accomplishments, and provides a road map for the future. I frequently update this document as well, so I encourage employees to periodically revisit it, even if they’ve read it before. —Bryce WelkerAccounting Institute of Success

 

13. Email series

We like to share a stream of emails that cover different aspects of goals and vision. That way, it’s digestible and helps everyone reflect on each aspect separately. Email also allows them to return and reread at their convenience. —Angela RuthCalendar

 

 

14. Quarterly presentations, monthly updates, and weekly meetings

Weekly meetings are used at the department level to have a two-way discussion about the goals of a particular department. Monthly company-wide updates allow departments to communicate to all stakeholders the progress that department has made toward that goal. Quarterly presentations coming from the C-suite ensure everyone gets management’s interpretation of the progress made on those goals. —Jeff KeenanLeadsRx

 

15. Multi-layer communications

Everyone learns and retains information differently, so be prepared to communicate information to your employees in various methods. Begin with group meetings to share any updates, goals, or changes to the organization. From here, send out written communication that outlines what was shared. Having visual, audible, and written communication covers most bases to meet everyone’s needs. —Jared WeitzUnited Capital Source Inc.

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How to Build a Construction Business From the Ground Up

Construction managerThe future of the construction industry is bright. Whether you're looking to build a construction business or expand your current one, there's no better time than now.

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By Holly Welles

The future of the construction industry is bright. Construction and extraction occupations are expected to grow about 10% from 2018 to 2028, and there’s no shortage of job postings seeking talented building, electric, or maintenance professionals. If you’re looking to build and expand your business, there’s no better time than the present.

Of course, choosing to invest in building a construction company will lead to more responsibility and initial costs, but the payoff is promising. Here’s how to get started.

Build a great construction team

To build a great business, you must build a great team. Hire people with different skill sets that will take your business in the direction you want to see it go. Be selective about whom you hire and invest in those who have the talent and track record to be powerful assets to your company.

The construction labor shortage has made recruitment competitive; finding experienced construction laborers and supervisors has been a challenge since the economic crash of 2008. This means you’ll need to focus on finding employees with a good attitudes and who can learn quickly on-the-job. Your business can benefit greatly from building leaders through robust training and on-the-job mentoring.

For recruiting, try building connections with local community colleges and technical schools. There may be students who are seeking opportunities that value practical skills. As your business grows, you can even sponsor programs that offer apprenticeships or internships for young students looking to enter the industry.

To build a construction business, mind your budget

Even if your construction company is making a profit now, there are expenses associated with growth. You must be willing to mindfully invest in order to increase earnings. Think about the cost compared to the potential profit of a project before taking it on.

The best way to plan is to create a budget based on your estimation of costs. Keep utilities, taxes, liability insurance, and professional bonds in mind when making this budget. From this base, you can calculate your ability to afford new laborers and equipment that can help you grow. Planning will ensure your company makes it through the growth process and comes out on the other side, more efficient and stronger.

Remember that unexpected costs are a given in the construction industry. You don’t want to be caught unprepared, so contingency planning is crucial. Set aside about 20% of your budget to pay for unforeseen costs like material upgrades, accidents, malfunctions, and mid-project changes. This will prevent costly delays in production and protect you from running your business into the ground.

Upgrade technology and equipment

Innovative heavy machinery and advancements in technology are changing the way work gets done in the construction industry. New construction business owners must commit to staying up-to-date on the latest software and equipment.

Technology allows your business stay ahead of the curve and the competition. For example, newer and more efficient tools will reduce project time and allow you to take on more clients, reducing labor costs and increasing profit. Keep an eye out for project management software, fleet management tools, and worker safety technologies that help businesses run more smoothly and with less effort.

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Since technology trends change almost overnight, tracking developments can be difficult for busy new construction leaders. One way to stay on top of industry trends is to begin regularly reading construction publications. Try to research new technologies that can help your employees work more efficiently.

Networking and attending industry conferences and events is also an excellent way to stay current. These trade events usually offer classes or demos that will allow you to speak with others in the industry. In addition, there are online communities, such as LinkedIn, where you can connect with industry professionals and discover new opportunities for growth.

Develop a marketing strategy

Most companies in the construction industry rely on word-of-mouth marketing to grow. While this organic form of advertising has its benefits, you should also consider investing in other types of marketing to get new customers more quickly. Depending on your budget, this can include everything from promotional discounts or referral incentives to television commercials.

Moreover, your marketing campaign should aim to both bring in new customers and retain existing ones. Reach out to former clients by providing referral incentives or offering free estimates or discounts on their next renovation. As always, excellent customer service and quality, reliable work will do wonders in creating a loyal client base.

Focus on winning new clients by creating a strong online presence. Ensure your website is geared toward converting potential customers; include testimonials, quality content, and examples of your work to win their trust and increase sales.

Outline a detailed marketing strategy that can be implemented over the next six to 12 months. Include digital platforms you plan to use to spread your message, and always evaluate your finances before making a final decision.

How to build a construction business: final thoughts

Construction professionals know better than anyone that a strong product requires an even stronger foundation. Before you build a construction business, make sure you and your team are ready to grow.

Then, consider your best venue for expanding your company. Be sure you are able to get skilled workers and updated equipment. Develop marketing strategies for gaining new customers while also maintaining your loyal base.

Most important, make sure you have the necessary funds to move forward. Growth can kill your business if you incur too many costs right out of the gate. Smart planning and careful budgeting can help you navigate the beginning of your construction career and launch a business that will have long-term success.

RELATED: When Financing Equipment, Beware of the Dreaded Blanket Lien

About the Author

Post by: Holly Welles

Holly Welles is a construction writer and the editor of The Estate Update. Her writing is published on Construction Executive, Build Magazine, and other prominent industry publications.

Website: www.theestateupdate.com
Connect with me on Facebook, Twitter, and LinkedIn.

The post How to Build a Construction Business From the Ground Up appeared first on AllBusiness.com. Click for more information about Guest Post. Copyright 2020 by AllBusiness.com. All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of AllBusiness.com.


15 Major Legal Mistakes Made by Startups

legal conceptBusiness startups that manage to avoid these legal missteps have a better shot at success than do those companies that fail to anticipate and plan for them from the beginning.

The post 15 Major Legal Mistakes Made by Startups appeared first on AllBusiness.com. Click for more information about Richard Harroch. Copyright 2020 by AllBusiness.com. All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of AllBusiness.com.


By Richard Harroch, Lynne Hermle, and Ellen Ehrenpreis

When launching a new startup, you can face significant business and legal challenges. We have seen plenty of mistakes made by entrepreneurs and startup companies.

The following are some of the more common and problematic legal mistakes made by small and growing companies. These mistakes are made at the initial formation of the business, in the early stages of growth, and when dealing with employees.

Mistake #1: Not Making the Deal Clear With Co-Founders

If you start your company with co-founders, you should agree early on about the details of your business relationship. Not doing so can cause significant legal problems down the road (a good example of this is the infamous Zuckerberg/Winklevoss Facebook litigation). Think of the founder agreement as a form of “prenuptial agreement.” Here are the key deal terms your written founder agreement needs to address:

  • How will the equity be split among the founders?
  • Is each founder’s percentage ownership in the company subject to vesting based on continued participation in the business?
  • What are the roles and responsibilities of the founders?
  • If one founder leaves, does the company or the remaining founders have the right to buy back the departing founder’s shares? If so, at what price?
  • What time commitment to the business is expected of each founder? What constraints will be imposed on outside commitments?
  • What salaries (if any) are the founders entitled to? How can that be changed?
  • How will key decisions and day-to-day decisions of the business be made? (by majority vote, unanimous vote, or are certain decisions solely in the hands of the CEO?)
  • Under what circumstances can a founder be removed as an employee of the business? (usually, this would be a Board of Directors’ decision)
  • What assets or cash does each founder contribute or invest into the business?
  • How will a sale of the business be decided?
  • What happens if one founder isn’t living up to expectations under the founder agreement?
  • What is the overall goal and vision for the business?

Similar mistakes are sometimes made with employees, through email or oral promises, such as “you’ll get 5% of the company” without vesting schedules, role definitions, decisions about what happens on termination, etc.

Mistake #2: Not Starting the Business as a Corporation or LLC

One of the very first decisions founders must make is in what legal form to operate the business. Because founders often start businesses without consulting lawyers, they incur higher taxes and become subject to significant liabilities that could have been avoided if they had structured the business as a corporation or a limited liability company (“LLC”).

The types of business forms that are generally available to a startup business are as follows:

  • Sole Proprietorship. Generally speaking, a sole proprietorship requires no legal documentation, fees or filings other than state and local business permits. On the other hand, there are disadvantages to operating in this form: (1) a sole proprietorship only has one owner, and if additional capital is required from other investors, the form is not available and a partnership or other entity form is required; and (2) a sole proprietorship provides no protection for the founder against creditors of the business (in other words, creditors can directly sue the founder), in contrast to corporations and LLCs where, generally speaking, the founders are insulated from creditor and other third-party liability. We don’t recommend sole proprietorships.
  • General Partnership. A general partnership is sometimes chosen as the legal form of business entity if there are multiple founders. Preferably, the founders will execute a partnership agreement to “set the rules” among themselves; however, if the founders do not enter into a partnership agreement, most (if not all) states have existing laws that will step in and supply the rules of engagement. In addition, the income of a partnership is taxed directly to the partners generally on a pro rata basis (i.e., according to percentage ownership of the business). Finally, each partner is generally liable for the debts of the business such that the personal assets of each partner are exposed to the full extent of the business’ obligations. We don’t recommend forming a general partnership for a startup business.
  • C Corporations. These are formed under state law (usually in the state where the business will first operate or, commonly, in Delaware, which is known for its well-developed body of corporate law). Most venture capital-backed companies are C corporations.
  • S Corporations. These, like C corporations, are formed under state law. An S corporation is a closely held corporation (not more than 100 stockholders) that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code. The election results in the corporation becoming a pass-through entity for tax purposes (meaning that the S corporation itself does not pay income tax; rather, profits and losses are passed through and divided among the corporation’s stockholders).
  • LLCs. These are formed under state law, are a hybrid form of corporation and limited partnership, and have certain tax advantages over C corporations. They provide limited liability protection to the owners, in keeping with the corporate form, but they also provide for flow-through taxation to the members (as with an S Corporation). If you plan on bringing in venture capital investors at some point, it is best to avoid starting the company as an LLC (which generally can’t invest in pass-through entities).
  • Limited Partnerships. These are formed under state law, often to hold investment real estate, and also are often the investment vehicle of choice for private equity firms, venture capital firms, and hedge funds.

Corporations, LLCs, and limited partnerships are formed by filing documents with appropriate state authorities. The costs for forming and operating these entities are often greater than for partnerships and sole proprietorships due to legal, tax and accounting issues. Each can offer advantages for founders (and subsequent investors) not available in the case of sole proprietorships and general partnerships, including liability protection from business creditors, tax savings through deductions and other treatment only available to corporations and LLCs, and ease in raising capital. The C corporation (formed in Delaware) is by far the leading choice for technology startups across the country.

Sole proprietorships and partnerships can be converted to a C or S corporation, an LLC, or another form of legal entity, but keep in mind that the costs of conversion can be significant and, depending on the manner of initial formation, can result in a lengthy process.

Mistake #3: Choosing a Company Name That Has Trademark Issues, Domain Name Problems, or Other Issues

When picking a company name, it is important to do research to help you avoid trademark infringement or domain name problems and to ensure that the name you choose is actually available to use. You may be infringing on someone’s trademark if your use of a mark is likely to cause confusion among customers as to the source of the goods or services. Here are some steps to take in order to avoid naming issues:

  • Do a Google search on the name to see what other companies may already be using the same or a similar name.
  • Do a search on the U.S. Patent and Trademark Office site for federal trademark registrations on your proposed name.
  • Do a search of Secretary of State corporate or LLC records in the states where the company will do business to see if anyone is using the same or a similar name.
  • Do a search on GoDaddy.com or other name registrars to see if the domain name you want is available. If the “.com” domain name is taken, this could signal the potential of prior use and is therefore a red flag.
  • Make sure the name is distinctive and memorable.
  • You might consider having your intellectual property lawyer do a professional trademark search.
  • Don’t make the name so limiting that you will have to change it later on as the business changes or expands.
  • Come up with five names you like and test market them with prospective employees, partners, investors, and customers.
  • Think about international implications of your chosen name (for example, you don’t want to choose a name that could turn out to have embarrassing or negative connotations in another language).
  • Avoid unusual spellings of the name. This can cause problems and confusion down the road (although some companies like Google or Yahoo have been successful with unusual names, such success is often the exception rather than the rule).

See 12 Tips for Naming Your Startup Business.

Mistake #4: Not Complying With Securities Laws When Issuing Stock to Angels, Family, or Friends

If founders form a corporation, limited partnership, or LLC, the sale of stock, limited partnership interests, or LLC interests to the founders and later investors will be subject to federal and state securities laws. Most securities laws require that such sales comply with certain disclosure, filing, and form requirements unless the sales are exempt.

Failure to comply with applicable securities laws requirements can result in significant financial penalties for the founders and the startup company, including a requirement that the company repurchase all shares sold to all investors in the unlawful offering at the original issuance price of the shares, even if the company has lost most, and perhaps all, of the money it raised from the investors. There can also be fines and other penalties (civil and criminal) imposed for failures to comply with the securities laws. To avoid such damaging (potentially fatal) consequences, founders should hire knowledgeable lawyers to document the sale of shares in compliance with such laws.

Mistake #5: Not Adequately Taking Into Account Important Tax Considerations

Startups need to pay attention to a variety of key tax issues germane to their businesses. Without proper planning, founders can find themselves or their startups liable for unintended and unanticipated taxes, fines, and penalties. Here are a number of the key tax issues to consider:

  • Obtain a Tax ID. In most instances, you will need to get a tax ID from the IRS for your company. This is also known as an “Employer Identification Number” (EIN), and it’s similar to a Social Security number, but for businesses. Banks will ask for your EIN when you open a company bank account. You can get an EIN online through the IRS website (the process is simple and quick and an EIN is issued immediately). In some states, a state tax ID may be necessary as well (for example, California, New York, and Texas require a state ID, which can also be obtained online).
  • Choice of Legal Entity. There may be valid reasons to choose a flow-through tax entity, such as an LLC or S corporation (see explanation of entity types in mistake #2 above). For example, flow-through entities allow for business losses to flow through to the shareholders’ individual tax returns, which allows the shareholders to offset the losses against any gains in the same fiscal year. As noted above, most venture capitalists and institutional investors prefer (indeed, may require) that the entities they invest in be C corporations (generally due to tax exempt limited partners that cannot receive active trade or business income due to their tax-exempt status).
  • Section 83(b). Founders and employees need to consider whether they can mitigate potential tax issues by an IRC Section 83(b) election. A Section 83(b) election relates to when someone receives stock or options subject to vesting and can minimize the amount of income deemed taxable at ordinary income tax rates to the recipient.
  • Qualified Small Business Stock. Holders of stock in qualified small business corporations may be entitled to a reduced rate of tax on gain from the sale of “qualified small business stock” under IRC § 1202. The tax savings can be substantial, making preservation of the exemption key for investors.
  • Tax Incentives. Depending on the nature of the business, various tax incentives may be available, such as renewable energy tax credits and investment tax credits.
  • Stock Options. Stock option plans are an extremely popular method of attracting, motivating, and retaining employees, especially when the company is unable to pay high salaries. A stock option plan gives the company the flexibility to award stock options to employees, officers, directors, advisors, and consultants, allowing these people to buy stock in the company when they exercise the option. The primary tax issue for the company in granting stock options is that the company needs to make a determination of the fair market value of its common stock in order to set the exercise price of the option, pursuant to Section 409A of the Internal Revenue Code. This is often done by hiring a third-party valuation expert.
  • Sales Taxes. The business may be subject to taxes from the sale or lease of goods and services, commonly referred to as a “sales tax” and in some instances as a “use tax.” The sales tax is calculated by multiplying the purchase price times the applicable tax rate. The applicable tax rates vary by state (California has the highest sales tax rate). In some states, cities and counties can levy an additional sales tax. Sales tax is required to be collected by the seller at the time of sale. The seller must file tax returns and remit the tax to the state and city/county that imposes a sales tax. The categories of goods and services that are subject to sales tax depend on the state, city, or county, and there are typically many exempt categories of goods or services.
  • Payroll Taxes. Startups have to pay state and federal payroll taxes on employee compensation. Payroll taxes are usually calculated as a percentage of the compensation the company pays to its employees. The taxes are taken out of (withheld from) employee pay, are collected by employers, and paid by employers on behalf of the employees and the company. U.S. federal taxes include federal income tax withholding owed by employees, which is calculated from the amount provided by the employee on IRS Form W-4 at the time of hire. The tax also includes amounts paid for Social Security and Medicare (called FICA taxes), where the employer deducts the employee’s share (one-half of the amount due) from the employee’s paycheck, and the employer pays the other half.
  • Employee vs. Independent Contractor Issues. It is critical for tax and other purposes that the company correctly determines whether individuals providing services to the business are employees or independent contractors. Employers run the risk of improperly characterizing independent contractors. Many startups prefer to use independent contractors to avoid paying Social Security, Medicare taxes, and unemployment taxes, and to avoid providing health insurance coverage. But the IRS and states are paying more attention to misclassification issues. In fact, companies like Uber that treat workers as independent contractors are under increased scrutiny (California’s Assembly Bill 5, signed into law last year and effective as of January 2020, requires many workers formerly classified as independent contractors to now be reclassified as employees). If the employer has significant control over the worker, the IRS or the state may claim the worker should have been classified as an employee. Companies must give their employees IRS Form W-2 setting forth their compensation for the year, and must give their independent contractors Form 1099 by February 1 of each year.
  • Properly Documenting All Income and Deductible Expenses. Every business needs to employ a record-keeping system that accurately and completely captures all income and deductible expenses. Some businesses use an ordinary checkbook for this system, but many businesses choose to use electronic software programs such as QuickBooks. The IRS website lists the types of records a small business should keep by category.

For a complete discussion, see Pay Attention to These 9 Essential Startup Tax Issues.

Mistake #6: Not Having the Right Legal Counsel

In a misguided effort to save on expenses, startup businesses often hire inexperienced legal counsel, including lawyers who are friends or relatives, or those who offer steep fee discounts. In doing so, the founders deny themselves the advice of experienced legal counsel who can help avoid many legal problems. Founders should consider interviewing several lawyers or law firms and determine if the lawyers or the law firms have expertise in some, if not all, of the following legal areas:

  • Corporation, commercial, and securities law
  • Contract law
  • Employment law
  • Executive compensation and benefits law
  • Intellectual property law
  • Real estate law
  • Tax law
  • Franchise law
  • Data security, cyber, and privacy law

Although it is not necessary that the lawyer or law firm retained by the founder have experience in all of the foregoing areas because certain problems can be “farmed out” to different lawyers or firms, it is often best that the founders retain a firm that can handle some, if not many, of the areas of expertise listed above so as to provide continuity between the founders and their lawyers.

To locate competent legal counsel, founders should:

  • Check with friends and business acquaintances to ask for referrals.
  • Consider state bar referral services.
  • Review local incubator/accelerator websites for lawyers who serve as advisory board members.
  • Attend programs featuring presentations by startup counsel and other relevant subject matter experts.
  • Review legal websites (e.g., Lawyers.com).

Mistake #7: Not Maintaining Proper Corporate and HR Documentation

Companies are often sloppy in maintaining proper corporate and employee/HR-related documentation. This can become problematic when the company pursues financings, is involved in an M&A activity, or is involved in claims or litigation with an employee or regulatory agency. Here is a compendium of the types of documentation the company should consider maintaining carefully:

  • Board and shareholder resolutions and minutes
  • Signed contracts (including documentation reflecting any loans to or from founders or other company employees)
  • Stock and option records including, among other things, stock option plan documents; executed stock purchase and option agreements; proof of payment for stock sales and share and option grants (as well as for other securities sold or issued by the company); 83(b) election forms (plus proof of form filing with the IRS); option exercise paperwork; and required state and federal filings
  • Job applications and resumes
  • Employee offer letters
  • Employment agreements
  • IRS W-4 forms (Employees’ Withholding Allowance Certificate)
  • Form I-9 completed by all employees (eligibility of the employee to work in the United States)
  • Anti-harassment and discrimination policy (and, if employees confirm their compliance with the policy, those acknowledgments or confirmations)
  • Benefit plans
  • Employee personnel files (including performance appraisals and notes of important discussions)
  • Employee complaints and the responses to those complaints
  • Workers’ compensation documents, unless maintained by the company’s workers’ compensation insurance carrier
  • Emergency contacts for employees
  • Records of any disciplinary proceedings taken, including documentation of oral warnings
  • Versions of company and employee policies, including but not limited to current and historical employee handbooks (as well as employee acknowledgements of receipt), codes of conduct, anti-discrimination and harassment policies, data security and privacy policies, and whistleblower and other policies relating to the reporting of employee misconduct
  • Employee compensation and bonus history
  • Employee-related posters mandated by law to be posted in the workplace
  • Employee termination notices (and any separation and/or severance agreements with departed employees)
  • PTO tracking records
  • Confidentiality and invention assignment agreements (described in mistake #9 below)

Mistake #8: Not Determining Which Permits, Licenses, or Registrations You Will Need for Your Business

Depending on the nature of the business, you may need the following permits, licenses, or qualifications:

  • Industry-specific permits for regulated businesses (aviation, agriculture, alcohol, etc.)
  • State qualification to do business
  • Sales tax license or permits
  • Home-based business permits
  • City and county business permits or licenses
  • Zoning permits
  • Seller’s permits
  • Health department permits (such as for a restaurant)
  • Federal and state tax/employer IDs

Mistake #9: Not Carefully Considering Intellectual Property Issues

If you have developed a unique product, technology, or service, you need to consider the appropriate steps to protect the intellectual property you have developed. Both the company’s founders and its investors have a stake in ensuring that the company protects its intellectual property and avoids infringing the intellectual property rights of third parties. Here are some of the common protective measures undertaken by startups:

  • Patents. Patents are the best protection you can get for a new product. A patent gives its owner the right to prevent others from making, using, or selling the patented invention. The key requirements of patentability are: (1) only the concrete embodiment of an idea, formula, and so on is patentable; (2) the invention must be new or novel; (3) the invention must not have been patented or described in a printed publication previously; and (4) the invention must have some useful purpose. Patents are obtained from the U.S. Patent and Trademark Office and the application process can take several years and be complicated. You typically need a patent lawyer to draw up the patent application for you.
  • Copyrights. Copyrights cover original works of authorship, such as art, advertising copy, books, articles, music, movies, software, etc. A copyright gives the owner the exclusive right to make copies of the work and to prepare derivative works (such as sequels or revisions) based on the work.
  • Trademarks. A trademark protects the symbolic value of a word, name, symbol, or device that the trademark owner uses to identify or distinguish its good from those of others. Some well-known trademarks include those belonging to Coca-Cola, American Express, and IBM. You can obtain rights to a trademark by actually using the mark in the regular stream of commerce. You don’t need to register the mark to get rights to it, but federal registration does offer some advantages. Trademark applications are filed with the U.S. Patent and Trademark Office.
  • Service Marks. Service marks resemble trademarks and are used to identify services.
  • Trade Secrets. A trade secret is a form of intellectual property that is not generally known to the public, confers an economic benefit on its holder because the information is not publicly known, and is the subject of efforts by the owner to maintain its secrecy. A trade secret right allows the owner of the right to take action against anyone who misappropriates the secret through theft or other improper means. Trade secrets can range from computer programs to customer lists to the formula for Coca-Cola.
  • Confidentiality Agreements. These are also referred to non-disclosure agreements or NDAs. The purpose of a non-disclosure agreement is to allow the holder of confidential information (such as the holder of a secret product or business idea) to share it with a counterparty who is then prohibited from further disclosure of the confidential information to another party. There are standard exceptions to the confidentially obligations imposed by an NDA, which are generally built into the agreement (such as when the information becomes known to the counterparty through wholly separate means without violation of any obligation owing to the holder of the confidential information).
  • Confidentiality and Invention Assignment Agreements for Employees. Every employee should be required to sign such an agreement. It accomplishes several purposes. First, it obligates the employee to keep confidential the proprietary information of the business, both during employment and after employment ends. Second, it ensures any inventions, ideas, products, or services developed by the employee during the term of employment and related to the business belong to the company and not the employee (see the discussion in mistake #13).

Another potential intellectual property issue arises when a founder starts a new company while employed elsewhere. Founders and investors should take care to avoid claims by a prior employer that the intellectual property contributed by the founder was misappropriated from the prior employer.

Mistake #10: Not Coming Up With a Great Contract

Most companies should have standard form contracts for dealing with customers or clients. Of course, every contract can be tailored to be more favorable to one side or the other. The key is to start with your form and hope it appears sufficiently reasonable that the other side doesn’t attempt to negotiate its terms. Here are some key points:

  • Get sample contracts of other companies in the industry. There is no need to reinvent the wheel.
  • Make sure you have an experienced business lawyer who has good experience (and also good forms to start with) do the drafting.
  • Consider making the form look like a standard preprinted contract with typeface and font size.
  • Don’t make the contract so long that the other side will throw up their hands when they see it.
  • Make sure the contract clearly spells out basic terms, such as a description of the deliverable(s), agreement on pricing, when payment will be due, what penalties or interest will be owed if payment isn’t timely, and how the contract can be changed (most commonly only by written agreement of the parties).
  • Minimize or negate representations and warranties about your product or service.
  • Include limitations on your liability if the product or service doesn’t work or fails to meet the buyer’s expectations.
  • Include a “force majeure” clause relieving you from breach if unforeseen events occur.
  • Include a dispute resolution clause and make sure to designate the governing law and venue for dispute resolution. Our preference is for confidential binding arbitration in front of one arbitrator in the city or county where you are based, perhaps under the streamlined rules of a commercial arbitration administrator (for example, JAMS).

Mistake# 11: Not Having a Good Terms of Use Agreement and Privacy Policy for Your Website

A terms of use agreement sets forth the terms and conditions for people using your website. Your privacy policy is a legal statement on your website setting forth what you will do with the personal data collected from users and customers of the site, and how such data may be used, sold, or released to third parties.

A good terms of use agreement will cover the following:

  • How the site can be used and the limits imposed on users
  • Disclaimers on warranties
  • Limits on liability of the site owner and its employees, officers, affiliates, and directors
  • How disputes will be resolved (e.g., through confidential binding arbitration precluding class actions)
  • Representations and warranties of the site user, and indemnification to the site owner
  • Rights to refunds and returns if products are sold
  • Intellectual property rights (e.g., copyrights)

A good privacy policy will cover the following:

  • What information the site collects
  • How the site uses the information collected
  • How the information may be shared or sold to third parties
  • How the site deals with children under 13
  • How the site can be accessed through third-party services such as Facebook and Twitter
  • A description of the use of cookies and other technologies on the site
  • The steps taken by the site owner to protect confidentiality and security of the information collected
  • How changes to the privacy policy may be put into effect

Privacy policies shouldn’t blindly be copied from other sites. They should be tailored to the specific business situation to lessen the potential exposure of the site owner.

The company must also consider the myriad of privacy data protection laws being enacted, including the GDPR and the California CCPA.

Mistake #12: Not Using a Good Form of Employment Agreement or Offer Letter When Hiring Employees

Oral agreements often lead to misunderstandings. If you plan to hire a prospective employee, use a carefully drafted offer letter, which the employee should be encouraged to review carefully before signing. For senior executives, a more detailed employment agreement often makes sense. A good offer letter or employment agreement will address the following key items:

  • The job title, role, and responsibilities of the employee
  • Whether the job is full time or part time
  • When the job will commence
  • How long the offer of employment is open to the employee
  • The salary, benefits (including vacation, relocation, etc.), and any potential bonuses
  • Whether the position is “at will,” meaning either party is free to terminate the relationship at any time without penalty (although employers may not terminate employees for legally prohibited reasons, such as for age discrimination or retaliation from sexual harassment allegations, etc.)
  • Confirmation that the “at will” agreement may not be changed unless the change is put in writing signed by an authorized officer of the company
  • Confirmation that the employee will need to sign a separate confidentiality and invention assignment agreement
  • If the company chooses, a statement that any disputes between the parties will be resolved solely and exclusively by confidential binding arbitration, but that the employee may opt out of the dispute resolution provision within two weeks of signing the offer letter (note: California and other state laws are in flux about whether such an arbitration agreement can be mandatory with respect to certain claims)
  • Any stock or stock options to be granted to the employee, subject to the approval of the board, and the terms of any vesting (plus a statement that terms are to be laid out in a separate stock purchase or stock option agreement)
  • The supervisor to whom the employee will report
  • Protective language stating that the offer letter constitutes the entire agreement and understanding of the parties with respect to the employment relationship, and that there are no other agreements or benefits expected (unless additional provisions are laid out in a handbook, which should be referenced if applicable)

Companies should ensure that the employee and the company sign the letter and any first-day paperwork (such as the IRS W-4 Form for withholding and the I-9 form mandated by law).

For a good sample employee offer letter, see 13 Key Employment Issues for Startup and Emerging Companies.

Mistake #13: Not Requiring All Employees to Sign a Confidentiality and Invention Assignment Agreement

Companies pay employees to come up with ideas, work product, and inventions that may be useful to the business. Employees have access to a good deal of their company’s confidential information, which can be very valuable, especially in technology companies.

One basic way to protect proprietary company information is through the use of a confidentiality and invention assignment agreement. This type of agreement deals with confidentiality issues, but can also ensure that the ideas, work product, and inventions the employee creates that are related to company business belong to the company—not the employee.

A good employee confidentiality and invention assignment agreement will cover the following key points:

  • The employee may not use or disclose any of the company’s confidential information for such employee’s personal benefit or use, or for the benefit or use of others, without authorization.
  • The employee must promptly disclose to the company any inventions, ideas, discoveries, and work product related to the company’s business that they make during the period of employment.
  • The company is the owner of such inventions, ideas, discoveries, and work product, which the employee must assign to the company.
  • The employee’s employment with the company does not and will not breach any agreement or duty that the employee has with anyone else, nor may the employee disclose to the company or use on its behalf any confidential information belonging to others.
  • Upon termination of employment, the employee must return any and all confidential information and company property.
  • While employed, the employee will not compete with the company or perform any services for any competitor of the company.
  • The employee’s confidentiality and invention assignment obligations under the agreement will continue after termination of employment.
  • The agreement does not by itself represent any guarantee of continued employment.

Venture capitalists and other investors in startups expect to see that all employees of the company have signed these kinds of agreements. In an M&A transaction in which the company is being sold, the buyer’s due diligence team will also be looking for these agreements signed by all employees.

A sample form of employee confidentiality and invention assignment agreement can be found at the Forms & Agreements section of AllBusiness.com.

Similarly, it will be appropriate that all consultants of the company also sign a confidentiality and invention assignment agreement. See Key Issues with Confidentiality and Invention Assignment Agreements with Consultants.

Mistake #14: Asking Interview Questions That Are Prohibited by Law

Federal and state laws prohibit employers from making hiring decisions based on protected categories: gender, race, age, color, religion, disability, and others. Asking the wrong questions could lead to a discrimination claim against the company, even if decisions are not made on that basis. Here are examples of the types of questions to stay away from:

  • How old are you?
  • What is your religion?
  • Do you have any medical conditions we should be aware of?
  • Have you ever been arrested or convicted of a crime?
  • Do you have any disabilities that would hinder you in performing the job?
  • Have you had any recent illnesses or operations?
  • Are you married?
  • Do you have children or plan to have children?
  • How long do you plan to work?
  • Do you drink or smoke?
  • What is your political affiliation?
  • Is English your first language?
  • What type of discharge did you receive from the military?
  • What country are you from?
  • Where do you live?
  • Do you take drugs?

Some of these may be obvious. The following questions may be less obviously problematic but should also be avoided:

  • What is your maiden name?
  • Do you own or rent your home?
  • Where is your family from?
  • Can you give me the name of a relative to be notified in case of emergency? (The problem is asking for the name of a relative. But you can ask, “In case of an emergency, whom can we notify?”)

See the California Department of Fair Employment & Housing Fact Sheet—Employment Inquiries: What Can Employers Ask Applicants and Employees?

Mistake #15: Not Taking the Proper Steps Prior to Firing an Employee

Terminating an employee, even an “at will” employee, entails legal risk if not properly handled and documented. Laws prohibit termination based on color, national origin, ancestry, gender, race, age, disability, marital status, religious preference, sexual orientation, absenteeism due to jury duty or military service, retaliation for sexual harassment, discrimination, or other allegations by the employee, and many other factors.

Here is some practical advice on what to do in connection with terminating an employee:

  • Have an employee handbook or a set of policies which confirm the company’s intent to act lawfully, with disciplinary policies for violations. Clear violations of company policies will support termination.
  • Consider adopting an employee reference policy, which explains how a departing employee can seek references and what supervisors should and should not say about departed employees.
  • When issues arise, investigate the situation to have a full understanding of the facts.
  • If the employee has poor performance or violates company policy, make sure he or she has been coached or warned and that documentation of those communications is included in the employee’s personnel file. A warning may be more appropriate than an outright firing for a first-time offense, unless it is significant misconduct.
  • Review the offer letter or employment agreement to ensure there aren’t steps or notices you have to undertake.
  • Consult with employment counsel to ensure that the termination will not be in violation of applicable law.
  • Consider a progressive discipline approach first, if the termination is not serious misconduct.
  • Conduct an exit interview, perhaps attended by another company employee who can serve as a witness, and terminate the employee in a dignified manner, in private, and document the discussion.
  • Be brief, accurate, respectful, and truthful about the termination.
  • Make sure all legal requirements are fulfilled, such as having the employee’s last paycheck ready together with any accrued but unpaid PTO (this is important in California and some other states).
  • If you are going to offer a severance package, make sure you get a complete and full release from the employee. The release should be in writing, signed by the employee, cover all known and unknown claims the employee may have (other than with respect to claims that cannot be waived as a matter of law), and be supported by adequate consideration. Note that special rules for releases will apply if the employee is located in California or is 40 years old or older, and the law may prohibit certain types of non-disclosure provisions.
  • Make sure the employee’s access to your computer network, voicemail, and email is revoked immediately upon termination, other than as agreed upon.
  • At the exit interview, ask for the return of company laptops, phones, keys, security fobs, and the like.
  • Ensure that the employee has the information necessary to obtain COBRA and unemployment benefits.
  • Make sure the employee understands that he or she will have continuing obligations under any confidentiality and invention assignment agreement.
  • Have the terminated employee leave the premises immediately, but give him or her an opportunity to pack up personal belongings privately and discreetly. Do not use security guards to escort the employee unless there is a concern about violence or other security threat.
  • In anticipation of litigation, make sure that all relevant emails and other documents concerning the employee are preserved.
  • Make a plan for how the terminated employee’s workload will be picked up by other team members. That may also require a debriefing with the team, but be sure to protect the privacy of the departed employee.

Terminating an employee is never easy, and the employer has to ensure it is taking the appropriate legal steps in doing so.

Conclusion

Startups that manage to avoid these legal pitfalls and missteps have a better shot at success than do those companies that fail to anticipate and plan for them from the beginning. Invest in planning and obtaining expert advice now to avoid major problems later.

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About the Authors

Richard D. Harroch is a Managing Director and Global Head of M&A at VantagePoint Capital Partners, a large venture capital fund in the San Francisco area. His focus is on Internet, digital media, and software companies, and he was the founder of several Internet companies. His articles have appeared online in Forbes, Fortune, MSN, Yahoo, FoxBusiness, and AllBusiness.com. Richard is the author of several books on startups and entrepreneurship as well as the co-author of Poker for Dummies and a Wall Street Journal-bestselling book on small business. He is the co-author of a 1,500-page book by Bloomberg, Mergers and Acquisitions of Privately Held Companies: Analysis, Forms and Agreements. He was also a corporate and M&A partner at the Orrick law firm, with experience in startups, mergers and acquisitions, and venture capital. He has been involved in over 200 M&A transactions and 250 startup financings. He can be reached through LinkedIn.

Lynne C. Hermle is a partner specializing in employment law at Orrick in Silicon Valley. She was the successful lead defense counsel for Kleiner Perkins Caufield and Byers in the gender discrimination and retaliation claims alleged by Ellen Pao. She has handled hundreds of employment claims involving sexual harassment, discrimination, retaliation, and wrongful termination throughout her career, and continues to litigate such cases before juries and in arbitration. She is a member of the American College of Trial Lawyers and received the Daily Journal “California Lawyer of the Year” as well as other awards for trial successes. She writes frequently on employment and trial topics, and has represented a number of the largest corporations in the world, including software, media, Internet, and other technology companies. She can be reached through the Orrick website.

Ellen Ehrenpreis is a partner specializing in tech startups at Orrick in Silicon Valley. She has spent more than twenty years in the tech and venture ecosystem and leverages her broad network and deep understanding of both the tech sector and legal landscape to effectively and strategically advise emerging companies and investors on a wide range of critical needs. On the company side, Ellen’s clients range from early startups to mature private companies. She advises companies and founders on formation, venture financings, governance, M&A transactions, corporate and securities matters, commercial transactions and litigation strategy. Ellen’s approach is holistic and pragmatic. Her unique skill set and business-driven approach derive from her decades-long career as a Silicon Valley lawyer and her broad experiences earlier in her career as both a successful litigator and business owner. Ellen also works closely with some of the leading venture capital and growth equity firms, whose principals she advises in connection with financings, equity structuring and corporate governance. Ellen’s company clients have represented a broad swath of the technology ecosystem, including both hardware and software, and, as a result, her industry experience is wide-ranging. Her clients have included companies in the semiconductor, SaaS, renewables, fintech, aerospace, digital retail, online sharing, biotech/biopharma, media, design and data analytics fields, among others. She can be reached through the Orrick website.

Copyright © Richard D. Harroch. All Rights Reserved.

The post 15 Major Legal Mistakes Made by Startups appeared first on AllBusiness.com. Click for more information about Richard Harroch. Copyright 2020 by AllBusiness.com. All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of AllBusiness.com.


Is Your Business Stuck in a Rut? Ask Your Team These 3 Key Questions to Help Challenge the Status Quo

Change Bowling Ball StrikeDo you find your business has become stagnant, stuck doing the same old thing? Learn how to break out and challenge the status quo by asking yourself three important questions.

The post Is Your Business Stuck in a Rut? Ask Your Team These 3 Key Questions to Help Challenge the Status Quo appeared first on AllBusiness.com. Click for more information about Petra Coach. Copyright 2020 by AllBusiness.com. All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of AllBusiness.com.


By David Pierce

Despite decades of doing the same old thing, your company does not have to accept the status quo. Let me explain.

As a business coach, I am working with a company in an industry that accepts as the norm leadership by brute force, annual employee turnover rates in excess of 100%, and employee engagement rates in the low teens. If you talk to anyone who has been in that industry for any period of time, they will say this is how it’s always been and there’s nothing that can be done to change it. 

This company was a victim of the mentality of accepting something simply because it has always been–a living, breathing example of the status quo. However, with our help, they have changed their mindset and realized they have the ability to challenge the status quo. They began a journey to become a destination for team members, not just a stopping point on their career journey.

The process required the team to answer three key questions: 

1. Where are we now?

Before you can plan any journey, you have to know where you are now. This process involves an evaluation of both the people and process sides of the business, as well as an understanding of the marketplace and the company’s relationships with customers and vendors.

Team member, customer, and vendor surveys—including NPS (net promoter score), eNPS (employee net promoter score), and focus groups supplemented with best practices from a wide range of industries—were conducted and evaluated to gauge where the company stood regarding compensation, morale, engagement, desires, dreams, and their current state with both customers and vendors. In addition, all processes were evaluated for inefficiencies and bottlenecks so that the company had a complete picture of their current status. 

2. What do we want to be?

The next step was to engage all team members in creating their vision of a future state for the company. This is sometimes called “future casting” or “painted picture,” but it involves a no-boundaries, no-judgment “brain dump” of all the possibilities of what the company could become. 

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In this team’s case, all of this information was discussed, debated, and distilled to a range of aspirational possibilities, leading to a clearly defined picture of the company’s future, stated in present tense language using phrases that begin with “We are …”

3. How do we get there?

We use a phrase in coaching: “Set a goal. Make a plan. Do the work.” The fun part is setting goals, but goals are nothing more than numbers and words without a well-defined plan and a commitment to execute that plan—the hard work, which is the final step in this evolution. Numerous studies have confirmed that a written, concise plan with a focus on just a handful of significant outcomes has a high likelihood of success, and when matched with accountability, nearly 100% success is possible. 

The company I was coaching began this phase by briefing the entire team on both the long- and short-term visions for the company, along with an explanation of how each member would play a role in this transformation. The purpose was to build team member engagement and allow staff to “catch the vision” of a better future. 

And so, the journey began.

Although this company has only been on this new path for a short while, they have already seen turnover rates reduced by double digits and employee engagement levels increasing. Additionally, the marketplace “chatter” about the company has been very positive from both customers and vendors.  

This just goes to show that you don’t have to accept the norm. Why not be your own “Status Quo Buster” and create the life and the company of your dreams?

RELATED: 5 Essential Qualities of a Successful Leader

Certified Petra Coach David Pierce spent a decade with Deloitte and PwC, and for over 20 years held a C-level post with a regional banking and financial holding company, developing and launching one of the first stand-alone online banks in the U.S. and participating in more than a dozen mergers and acquisitions transactions. A tireless entrepreneur, David also helped launch an apparel manufacturing startup and numerous commercial real estate projects. Contact him at david@petracoach.com

The post Is Your Business Stuck in a Rut? Ask Your Team These 3 Key Questions to Help Challenge the Status Quo appeared first on AllBusiness.com. Click for more information about Petra Coach. Copyright 2020 by AllBusiness.com. All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of AllBusiness.com.


Is Technology Improving or Sabotaging Your Productivity?

Analysis with laptopTo improve your productivity using technology and limit its productivity downsides, put these five strategies into practice.

The post Is Technology Improving or Sabotaging Your Productivity? appeared first on AllBusiness.com. Click for more information about Jayson DeMers. Copyright 2020 by AllBusiness.com. All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of AllBusiness.com.


When it comes to technology, most of us are grateful for it. Computers make everything easier—from researching information to communicating with friends and colleagues—and even once basic devices like phones and cars are getting high-tech makeovers to do more, faster and better.

At the same time, there are critical drawbacks that occasionally prevent technology from working in our favor. When you lose your Internet connection, you’re practically helpless. When you do research, it’s easy to get distracted by peripheral tasks. When you’re online, you’re constantly getting messaged and distracted from your work.

Ultimately, is technology increasing or decreasing our productivity?

The results are mixed. Online productivity statistics suggest that workers, on average, are only productive for five hours on the computer during a typical eight-hour workday. Yet, at the same time, Internet access gives us more contact, more information, and greater speed—so those five hours might be even more productive than eight hours of work just 20 years ago. In fact, one study estimates the increase in productivity to be 3% annually since 2011.

So what does this mean?

It means you’re far more productive with technology than without it, but you’re still highly likely to waste time while you’re using that technology. Because of technology, you are probably getting more done than your grandfather did 50 years ago, but also because of technology, you’re not getting nearly as much done as you could be.

To improve your productivity using technology and limit its productivity downsides, put these five strategies into practice:

1. Keep track of how you spend your time

This first point is critical. As cited earlier, the average worker who spends eight hours on a computer per day spends only five of those hours doing productive work. What happened to those other three? Blink, and you’ll miss them.

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For the most part, workers aren’t consciously aware of how much time they’re wasting. To properly identify when and how you’re wasting that time, set up a time tracker such as one of these productivity tracking tools. Take note of how much time you spend doing each task throughout the day, and make gradual improvements to phase out unnecessary expenditures.

2. Don’t stay in constant contact

One of the greatest advantages technology offers is the ability to be in constant contact. You can have an email window, a chat window, an incoming text message, and a ringing phone all active and distracting you simultaneously. Your coworkers, bosses, clients, vendors, partners, and friends can all reach you at any time. On one hand, this is a marvelous advancement for efficient communication, but on the other hand, it’s a recipe for constant distraction.

How many times during the day do you interrupt your work on a task to address one of these modes of communication? The solution is to open yourself to communication during certain, designated periods, and avoid excessive communication in the meantime.

3. Eliminate distractions, manually if necessary

Distractions are always only a click away. Eliminating those distractions can prove difficult, especially if you’ve made them a habit. However, there are manual ways to remove those pesky tech distractions from your life. For example, you could simply disable Internet access on your device while you’re editing a written report. If that’s not possible, you can use a browser extension like StayFocusd to disable access to sites that habitually cause you to lose focus on your work. You might also want to delete or hide certain apps on your phone during the workday, to prevent yourself from mindlessly opening them for a quick distraction.

4. Plan your day in advance

This is a time-tested productivity tip that goes way back, but in today’s tech-riddled age, it’s more relevant than ever. Early each day (or the night before), make a list of all the tasks you intend to complete, and prioritize them based on what’s most important. Then, allocate a specific amount of time to complete each of those tasks, with short breaks as necessary throughout the day.

If you only have one hour to complete a report, it will force your mind to focus on completing the task at hand, and between tasks you won’t have a period of ambiguous idle time that so frequently leads to distraction—you’ll know exactly what you need to do next, and you’ll be able to easily move on.

5. Spend some time away from your devices

Last, but not least, try walking away from your devices whenever you get a chance. Give your eyes and your mind a chance to decompress from staring at a screen all day by going for a walk or having a stretch. A break from technology itself—that is to say, not on a time-wasting website—can actually improve your productivity overall. Doing some work offline and away from your devices can also help you stay focused—provided there are some tasks you can handle without a digital device or Internet access.

Put these productivity tactics to work

With these tactics in place, you’ll keep technology from dragging down your productivity unnecessarily. Technology isn’t a great evil that gets in the way of traditional work; instead, think of it as a magnificent tool that most of us aren’t using correctly. Once you better understand the benefits and potential liabilities of technology in your own work environment, you’ll stand to waste far less time overall.

RELATED: Debunking 5 Time-Management Myths Hurting Your Productivity

The post Is Technology Improving or Sabotaging Your Productivity? appeared first on AllBusiness.com. Click for more information about Jayson DeMers. Copyright 2020 by AllBusiness.com. All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of AllBusiness.com.


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