Protect Your Business
now browsing by tag
Disclaimer: This article on how to protect your small business is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
Entrepreneurship is on the rise. There are as many as 1.22 million employer businesses in Canada, 97.9 percent of which were small businesses. However, the sad reality is that many new businesses fail within the first five years. So, what are the key factors that contribute to a successful startup?
There is no single answer to this question as each business is unique and faces its own challenges. However, one answer may lie in how we protect our businesses.
While we may not consider contracts and legalities to be a priority in our business, they should be. Having well-drafted contracts in place from the outset can save your business a lot of money, time and headaches down the road.
In this article, we will talk about why we fail to protect our business, why it is vital to do so and the top three contracts that you should have in place.
Protecting Your Business
Your business is the result of your blood, sweat, and tears. It is hours of hard work, sacrifice, and dedication. So why do we fail to protect it? We work tirelessly to make our dream a reality, but when it comes to protecting that dream, we often neglect to take the necessary steps.
Why is this?
There are a number of reasons. For one, we may not think that our business is susceptible to certain risks. We may also believe that we don’t have the time or resources to put into protecting our business. And finally, we may simply be unaware of the steps we need to take.
However, the truth is that all businesses are susceptible to risks and it is vital to take the time to protect your business. While you will probably be fine most of the time, the damage that of having one legal issue can be enough to completely destroy your years of hard work. Let’s outline what happens in your business when you have strong contracts in place to protect your business.
Building a Strong Business
First of all, taking the steps to legally protect your business and limit your liability brings you peace of mind. It allows you to focus on the work that you love without having to worry about the what-ifs.
In addition, strong contracts set clear expectations between you and your business partners, employees, customers, and vendors. This clarity leads to smoother operations and fewer surprises down the road.
Finally, having well-drafted contracts in place provides your business with a competitive edge. When you can show that you have taken the steps to protect your business, it instills confidence in those who do business with you.
Your Business Contracts
Now that we’ve talked about the importance of protecting your business let’s talk about the contracts you need in your business. But first, what if someone provides you with a contract to sign?
Should I Sign Someone Else’s Contract?
If you are going to be signing a contract provided by a vendor, service provider, client, etc., then you will want to be sure to review it thoroughly. You likely will also want to have it reviewed by your lawyer. A lawyer can flag any issues that you can negotiate before you sign a contract.
This does not have to be an expensive or time-consuming project. You can have a lawyer review and revise a contract for a relatively low amount, but gain peace of mind moving forward in a business relationship.
Ideally, you will provide your own contract, but if you do sign another person’s contract, make sure you review and understand it first.
Now, let’s go over the top three contracts that every business should have in place.
1. Employee Contracts or Independent Contractor Agreements
2. Client Agreements
While there are many other types of contracts that your business may need, these three are a great place to start.
Employment or Independent Contractor Agreement
Whether you hire independent contractors or employees, you need to have a contract in place. There is a big difference between the two, so you need to make sure to speak to a lawyer to clarify what contractual relationship you’re going to have with the person you’re adding to your team.
This is one area where many businesses see things go sour. The reality is that you probably don’t have the bandwidth as a small business owner to be paying out more money than necessary because of a poor decision.
Specifically, you want to build in confidentiality into your contractor or employment agreement. For many of us, there’s a “secret sauce” or even proprietary information about how we do business. You need to protect your business by ensuring that your employee or contractor cannot use your confidential information, take clients or poach employees.
This is crucial for both service-based businesses and product-based businesses that are selling higher-ticket items. For the purpose of this article, we will focus on service-based businesses.
You want to ensure that the terms on which you’re providing your service are clear, and you want to be clear on how you can stop working with someone. The reality is that we will all face that nightmare client at one time or another.
When you’re ready to walk away from someone who is, for example, disrespectful to your or your staff, you want to know that your contract allows you to. Because if it doesn’t, and that client does not release you from your obligations, you could be facing an uphill battle.
Another area that your contract must cover is about the terms and timing of payment. The absence of these terms could result in you working for weeks or months without getting paid, which can be frustrating.
By providing clear, strong contracts for your clients, you are setting the tone of the relationship and protecting your business.
Your Estate Plan
This is not necessarily a contract, but it is documentation that will protect you, your family and everything you have worked so hard for. The sad truth is that 56% of Canadians do not have a will or powers of attorney in place.
If something were to happen to you, what happens to your small business?
If you’re a sole proprietor, the answer is likely nothing. Your business dies with you. However, if you are incorporated, your shareholders will inherit the business and its assets.
You need to ensure that you have your business structured in a way that protects your family, your employees and yourself. You also want to make sure the people who are running your business know what to do and how to do it.
Having these documents in place and having them drafted by a strategic, skilled advocate who understands what your business means to you, is simply invaluable.
Protecting Your Business With Beeksma Law
When it comes to protecting your business, you need to have the right people in your corner. At Beeksma Law, we understand that your business is your lifeblood.
We also know that you cannot afford to make a mistake when it comes to contracts or any other legal agreements. That is why we take the time to get to know you, your business and what you need to protect it. Our team has a well-rounded experience to help you protect everything that matters to you most.
To learn more about how we can help you, please contact us today.