Artists, artisans, vendors, crafters, home businesses and small manufacturers often find that selling their wares through traditional channels can be too difficult and too expensive. Selling goods on consignment, whether online or through a bricks-and-mortar storefront, can be a workable alternative that costs very little, and gives them an opportunity to obtain exposure for their work in several locations and sell goods through more than one dealer.
The success of your business is dependent in large part on how well you market it. That is why it is vitally important to develop a solid, workable marketing plan for your business. An overview of your marketing plan should be included in your business plan as well, so potential investors and lenders can review your marketing strategy.
Are you thinking of starting a home business? Do you know whether you can do so legally in the neighborhood you live in? Before you invest a lot of money in inventory, supplies and equipment, make sure that your ability to operate your business will not be impacted by zoning laws, bylaws, or restrictions imposed by the local Home Owners Association. If you live in a condo, or if you rent, there may be further limitations imposed by the condominium association or by your lease.
Power lunches are an important part of most executives' weekly schedule. But if you've never arranged a business lunch before, it can be a little intimidating. Here are some easy tips which will help you plan a successful business lunch, and hopefully pave the way to a successful transaction.
Whether you're hoping to generate extra income in addition to a regular job to help make ends meet, or you want to fulfill some entrepreneurial goals, starting your own home business can help you meet those goals. But home businesses can also offer many challenges. Follow these 18 tips from successful home business owners to help increase your chances of reaching profitability without spending every waking moment and every last dollar to get there.
Many people are choosing to start their own businesses these days. Whether they are people who don't want to spend most of their waking hours commuting to and from work, parents of young children who want a more flexible work environment, or retirees who have decided to get back into the mainstream, there are plenty of opportunities for those folks who are considering starting up a home-based business.
If you've ever thought about starting your own home business, there's no time like the present. But what sort of business should it be? How do you get started? How do you find potential customers? Let's go over the essential steps you should follow in order to answer those questions and help you in your decision-making process.
Almost everyone has skills, knowledge, experience and assets that could be channeled into a marketable home-based business. For instance, if you own a truck or have access to a trailer, you could start a junk hauling or recycling pick-up service. An accountant with space for an office has all the tools they need for a successful home business. There are many types of businesses that can be run from your home. Just to name a few:
Do you know who your target customers are? How large is the potential market within your geographical area? You will need to answer those questions before you invest a lot of time and money into the venture. Find out how many people in your area would be interested in your proposed product or service. Talk to the people in your neighborhood, take several informal surveys over a period of one to three months to determine what percentage of your area would be willing to pay for your product or service. Make the survey simple - just a few key questions. For example:
A business plan is an essential component of the process. It gives you a means to clarify what your business proposition is and how you plan to grow your business, set out your mission statement and goals, and convince potential lenders and investors why they should have confidence in its potential. It is a vital tool for obtaining financing, especially if you require a start-up loan for equipment and supplies.
Your business plan should include:
Too often, enthusiastic and ambitious entrepreneurs jump into an extra income project and suddenly find that the costs are too high, and the time requirements more than they can meet. It pays to lay it all out on paper before you get involved. The clearer the vision you have of the project before you start, the better your chances for success.
Regardless of what type of business you start, you should have enough capital available to sustain the business through the first six months of operation. Do not count on receiving or spending any business income for yourself or your bills during that start-up phase. All revenues obtained in the first 6 months should be reinvested into the business in order to reach your planned Year 1 projections. After that initial 6-month period you can set up a small monthly salary for yourself.
Don't expect instant success. "If you build it, they will come" only happens in the movies.
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Imagine this scenario: You have been offered a position that is a dream job, right in your chosen field with excellent compensation and benefits, maybe some stock options. You and your future employer have agreed to sign an Employment Agreement as a precondition. Don't panic! Keep calm and read on.
An employment contract is the business equivalent of a prenuptial agreement and just about as uncomfortable to ask for. How will you know what items should be included in the contract, or if some important element is missing? All of this can be very anxiety-making.
Of course the wisest course of action would be to review it with a lawyer. But if you decide to go it alone, here are some basic guidelines as to what you should look for in the agreement.
The list below contains just some of the types of additional provisions that may be included in the Employment Agreement. Some of these may actually be required by law in your area. Check the current labor laws to find out which of these provisions are statutory and would therefore apply to you.
Keep in mind that while items like the company's stock options plan or medical benefits package should be described in the Employment Agreement, it is unlikely that these issues would be negotiable. Your best advice is to review the Employment Agreement with a lawyer. He/She will be able to tell you if it's in our best interests to sign it as is or if there's anything extra that you should be asking for. You can also have your lawyer negotiate those extras with the employer.
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Joint ventures are much more common in today's business world as companies strive to gain access to new world markets and improve their profit margins in the face of increasing costs and the need to comply with rapidly changing laws and regulations.
Joint ventures, also referred to as "business alliances", "strategic alliances" or "corporate partnering", offer an attractive alternative to the traditional method of doing business, and there are numerous advantages to co-venturing. For instance:
A joint venture is basically a short-term partnering arrangement in which the parties involved jointly undertake a project for mutual profit. Similar to a partnership, a joint venture can involve any type of business transaction or project, and the parties may be individuals, companies or other types of entities or organizations.
The co-venturers share the costs and the risks, as well as any gains and benefits, and each of them contribute money, property, effort and/or know-how to the joint venture. The participants in a joint venture each retain ownership of their individual property, which is returned to them at the conclusion of the venture.
The parties may decide to enter into a contractual arrangement to cooperate with each other (a contractual joint venture), or they may decide that it's more advantageous to incorporate a separate company to carry out the project (an incorporated joint venture). The life span of a joint venture is typically the life of the project for which it was created, although the co-venturers may determine that the joint venture should carry on for an additional period of time, as required by the nature of the business / project.
The laws governing joint ventures differ from country to country. For example, in the U.S. joint ventures are governed by state partnership and commercial transactions laws. In Canada, there are no specific laws governing joint ventures, and the joint ventures are governed by the written contract between the parties. Therefore having a written Joint Venture Agreement is of paramount importance. If the joint venture is incorporated, with the co-venturers as shareholders, the legal status of the venture is governed by the law governing corporations in the jurisdiction in which it was incorporated. It is important to note there have been court decisions where shareholders in a corporate joint venture have been deemed partners.
Like any other business opportunity, joint ventures have their own inherent risks. This is particularly true when you're expanding into a new market or into another part of the world. Before you decide to venture into a foreign market be sure that everyone on your team is well aware of the local laws and the cultural differences, customs, holidays, and social taboos. Be clear on what the purpose of the joint venture is and how your business would contribute to and benefit from the venture. What would be required of you, and what would your expectations be? What contributions would you be expected to make in terms of money, property, resources, and expertise?
Foreign joint ventures are subject to international trade laws and to local laws governing commercial transactions, labour, and consumer rights. Tax laws also differ from country to country, and you should be fully aware of what these laws are in the countries you're moving into. It's also critical to know whether there are restrictions on the amount of investment or capital distribution that foreign entities are allowed to make. Can you freely move money into and out of the business, or are there limits imposed by law? Many problems can be avoided if everyone involved is very clear on the joint venture's goals and objectives and has a good understanding of how those goals are to be accomplished. A well-researched business plan for the venture must be developed with a full analysis of the aims and objectives. Everyone involved should be well acquainted with the business plan and how it will be implemented. All of the participants must also agree on how the venture will be managed and what each party's role will be in that regard. These points should be clearly spelled out in the Joint Venture Agreement.
Choosing the right partner in a joint venture is essential to your success. You want a partner that can supply resources, property, assets, and/or know-how that complement your business. As with any other business relationship, you will want to check out all potential partners before deciding to embark on a joint venture. Do thorough due diligence, and be sure to search online as well - on the principals as well as the company (if applicable). A Google search can bring up a wealth of information, comments, feedback, personal experiences - favourable and unfavourable - that can help you form a fairly accurate overall picture of the other partners.
Once you have prepared a draft of your agreement, review it with your co-venturer(s) and legal counsel prior to signing it. At a minimum the joint venture agreement should include the following:
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A. A partnership is an unincorporated business that is owned and operated jointly by two or more parties. It is typically an ongoing long-term business operation, the end goal of which is to create profit for the partners.
A. The biggest difference is that a corporation has a legal existence separate from its owners, with the same legal rights and obligations as a natural person. A corporation can hold property and assets in its own name, it can sue and be sued, and it must file income tax returns. A partnership does not have this type of separate and distinct existence.
Unlike a corporation, a partnership is not required by law to hold meetings, elect officers, or maintain a corporate minute book. Usually the partners will all participate in the management of the partnership and will share pro rata (according to their individual contributions) in the profits and losses, and assume equal responsibility for the partnership's liabilities.
Shareholders of corporations and LLCs are not personally liable for the obligations of the corporation / company. By contrast, partners in a general partnership are all personally liable for its obligations and can be sued by the partnership's creditors.
A. If you go into business with someone else, you have automatically formed a partnership and are not required to file anything to "create" the partnership in the eyes of the law. That having been said, depending on where the business is located and what type of partnership you are forming (such as a limited partnership), there may be some forms that are required by local government authorities for business and/or tax purposes.
Do your research to find out if you're required to submit any documentation to satisfy those requirements in your state, province or territory. It is beneficial for all parties that the details of how the partnership will be run are clearly set out in a written partnership agreement. If you don't have a written agreement, the partnership laws of your state, province or territory will govern the partnership. A written partnership agreement will remove any ambiguity as to the parties' rights and their responsibilities to each other and to the partnership, and can eliminate many sources of conflict before they arise.
A. This is another reason to have a formal agreement in place. All partners can then agree what will happen to the partnership if somebody wants to leave the partnership for any reason - whether by choice (retirement, change of circumstances, etc) or by necessity (illness, incapacity, bankruptcy, death). Every Partnership Agreement should contain buy-sell provisions to deal with these situations, in order to avoid loss of income, litigation, tax implications, and other negative consequences.
A. As discussed above, a partnership is not considered a separate entity in the way that a corporation is, so the partnership does not pay income taxes on its own behalf. Partnership profits and losses pass through to the partners, who must claim them on their own income tax returns. The partners then pay taxes on their share of profits or deduct their share of partnership losses, as appropriate. Nevertheless, partnerships are required to file certain forms with the taxing authority - this is true in both the United States and Canada.
A. A general partnership is a partnership in which all the partners participate in managing the business. In a limited partnership, one or more general partners are responsible for running the business while the limited partners (of whom there may be many) are responsible for capitalizing the business. The limited partners have very little control over the day-to-day operations, but in return for giving up that control their liability for partnership debts and obligations is limited to the extent of their investment. Securities laws may apply to the sale or transfer of limited partnership interests. If you're considering setting up a limited partnership to attract investment capital, you should consult a lawyer.
A. Because a partnership has no legal status as a separate entity, the partners are personally liable for all of the partnership debts and obligations. Partners in a general partnership have the same degree of liability as the owner of a sole proprietorship. If one of the partners creates an obligation for the partnership, all of the partners are bound by it. Limiting the liability exposure of the partners can be encompassed in a written agreement, by stipulating that all or a majority of the partners must consent to enter into certain types of obligations or to incur debts over a certain limit on behalf of the partnership.
Limited partnerships reduce the liability of the limited partners to the extent of their original investment. The general partner manages the partnership and accepts full liability for the partnership obligations, and the limited partners give up any management authority in return for the protection from liability.
A. A written Partnership Agreement should contain the following:
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If your business hires outside consultants, it's worth your while to learn how a consulting contract is structured. And if you're a consultant yourself, you'll want to know how to prepare your own agreements with clients to cut down on your legal fees.
While people often assume you need to have an attorney draw up your contracts, if you acquaint yourself with the various provisions that are included as standard elements in a consulting agreement, you should be able to confidently draft your own contracts.
The terms of the contract should be discussed and agreed to verbally first, before putting it in writing. It might be a good idea to prepare a Letter of Intent first, to make sure that both parties are on the same page before you enter into a formal written agreement.
1. The Preamble. On the first page you will set out the full legal names and a brief description of each party, and a summary of the parties' intents and the purpose of the contract.
2. Services to be Provided or Excluded. Fully describe the scope of the services that the consultant will provide, either in the main body of the contract or in an attached schedule. If certain services are specifically not included, these exceptions should be clearly set out. All deliverables, completion dates and deadlines should be listed.
3. Employees and Contractors. If more than one person will be providing consulting services, identify them and how they are related, i.e. which ones are employees and which ones are independent contractors retained by the consultant to assist with the project. It may be helpful to include an organizational chart with each person's name, position and job description, and the reporting hierarchy. Each of these persons should agree in writing to be bound by the terms of the Consulting Contract.
4. Qualifications. The consultant's qualifications should be described, or if the parties prefer, the consultant can make representations to the effect that he/she is fully qualified to provide the services.
5. Term and Renewal. Is the contract ongoing and open-ended? Will it renew automatically or will the parties negotiate a new contract before the old one expires? Is it a project-specific contract that will end when the project is completed? Is it a one-year arrangement? Define what the term of the agreement will be. If it is project-specific, clarify the circumstances that define completion of the project.
6. Contract Price. The contract price should be clearly set out. You also need to be very clear about:
7. Invoices. If an invoice is required to initiate the payment cycle, it's advisable to include a description of the invoice format or attach a sample invoice as a schedule.
8. Approval Process. Describe the procedure for approval and acceptance of each phase or deliverable, as well as the procedure for revisions if any are required.
9. Contract Extras. Describe how changes or additional services can be requested by the customer, the additional amount that must be paid for those extras, and when and how it must be paid.
10. Currency. Be clear on what currency is the basis for the amounts quoted by including a paragraph like this one: "All amounts required to be paid under or in connection with this Agreement shall be paid in lawful money of ___________ (name of country)."
11. Expenses. Detail which expenses will be paid by the customer, what proof is required for reimbursement by the customer (e.g., receipts), any maximum limit on expenses, and which expenses or amounts require the customer's prior approval. Clarify whether expenses will be included as line items on the regular invoices or if they will be billed separately.
12. Reporting. What kind of reports will the consultant be required to deliver, how often and in what form? This should all be clearly established in the contract.
13. Ownership. Be very clear about who will own the work product, including any intellectual property rights included in that work product. If the contract is made on a work-for-hire basis, the customer should be the owner of the work product and IP rights.
14. Insurance. Will the consultant be required to carry E&O / professional liability insurance during the term of the agreement? Make sure the insurance provision establishes the amount and type of coverage to be maintained.
15. Termination. This section should set out:
16. Dispute Resolution. Include a provision to deal with how disputes arising out of the agreement will be handled, such as having the parties agree to submitting disputes to binding arbitration or a third party mediator. It should also include the legal remedies available to each party.
17. Governing Law. Clarify the jurisdiction which governs the agreement (eg. "This Agreement shall be governed in all respects by the laws of _________________.").
18. Notices. Provide an address for each party for service of notices and other communications. If copies are to be provided to attorneys, accountants or other advisors, include an address for each of these persons as well.
19. Confidentiality. Include confidentiality provisions in the consulting contract or, alternatively, have the consultant sign a separate Confidentiality Agreement, make reference to it in the contract and attach a copy as a schedule. The confidentiality provisions should survive the expiration or termination of the contract. Clarify what the legal consequences will be for disclosing any confidential information without consent.
20. Non-Competition. Consider whether to include a non-competition clause (also called a "non-compete"), which restricts or limits the consultant's ability to perform similar services for a client's competitors (or its customers) during the term of the contract.
21. Entire Agreement. Make sure that all items agreed to verbally are set out in writing in the agreement. And include a standard clause that says the agreement supersedes any other verbal or written agreements between the parties and that no modifications or amendments are binding unless they are in writing and signed by both parties.
22. Limitation of Liability. Limit your liability to the extent legally possible. You cannot completely eliminate or avoid liability, but you may be able to limit the amount an unsatisfied client can claim to a reasonable amount, such as the amount that the client has paid under the contract plus attorneys' fees. The contract should specifically prevent recovery for consequential damages. Include your employees and subcontractors under the limitation of liability clause to reduce their exposure as well.
Both parties should review the contract with a legal advisor and ask for explanations of any clauses that are not completely clear. Whether you're the client or the consultant, you should not sign anything unless you fully understand what you're signing.
If the contract is for a lengthy project, don't agree to wait until the end of the contract term to get paid. Split the payments up over the duration of the contract.
If a non-competition provision is included, you must ensure that it does not unfairly restrict the consultant's ability to earn a living in his/her field of expertise. This can result in the provisions being struck down in the courts. For instance, in California courts non-competition provisions are very likely to be deemed invalid. And in most other jurisdictions the more restrictive the provision is, the more likely a court will strike it.
The ownership provision should be worded so that it does not give the client title to ALL work performed by the consultant during the term of the contract. This could be interpreted by a court as giving the client title to work performed for other clients. You should get legal advice on this subject to ensure that (i) your rights are protected and (ii) other parties' rights are not infringed upon.
You should be wary of provisions that unreasonably restrict the consultant from assigning their interest in the contract or from subcontracting any of the work. Renegotiate this with the customer before finalizing to allow for assignment with consent, which should not be unreasonably withheld.
Almost any contract - even a "standard" form contract - is negotiable. If you're signing someone else's standard contract and any condition or provision of that contract makes you nervous or uncomfortable, it's your responsibility to bring it up. Don't sign anything until you're satisfied with it. Review it with your lawyer, who can then assist you in negotiating a more favorable arrangement.
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