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Franchise Agreement – What You Need To Know

franchise agreement
franchise agreement

Franchise Agreement - Everything You Need to Know Before Signing

If you’ve always dreamt about starting your own business but have never had any groundbreaking ideas, opening a franchise can be a great way to profit from someone else’s established brand.

Franchises offer an immediate customer base, pre-determined products and services, and a playbook success.

However, franchising isn’t as easy as it sounds – you’ll need to be prepared to follow the rules and regulations set by the franchisor. You may need to invest in additional training and support.

Before signing a franchise agreement, ensure you understand exactly what’s expected of you.

Familiarise yourself with the following clauses before attending a consultation with your lawyer so you’ll get more out of the talk.

1. Term

  • Just because you’ve paid a franchise fee doesn’t mean you get to run your outlet forever.
  • The term is the timeframe you get to run the franchise under your current contract.
  • Although franchise contracts usually provide for renewal after the term expires, you should never take it for granted that you’ll be able to renew yours.
  • It would be best if you always worked out whether you’ll  get a decent return on the investment during the first term

2. Renewal

  • The renewal clause in the contract will enable you to renew the franchise agreement when the term expires.
  • However, it is common practice that you can only renewal the franchise agreement on the condition that you fulfil certain obligations. Do look out for these conditions.
  • The renewal clause is essential because it allows the franchisee to continue the business relationship with the franchisor.
  • It also creates a sense of security for the franchisor because it knows the franchisee is committed to the business.

3. Exclusive Territory And Reservation of Rights

  • As any business owner knows, competition is a fact of life.
  • However, when starting a new business, having some protections is essential to prevent a competitor from opening up shop too close to you.
  • This is especially important when dealing with a franchisor, who may reserve the right to sell their products through specific channels, such as the Internet.
  • Study the contract carefully to see what privileges the franchisor is reserving.
  • If you’re uncomfortable with the terms, consider looking for a different franchise.

4. Operations & Source Of Supply

  • The uniformity of McDonald’s restaurants around the globe is no coincidence – it is the result of a particular franchising strategy employed by the company.
  • Franchisors, or the companies that licence the use of their trademarks and business models to others, maintain a high level of control over their franchisees by dictating many specifics about how the franchises should be run.
  • This means that you should expect to be told what the operating hours of your new franchise will be, how to decorate your outlet, or from whom you will purchase your stock.

5. Selling The Franchise

  • The sale of a franchise can be a complex process, and it’s essential to be familiar with the conditions governing the deal before putting your business up for sale.
  • For example, many franchise agreements include clauses that require the seller to refurbish the premises and pay an administrative fee.
  • In addition, the new franchisee taking over from you might be required to pay a fee.
  • All of these factors can have a significant impact on the sale proceeds.

6. Termination Of The Franchise Agreement

  • A crucial part of being a successful franchisee is understanding and abiding by the franchisor’s rules.
  • If you make a mistake and find yourself in default, the franchisor has the right to terminate the contract.
  • To avoid this, you must familiarise yourself with all the events that could be considered a default and take steps to ensure you don’t let them happen.

7. Post-Termination Obligations

  • If the franchise agreement is terminated, there are several obligations you will have to comply with.
  • This includes immediately ceasing the use of any of the franchisor’s trademarks.
  • Understanding what you must and must not do is the key to avoiding even more trouble.

It is common for franchise agreements to protect the interests of the franchisor and its franchisees.

Many franchisors, particularly those in business for a long time, require their franchisees to sign and adhere to strict stipulations in their Franchise Agreements.

A good rule of thumb is never to sign anything you don’t understand.

Consult with a lawyer if you need help interpreting the terms. You can rely on them because they understand your circumstance and can help you figure out what changes are needed.

Should you sign the franchise agreement? Speak to us over video consultation via Lawyer Anywhere. We will walk you through every clause in the franchise agreement, so you’ll know exactly what you’re getting into.

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5 Documents You Need To Have to Protect Your Business

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5 documents you need to have to protect your business

Bulletproof Your Business with These Essential Documents

Whether you are just starting or have been in business for years, these documents will help you protect your business and ensure everything is in order.

The top 5 “must have” documents are the skeleton framework to help protect your business to ensure a smooth operation.

1. Shareholders Agreement

  • If you run your business with partners, the Shareholders Agreement is a MUST-HAVE document.
  • Unfortunately, one of the most overlooked documents among Singapore’s Small & Medium Enterprises is the Shareholders Agreement.
  • The most common reason for partnership disputes is when a shareholder wants to “exit” the business.
  • A Shareholders Agreement sets the rules and procedures for shareholders to exit the business. This includes specifying the price that shareholders will pay it.
  • Having a Shareholders Agreement in place allows shareholders and the company to operate clearly and clearly understand exit rules.
  • This can help to avoid disputes and disagreements between shareholders.
  • A Shareholders Agreement can also address various issues, such as dividend policies, the structure of company operations and management rights. 

2. Contracts For Business Operations

  • Disputes arise when you leave room for doubt (and unscrupulous clients or contractors exploit the loophole).
  • Contracts are essential for business operations, as they establish the terms and conditions of transactions between businesses.
  • Contracts can be used for various purposes, including Sale and Purchase Agreements, Service Contracts, Distribution and Agency Agreements, and Vendor and Supplier Agreements.

3. Consulting Agreements

  • When engaging freelance contractors, the Consulting Agreement must define the scope of services, the project/task details and payment arrangements.
  • The recent growth of hiring freelance contractors to avoid payment of employee benefits has caught the attention of both the Ministry of Manpower and the Central Provident Fund Board. While it is true that verbal agreements are enforceable, written agreements provide the best source of evidence (which protect you), significantly when memories fade.
  • Hence, the cardinal rule of law is “Get It In Writing” – documentation is a priority instead of an afterthought. 

4. Director Employment Agreement

  • People very often get confused between ownership and management.
  • While a shareholder owns a stake in the company, it does not necessarily mean they must be a company director.
  • A company director is appointed (“employed”) by the company’s board of directors to help manage the company. Such directors, being senior positions, have specific roles and responsibilities.
  • A Director Employment Agreement aims to set the terms and conditions of the director’s employment with the company.
  • This includes the director’s salary, benefits, and any other terms and conditions of employment.
  • The Director Employment Agreement will also typically specify how the director can be terminated and what happens to the director’s shares in the company upon termination.

5. Employment Agreement

  • No business succeeds without help from loyal and dedicated employees. 
  • An Employment Agreement aims to set out the terms and conditions of an employee’s relationship with their employer.
  • This includes an outline of the compensation that the employee will receive, as well as any benefits that they are entitled to.
  • In addition, the Employment Agreement can provide a non-competition clause that prevents the threat of direct competition by a departing employee.
  • Having an Employment Agreement in place is essential, as it can help clarify the expectations and roles of both the employee and the employer.

Contact us via Lawyer Anywhere for advice on drafting any of the Top 5 Must-Have Business Documents.

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Business Growth – Can You Franchise Your Business?

franchise
can you franchise your business

Unlock Your Business's Potential : Discover if Franchising is Right for You

Congratulations! You have succeeded in establishing your brand and now wish to expand your business.

Franchise-In-Brief

  • Franchise businesses have grown in popularity in recent years, and for a good reason.
  • A franchise offers the security of a proven business model combined with the independence of owning your own business.
  • Assessing your business’s franchise-able is vital before investing time and resources into developing a franchise system.
  • So, what makes a business franchisable?

Here are 6 questions you should ask before you take the next step.

1. Do You Have a Proven Business Model?

  • The process of franchising a business can be a lucrative one, but it has its risks.
  • To ensure that you’re ready to franchise your business, you’ll need to make sure that you have a proven business model.
  • This means that you’ll need to iron out any kinks in your business model and that you’ll need to be able to demonstrate to prospective franchisees that your business model works!
  • A successful prototype and ensuring that your existing outlets perform well are also essential.
  • If you can’t demonstrate these things, avoiding franchising your business is best.

2. Is Your Business Model One That Can Be Sold?

  • Pitching your business to prospective franchisees is akin to making a sale.
  • Since you have achieved great success with your business, certain qualities will give potential franchisees the confidence that they can replicate your success.
  • These factors include a striking brand image, uniqueness, and an easy-to-understand business model.
  • If you have received numerous inquiries, that’s a good sign that others consider your business model attractive.
  • This is why it is important to highlight these key factors when pitching to prospective franchisees.

3. Can Your Business Model Be Replicated?

  • Several factors contribute to a business’s success, and not all of them can be easily replicated by a franchisee.
  • To determine if your business is franchise-able, you need to look at the reasons behind your business’ success and ask yourself if someone with just an operations manual can replicate them.
    • For example, if your business is successful because of an excellent location or manager.
    • In that case, it may be challenging to replicate that success through franchising.
    • However, if your business is successful because it offers a unique product or service in high demand, it may be more franchise-able.

4. Can Your Franchisees Get an Adequate Return on Their Investment?

  • When considering a franchise opportunity, it is crucial to consider the potential financial gain you may realise and the potential income of the franchisees you will be working with.
  • A successful franchise system is one in which the franchisees can earn a good return on their investment.
  • You will be expected to provide them with projections based on sound research, and these projections will need to be competitive with other investment opportunities.
  • If you can do this, then the system will likely succeed.

5. Are You Committed?

  • When it comes to franchising your business, there are a few things you need to keep in mind.
  • First and foremost, franchising is not a hands-off approach – you’ll need to be actively involved in supporting your franchisees if you want to see success.
  • This requires significant time, effort and resources, so you must be prepared to do the work.
  • It is also essential to maintain a good relationship with your franchisees; if you’re not committed to providing them with the support they need, you’re not ready.

6. Do You Have the Resources?

  • Franchising can be a great way to expand your business, but it’s important to remember that it’s a costly process.
  • You’ll need to invest in developing an operations manual, an advertising programme, and training materials, retaining a lawyer and having a good franchise agreement drafted.
  • All these require time and capital investments, so if your business needs to be in better financial shape, it’s not the time to start franchising.

Franchising can be a great way to grow a business, but it’s essential to be aware of the potential pitfalls.

A business not well suited to franchising may not see the success it expects and could even damage the brand.

Remember to conduct your research before committing to a franchising system.

Planning to franchise your business? We will work with you to ensure that all your bases are covered. Contact us today.

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How To Handle A False-Negative Review : 5 Steps to Take

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how to handle false-negative reviews

Crush False-Negative Reviews with 5 Essential Steps

It’s no secret that the Internet can be a breeding ground for negativity.

If you’re in business, you’ve likely experienced the sting of a false-negative review.

While controlling what others say about you online is impossible, you can take steps to minimise the damage.

If you receive a false-negative review, there are 5 steps you can take to rectify the situation.

Step 1: Don’t Panic

  • Assuming you have good reason to believe the review is false, the first step is not to panic.
  • It can be difficult not to take it personally, but remember that this is just one person’s opinion and that there are many other reviews.

Step 2: Do Your Research

  • When you receive a false-negative review, the first step is to take a deep breath and not react emotionally.
  • It is important to remember that this is one person’s opinion and that not everyone will have the same experience.
  • Step 2 is to do your research.
  • Try to find out if there are other reviews about this person or business.
  • If there are, see if there is a pattern of negative reviews.
  • If so, this may be something to take into consideration.

Step 3: Respond Professionally

  • Next, you should contact the customer who left the review and try to resolve the issue.
  • If they are unhappy with your product or service, see if there is anything you can do to make it right.
  • If you cannot resolve the issue with the customer, the next best thing you can do is respond to the review publicly.
  • Thank them for their feedback and tell them you are constantly working to improve your business.

Step 4: Gather Evidence

  • If the customer is unresponsive or unwilling to work with you, the third step is to gather evidence.
  • This could include screenshots of conversations, copies of emails, or anything else that would help prove the review is inaccurate.
  • Once you have gathered your evidence, you should reach out to the site or platform where the review was posted and request that it be removed.
  • Sometimes, they may require you to provide evidence for them to decide.

Step 5: Seek Legal Action

  • Suppose all of the necessary steps to mitigate the false-negative review have failed; your last resort is to seek legal action.
  • This process is usually complex and lengthy, so consult a lawyer beforehand.
  • Many businesses usually write a cease and desist letter as their first form of legal action.
  • If the reviewer does not comply, you can take them to court.
  • Be aware that this process is often costly and time-consuming, so only pursue it if you are confident in your case.

Receiving a false-negative review can be upsetting. Still, it’s important to remember that they are rare and you shouldn’t let them get in the way of your business.

Are you in need of legal assistance to run your business? We offer video consultation via Lawyer Anywhere so that you can get the help you need. Contact us today to get started!

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How To Attract Venture Capital Investors?

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how to attract venture capital investors

Learn The Secrets of Attracting Venture Capital Investors

If you’re an entrepreneur with a great business idea, you may be wondering how to convince the venture capitalist to invest.

While there’s no surefire formula, there are a few things you can do to increase your chances of success.

How Much Money Can You Realistically Expect To Raise?

  • You must know exactly how much money you anticipate raising to attract investors to your firm.
  • Doing your homework and being realistic about how much money you need to get your business off the ground and how much you can raise is essential.
  • Be sure to provide investors with a clear explanation of how the cash will be used and the expected return.
  • Investors will be more interested in your company if you demonstrate dedication and a well-thought-out strategy.

The Business Model

  • Several elements can make your startup more appealing to investors. 
  • Ensure you have a thorough business model.
  • A defined value proposition, target market, competitive landscape, and go-to-market strategy are needed.
  • Have a team with the abilities and experience to execute your business plan.
  • Know your burn rate and runway.
  • Be ready to describe your vision for the company’s future.
  • If you can do all these things, you’ll be more likely to attract investors.

What Problem Are You Solving?

  • Your startup needs to be attractive to investors to get the funding you need to succeed.
  • What makes a startup attractive to investors?
  • You must be trying to solve a problem.
  • This problem can be anything from finding a new way to get people to exercise to making shipping goods more efficient.
  • Whatever your problem is, people need to be willing to pay for a solution.
  • It would be best to have a dedicated team of passionate people committed to solving this problem.
  • This team should have a mix of skills and experience to help them succeed.
  • Having a solid business plan outlining how you will solve this problem while making a profit would be best.
  • A well-thought-out business strategy, a team of qualified staff and a clear vision of how you intend to achieve your goals will make investors more eager to invest in your project.

How Will You Make Money?

  • To attract investors, you must have a clear revenue plan.
  • This means having a detailed business model outlining your revenue streams, costs, and profitability.
  • It also means articulating your value proposition and how you will differentiate yourself in the marketplace.
  • Investors want to see that you have a clear path to profitability and understand the market landscape.

Who Is On Your Team, And What Are Their Qualifications?

  • The first step in attracting investors to your firm is to assemble a capable and experienced team.
  • Your team should be able to sell your idea to investors and carry out your vision.
  • A strong team will give investors the confidence that your startup is worth investing in.
  • You and your team should be able to explain what your startup does, what problem it solves, and why it is the best solution.
  • Getting this point across will greatly make investors more interested in your startup.

The Market

  • As a startup, having a strong understanding of the market is one of the most crucial things you can do to attract investors.
  • This means you should know your target audience, their needs, and how your product or service fulfils those needs.
  • Having a clear strategy for reaching your target audience and what kind of growth you hope to see in your business is also important.
  • Having this information will not only make your startup more appealing to investors, but it will also help you to focus your efforts better.

How Big Is The Market For Your Startup?

  • The size of your startup’s market is one of the most critical considerations for investors when they are looking to invest.

  • Suppose your startup is addressing a small or niche market.
    In that case, it may be less attractive to investors than a startup with a larger addressable market.
    To make your startup more appealing to investors, emphasise your product or service’s market size and growth prospects.

With these tips, you’ll be ready to start talking to people who want to back up your project.

If you don’t succeed at first, do not give up.

On the contrary, it’s important to keep trying.

If you put in the time and effort, you’ll find the venture capital investors who are  interested in your business.

If you’re looking for help reviewing a “standard contract”, speak to us over video consultation via Lawyer Anywhere.

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Distributors vs Agents

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distributors

Distributors vs Agents : Key Differences

You’ve got a fantastic product and would like to sell it overseas.

However, before you hunt for contacts abroad, deciding how you intend to penetrate the market of your choice is essential.

Some people use distributors to do business, while others use agents.  

Distributors vs Agents : Both have unique benefits and drawbacks, so it’s important to understand the differences before deciding. 

When it comes to selling products overseas, there are 2 main ways to do it:

  • through distributors
  • through agents.

Distributors vs Agents

  • Distributors can provide you with a direct line to your target market.
  • However, they can also be more expensive.
  • Agents, on the other hand, are typically cheaper.
  • However, they may be less familiar with the customs and regulations.
  • Both methods have pros and cons, and it’s important to understand which will work best for you and your product. 

 

1. Distributors Buy Your Goods; Agents Don’t

  • Distributors buy your goods and then resell them to retailers.
    • They usually have much experience in the industry and can help you get your product into stores.
  • Agents don’t buy your goods but use their contacts and relationships to help you find buyers.
    • They usually have less experience than distributors, but they can be cheaper.

2. Agents Represent You. Distributors Don’t

  • An agent is your representative, meaning everything he does is supposed to be authorised by you.
    • Any promises made to third parties by an agent are as good as if you made them.
    • Therefore, you must be kept apprised of all the agent’s activities.
  • A distributor is forbidden from pretending to act on your behalf or promising that you will do something for a third party, such as offering a discount.
    • Any transactions between a distributor and a customer don’t involve you.
    • The distributor does not function as your representative and is obliged to handle sales without your help.
    • It’s important to remember that the distributor is an independent business and should be treated as such.

3. Agent’s Mistakes Are Your Mistakes, Distributor’s Mistakes Are Not

  • The principal appoints the agent to carry out certain activities on its behalf.
    • This means that anyone employed by your agent to carry out its activities is technically acting on your behalf.
    • This, in turn, means you might be directly responsible for the acts of a careless, negligent or misbehaving employee.
  • You need not worry as much about whom the distributor chooses to hire, as you cannot be held liable for their actions since they are an independent business.

4. Agents Have To Provide You With A Customer List, Distributors Don’t

  • Once a distributor has purchased goods from you, they are off your hands, and it is up to the distributor how and to whom he will sell them.
    • The distributor may sell the goods to other businesses or consumers.
    • The distributor may also choose to sell the goods in a specific region or to a specific type of customer.
    • It is crucial to remember that the distributor is not obligated to sell the goods to anyone, and you, as the supplier have no control over how the goods are eventually sold.
  • An agent typically works much more closely with you and will provide you with customer lists so you can have the products manufactured accordingly.
    • This way, you can ensure that the products you sell are what the customers want and that you are not overproducing or underproducing items.
    • This allows for a much more streamlined and coordinated manufacturing process.

5. Agents Have More Influence Over Customer Satisfaction; Distributors Don’t

  • Every businessperson knows that appeasing angry customers is a difficult task.
  • When selling through an agent, you have far more control over issues like after-sales services and warranty works and can ensure that your customers are satisfied.
    • By providing good customer service, you can turn an angry customer into a satisfied customer who will likely recommend your product or service to others.
    • Good customer service can help build customer loyalty, increasing sales and profits.
  • While the distributor may be better equipped to market and sell your products than you are, there are also some risks associated with selling through a distributor.
    • For example, the distributor may not be as motivated to sell your products as you are and may instead prioritise sales of its products.
    • If the distributor goes out of business, your customers may not be able to find your products anymore.

Although the goal of agents and distributors is to sell your products in a particular market, the dynamics of your relationship with each can be quite different.

Regardless of your path, always keep your lines of communication open with your agent or distributor.

They are a vital part of the process; if you treat them well, they will be more likely to work harder to sell your products.

A distributor can get you more sales, but an agent can offer you more support. We understand that this can be a difficult decision. Speak to us via Lawyer Anywhere; we’re help to help you every step of the way!

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Protect Your Assets With Keyman Insurance

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protect your assets with keyman insurance

Keyman Insurance for Unpredictable Times

Different professions hold different views on the term “Assets” definition.

Ask any accountant, and they will probably tell you:

“Assets = Liabilities + Owners’ Equity”.

Many business owners consider:

“Assets = Customers + More Customers + Even More Customers”.

Being lawyers, our definition of the term “Assets” comprises:

“Assets = Anything which is of value”!

Need For Business Insurance

  • Almost every business, regardless of size, has some form of insurance to protect its physical assets in the event of a natural or artificial disaster.
  • Insurance policies can protect against physical damages to manufacturing facilities, plant and machinery, stock inventory, and office premises.
  • These policies help mitigate any potential financial losses the business may suffer due to such an event.

Key Executives

  • While most companies insure themselves against the loss of physical assets, few insure themselves against the loss of their most important asset – the “Key Executives” of the company.
  • These “Key Executives” perform critical financial, business, and strategic management roles.
  • Their presence in the company is essential for its success.
  • Key executives are the backbone of any business, and their loss can have a devastating impact.
  • Their presence in the company is vital to the company’s continued success.
  • Therefore, companies need to have a plan to protect themselves from this potential risk.

Keyman Insurance

  • Have you ever considered if your business could continue without you as a business owner?

    Have you ever considered what might happen if one of your key employees could not work?

    You should plan what to do if you or one of your key employees cannot work. This could help ensure that your business can continue to operate even if something happens to you or one of your employees.

    • Keyman insurance is specifically designed to financially protect a business from the potentially devastating effects of a key employee’s prolonged illness or death.
    • While “keyman insurance” cannot provide the business with an equally capable replacement employee, it can provide a cash injection during the critical interim period while the company recovers from the devastating loss of the essential employee.

Who Is A KeyMan?

  • A keyman is a person who plays a vital role in the business.
  • The general rule is that if the company  relies on a specific individual for sales or is the only one with the technical knowledge to run a particular aspect of the business, then that person would be considered a keyman.
  • Key individuals include but are not limited to company directors, sales directors, IT specialists, managing directors, and product development heads.

How Does Keyman Insurance Work?

  • Keyman insurance is similar to personal life insurance, except that the owner and beneficiary of the policy is the company.
  • This is because keyman insurance is company-owned life insurance specifically designed to financially protect a business against losing a vital team member.

Do I Need Keyman Insurance?

  • Studies have shown that 50% of small business owners expect their business to fold within 12 months of losing a key employee.
  • Keyman insurance provides such small business owners with peace of mind, knowing that if they lose a key employee, they would have a fall-back mechanism that includes funding to tide them over the crisis.
  • A simple way to determine whether you need a keyman insurance policy is to answer the following questions:
    • Do you have at least 1 key person in your business?
    • Would the loss of this key person seriously impact your business?
  • If you answered yes to any of the questions above, you should consider a keyman insurance policy.

Who Needs Keyman Insurance?

  • Keyman insurance is helpful for all types of businesses.
  • As the name suggests, keyman insurance protects the business from losing profits if the key person dies or can no longer work.
  • However, if the business owner’s concern is ownership protection, it is more beneficial to obtain ownership protection insurance.
  • Ownership protection insurance protects a business from being sold or shuts down if the owner dies or cannot run it. 

What Is the Difference Between Critical Illness/Life Insurance & Keyman Insurance?

  • A common misconception amongst business owners is that critical illness and life insurance policies, being of much lower costs, offer the same benefits as Keyman insurance.
  • In reality, they offer vastly different benefits, and the benefits justify the difference in insurance premiums.
  • While premiums are much lower, critical illness and life insurance policies are personal.
    • They will pay out on the stipulated event, i.e. critical illness or death.
    • Critical illness insurance pays a lump sum if the insured is diagnosed with a critical illness.
    • Critical illnesses include conditions like cancer, heart attack, and stroke.
    • Life insurance pays a lump sum of money if the insured dies.
  • Keyman insurance policies differ from other insurance policies; protecting the business, not individual employees.
  • Keyman insurance, being a corporate policy, would pay out on events detrimental to the business.
    • Such events include when the key personnel for the business cannot work for any reason.
    • This could be due to illness, injury, or even death.

When Should I Get Keyman Insurance?

  • Procrastination is a vice that many people share, including many small business owners.
  • Unfortunately, in the area of business planning, it can lead to their financial undoing.
  • Many owners of successful businesses put off identifying their critical assets until it is too late.

In short, the time to get keyman insurance is now!

Without a solid business continuity plan, your business could crumble if something happens to a critical person. We have been protecting businesses like yours in case something happens to a key employee. Contact us today!

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Drop-Shipping vs eCommerce. Which Is Better?

drop-shipping vs eCommerce
drop-shipping vs eCommerce

Drop-Shipping or eCommerce : Level Up Your Online Business

Drop-shipping vs eCommerce?

Drop-shipping and eCommerce are still two popular ways to make money online.

However, understanding the differences between the two is vital before selecting which one is best for you.

DROP-SHIPPING

  • Drop-shipping is a way to run an eCommerce business without all the work of setting up a website and maintaining an inventory.
  • For example, when a store owner receives an order from a customer, they contact the supplier and have the supplier ship the product directly to the customer.

Pros of a Drop-shipping Business

  • Low Start-Up Costs: Since you don’t require inventory, your only costs are domain name, hosting, customer support, and marketing. Drop-shipping businesses have low costs, making them low-risk investments.
  • Speed: Fast start-ups are crucial in every market, especially eCommerce. To enhance sales, shoppers must trust that things will come fast. You can miss out if you wait too long to buy a hot new product. Drop-shipping is a terrific approach to test your niche and top-selling products quickly.

Cons of Drop-shipping Business

  • High Competition: Many businesses with low start-up costs have jumped on the drop-shipping bandwagon. Although the overall opportunity is viable, it can make standing out and attracting customers to your site more challenging.
  • Low Margins: Overall, the possibility is still highly viable, but low-margin items leave little tolerance for error. Say you must charge more for your product to cover shipping and delivery. Then, your product may not be market-friendly.
  • Less Control: You have less control over the quality of the products you’re selling, and there can be longer shipping times.

ECOMMERCE

  • eCommerce businesses are more traditional businesses that sell products directly to customers online.
  • This can be done through various platforms, such as online stores, auction sites, or even personal websites.

Pros of an eCommerce Business

  • Better Brand Control : You control the image and message of your business, as well as how your business is presented to the public. This means you can hone in on a specific niche or market and craft a brand that’s unique and authentic to you.
  • Greater Profit Margins : Since you’re not dealing with consignment or drop ships, you keep 100% of the money from your sales. This means that you have zero margin for error — but when done right, the profits are significant.
  • Easier to Build Trust : Building trust with your customers is easier to do with an eCommerce business since you sell them the product. If you can build that trust, your customers will be more likely to buy from you again in the future. 

Cons of an eCommerce Business:

  • Expensive to Get Started : An eCommerce site can cost a lot to set up correctly. This includes software costs for your website and expensive payment processors. As a result, an eCommerce business can be expensive to launch but less expensive and more scalable than a traditional business model.
  • Harder to Scale : You can’t readily add staff or contractors since you manage everything. As your firm expands, you’ll have to do more yourself, which can be difficult as you must learn to do everything. An eCommerce firm can grow, but it gets harder once you approach your scaling limit.
  • Harder to Make Sales : You’ll increase sales with an eCommerce business as you improve your brand and marketing talents. However, there is a cap on how many sales you can make daily (since it’s a solo effort). This cap is reached sooner than an eCommerce business’s per-day sales limit.

There is no right or wrong answer when choosing between drop-shipping and eCommerce.

Both business models have pros and cons, and choosing one will ultimately depend on your preferences, goals, and experiences.

  • Drop-shipping might be the better option if you’re starting, as it’s generally lower risk and requires less capital.
  • However, if you’re looking to scale your business quickly; eCommerce might be a better option, as it offers more control over the customer experience and allows you to build a stronger brand.

Ultimately, the best solution for you will depend on your specific business goals and needs.

Every business is different. As such, the difficulties that you face will vary. We offer video consultation via Lawyer Anywhere and can help you navigate the ups and downs of starting and running your own company.

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8 Amazing Questions Every Business Owner Should Ask

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8 amazing questions every business owner should ask

8 Game-Changing Questions for Business Owners

The majority of entrepreneurs enjoy creating businesses based on their hobbies or interests.

However, because business owners are not legal experts, start-up legalities may be annoying and perplexing.

Corporate compliance, intellectual property laws, taxes, rules, and corporate liability are just a few legal issues that will arise as the company grows.

Of course, it’s best to consult a lawyer about your company’s needs, but knowing what to discuss helps.

The best way to save on legal bills is to avoid problems in the first place.

Here are 8 conversation-starting questions which may be vital for your business’s growth and success.

1. Why Is It Essential To Keep Business Records?

  • Small businesses must keep all tax receipts and paperwork.
  • Depending on your business, some contracts may limit your liability if you are sued.
  • Some of the other paperwork your company generates may be useful in the future because it demonstrates how well it is growing.
  • Talk to your lawyer about what company records to keep.
  • Keeping accurate records from the beginning is easier than searching for them later.

 

2. What Are My Risks of Getting Sued As A Small Business Owner?

  • Some businesses are more likely to be sued (for example, running a skydiving business will be riskier than working as a freelance blogger).
  • A lawsuit could be filed for a variety of reasons.
  • For example, contract disputes are a common source of business liability.
  • To determine your chances of being sued, you should learn how you could be held legally and financially liable.
  • These risks should then be reduced or eliminated.
  • You should consult a lawyer about these liabilities.

 

3. Can I Use Personal Assets In Running My Business?

  • Many small business owners do not draw a line between what is personal and what is business.
  • Your business is a mix of your passions, hobbies, and profession.
  • Keeping business and personal assets separate is difficult but necessary.
  • Even seemingly simple behaviours, like buying office supplies with your credit card, might threaten your assets.
  • If you consider your personal and corporate identities being the same, why wouldn’t a creditor or court?

 

4. How Do I Find Investors?

  • Investors may be interested in your company if it has growth potential.
  • Investors provide small businesses with capital, connections, and information.
  • Accepting investors is not something to be taken lightly.
  • You must understand how the rules for receiving money will affect your business and your freedom as a business owner.

 

5. What Qualities Make A Company Attractive To Work For?

  • Most workers want more than just a good wage and job security.
  • Employees do better when they are provided freedom and respect space.
  • An excellent dynamic employer-employee relationship starts with good leadership.
  • Work with your lawyer to establish best practices before recruiting new team members.
  • This involves clear HR regulations, the necessary paperwork (independent contractor and employment agreements, non-disclosure agreements, termination letters, etc.), and following up with each employee.

 

6. How Can I Protect My Brand?

  • Your company’s reputation is its most precious asset, regardless of industry.
  • Protect your brand from competitors and copycats.
  • A lawyer can register your company’s brand name, logo, and other identifiers.
  • They can aid with brand infringements.

 

7. How Do I Ensure That My Business Is Compliant?

  • Every company must follow the rules and regulations of the country.
  • If you break these laws, you could face fines, penalties, company liability, and personal liability.
  • How do you know which laws affect your business?
  • Without experience, it’s hard to tell if you’ve overlooked a law or rule.
  • The regulations that apply to your business depend on the business entity you chose, where you incorporated it, and where you do business.
  • If you want to ensure that your company is compliant, consult your lawyer.

 

8. How Do I Make Plans for My Family?

  • Many small business owners hope to transfer their company or its assets to their family eventually.
  • However, depending on the structure of your business (and your family), this may not be as simple as you believe.
  • A lawyer with experience in estate planning can assist you in ensuring the security and transferability of your business to your family.

Every business is different, and as such, the difficulties that you face will vary. We offer video consultation via Lawyer Anywhere and can help you navigate the ups and downs of running your own company.

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Developing A Retirement Exit Strategy That’s Right for You

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developing a retirement exit strategy that's right for you

Plan Your Retirement With Confidence

Find The Retirement Exit Strategy That Suits You Best

Are you ready to retire? Have you planned for your retirement exit strategy?

Many business owners don’t have a plan for what will happen when they retire and exit their businesses.

This can lead to difficulties in the transition and cause the business to fail.

Retirement exit planning is an integral part of any successful business.

This is why Business Succession Planning is so important.

A successful retirement exit strategy begins with developing a succession plan.

Several options are available for retirement exit strategies.

The best choice for you will depend on your business’s specific situation and personal goals.

Here are the 4 most common Business Succession Plans.

1. Selling Your Business To A Co-Owner

  • If you own your business together with your partners, then you should consider drafting a mutual agreement that sets out the terms and conditions for selling a deceased or disabled owner’s business interest.
  • This can help avoid future disputes and ensure a smooth transition for the business.
  • One key advantage of this plan is that it allows the co-owner to buy out the shares of the deceased or disabled owner without delay.
  • However, the critical drawback of this plan is that the co-owner requires much cash on hand since he would be prepared to buy out your shares theoretically at any time.
  • A buy-sell agreement structure is a great way to overcome a co-owned business’s key drawback since the funding mechanism for the buy-sell agreement structure is usually done by purchasing an insurance policy.

2. Passing Your Business To Your Heir

When choosing an heir to take over your business, there are a few things you’ll want to keep in mind.

  • First, is your heir ready and willing to take on the responsibility?
  • Second, is your heir capable of running the business?
  • Third, is your heir the right person for the job, both from a skill and character standpoint?

If you can answer yes to all of these questions, passing your business on to your heir is likely the best course of action for you and your family.

When making business decisions within a family,  keeping emotions in check is essential.

Unfortunately, this is easier said than done, especially after an untimely death or disability.

Studies show that second-generation businesses rarely survive the transition, as they’re often sold by the inheriting family member or fail outright.

 

3. Selling Your Business To A Key Employee

  • A key employee is a good option for a business succession plan since the employee is generally more reliable than an outside buyer and is more committed to continuing the business’s success.
  • In a perfect world, the owner of a company would have a clear succession plan that seamlessly transfers ownership to the most qualified and deserving employee.
  • But in the real world, many business owners don’t have plans.
  • Money is often the biggest hurdle when it comes to key employee succession.
  • Most employees aren’t financially able to buy the business they work for.
  • One solution to this problem is an employee stock ownership plan (ESOP).
  • An ESOP is a retirement plan allowing employees to own a piece of the business they work for. The company contributes to the ESOP, which purchases the company’s shares.
  • Employees can then withdraw or cash the shares when they leave the company.

4. Selling Your Business To An Outside Party

  • You may have to sell your business to an outside party when there isnt’t an obvious successor.
  • Getting an updated valuation of your business would be best to ensure you get the best price.
  • When it is time to sell your business, you want to ensure everything goes as smoothly as possible.
  • But, unfortunately, you can’t predict precisely what the sales process will have in store.
  • For example, your business may not be as valuable as you have anticipated, there may be a lack of credible buyers, or your business may not be able to sell at all.
  • Therefore, weighing essential to weigh your options and considering the potential drawbacks before selling your business is essential.

No one ever plans to fail, but failure to plan leads to most business failures.

No one knows when their time will come, but having a good succession plan in place can ensure a smooth transition of your business when the time does come.

A succession plan can help transfer ownership of the company to another individual, maintain your lifestyle in retirement, provide for your heirs financially, and prepare the business to handle unexpected events.

If you don’t have a succession plan, it’s essential to start developing one now to ensure a smooth transition for you and your business.

You’ve spent your life building your business, but you’re not sure what will happen to it when you retire. Speak to us for advice on planning your retirement exit strategy.

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