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Writing your Will can be a daunting prospect. Not only do you have to decide who to leave your property to when you die and who will be the executor of your estate, but you have to wade through a lot of confusing legal terms. This brief Glossary explains some of the words and phrases commonly used in wills, as well as a few other terms that you may encounter during your estate planning process.

Administrator

An administrator is a person or firm that is appointed by the Court to manage and distribute the estate assets of a person who died without making a will, or of a person who died with a will but whose named executor is either unable or unwilling to act in that role.

Beneficiary

Anyone who benefits under your Will by receiving a gift of property or money is a beneficiary.

Bequest, Bequeath

A bequest is a specific gift of property or money to a specific beneficiary under a Will. To give a gift to someone under the terms of your Will is to bequeath that gift to them.

Codicil

A codicil is an addition or addendum to a Will, which has the effect of making a change to the Will without entirely replacing it. Codicils are typically used only to make minor changes, but since the requirements for witnesses are the same for a codicil as for a will they really have no advantage over just making a new will.

Decedent

A person who has died.

Devise

This term refers to the transfer of real estate property to a beneficiary through a Will.

Disinherit

To cut off a person from his/her inheritance in an estate where he/she would have been a natural heir. A child can be disinherited by a parent in the parent’s Will.

Estate

All of the testator's assets and property, including cash, investments, real estate and personal possessions.

Executor

The person you have named in your Will who will be responsible for administering your estate is your executor (also called a personal representative or trustee). The executor is responsible for obtaining the grant of probate, collecting debts and other amounts owed to your estate, managing any testamentary trusts set up in your Will, filing the final income tax return, paying any estate taxes due, and making the final distribution of estate assets to the beneficiaries.

Guardian

An adult person appointed by you to care for your minor children, or, if the guardian is a property guardian, the person responsible for managing any estate property left to a minor child in your Will.

Heir / Inherit

An heir is a person who takes title to a deceased person's property by the laws of descent because the deceased has no will. That is different from a beneficiary, who is bequeathed a gift in a decedent's will. When an heir takes or receives property through the legal right of succession in this manner, they are said to inherit the property.

Holographic will

A will that is handwritten, signed and dated totally in the handwriting of the testator is called a holographic will. Holographic wills are not recognized as legally valid in all places.

In specie

When estate assets are distributed to beneficiaries in their present form, that is a distribution in specie. The alternative would be for the executor to sell the assets and distribute the cash proceeds.

Issue

All persons who are descended from a common ancestor (for example one's children, grandchildren, and so on), either through birth or adoption.

Letters testamentary

A formal document issued by a probate judge giving a personal representative the authority to conduct business, enter contracts, sell estate property, pay bills, distribute estate property, and otherwise act on behalf of a decedent's estate.

No contest provision

This is a provision that you can add to your Will which provides that any beneficiary under the Will who makes a legal challenge to the validity of the document will be disinherited. You should review this with your legal advisors beforehand if you are considering adding such a provision.

Non-probate property

Any real or personal property which has been disposed of by a decedent by any means other than through a will, such as proceeds of life insurance policies, retirement plans, or property held in joint tenancy with right of survivorship.

Per capita

The method of dividing an estate by giving an equal share to each of a number of persons, all of whom stand in equal degree to the decedent.

Per stirpes

This is the most common way of distributing an estate such that if one of the decedent's children is dead, his/her children will share equally in his/her share of the estate distribution. This is also known as "by right of representation".

Probate property

Any estate property (real or personal) which has been left to beneficiaries under the testator's will, and which is managed by the executor prior to being distributed to the beneficiaries.

Probate

The legal process which facilitates the transfer of a deceased person's property, whether they heave a will or die intestate (without a will). The court will establish the authenticity of the will, appoint a personal representative or administrator if necessary, identify heirs and creditors, direct the payment of debts and taxes, and oversee the distribution of the assets.

Testament

As in "last will and testament". The word simply means the written contents of your Will which consists of your instructions and wishes regarding the disposition of your estate.

Testamentary capacity

This refers to your legal ability to make a will, meaning that you are of legal age and of sound mind.

Testamentary trust

A trust that is created under a will and does not come into existence until after the testator's death. Testamentary trusts are the most common method of managing estate property on behalf of beneficiaries who are not of legal age.

Testator

The testator is the person making the will - in other words, you.

Trust

An arrangement under which assets are set aside by an individual and administered by a trustee for the benefit of another person.

Trustee

If you leave property or money in trust for minor children, the trustee is the person responsible to administer the trust until the conditions you have set (for instance, until the children reach a certain age) are met. The trustee has the authority to use trust funds for medical expenses, education costs, and other necessary expenses - basically the same authority as the parent would have if still alive.

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You have been named as executor in a loved one's will. What does that entail?

You might feel honoured to be named the executor of a person’s estate. After all, it is an indication of the high regard and level of trust that the testator feels for you. However, it is a demanding, time consuming and often complicated role.

Acting as the executor of an estate involves dealing with all the legal, fiduciary and tax implications arising out of the person's death, as well as coping with the financial and emotional needs of beneficiaries. And if the deceased person is a loved one, the role becomes even more difficult because you will be dealing with your own grief and loss as well.

To aid you in properly carrying out the duties of an executor, we have put together a list of the duties that are most often required from an executor. But be aware that this list is not exhaustive. Other tasks may be required, depending upon how complicated the deceased's estate is, where the property is located, and the marital and family status of the deceased (e.g., divorced, step-children, disabled dependents, etc).

10 things you will be required to do as an executor

1. Find and read the will, and organize funeral arrangements. Locate the deceased's Last Will and Testament and read it over to familiarize yourself with their wishes and instructions. As soon as possible after that, arrange a meeting of the deceased's immediate family (and, if appropriate, include close friends or business associates). The meeting should discuss funeral arrangements, and identify and locate important documents and items such as banking and tax records, stocks and other securities, insurance policies, safe deposit boxes, title deeds, etc.

2. Determine the location of all estate assets and property. Make a list of everything and ensure that all assets (real property, personal property and funds) are protected and sufficiently insured. If the deceased was a business owner and there is no one available to take over managing the daily operations, you will have to hire a qualified manager on an interim basis during the estate administration period.

3. Probate the estate. You may need to consult a lawyer to help you through the process, depending on the complexity of the estate.

4. Advertise for creditors. This is essential if the deceased is the sole owner of a business. Place a notice in a local newspaper with the name of the deceased, date of death and your contact details, so that any creditors who have an interest in the estate assets have an opportunity to come forward and make a claim. If you fail to do this and a creditor turns up after all the money has been distributed, you will be responsible for paying the debt.

5. Transfer all of the deceased's property into your name. As the executor of the estate, you are entrusted with the power and authority to dispose of the estate assets. You will need to deal with financial institutions, brokers, transfer agents, and land titles offices to transfer title deeds into your name first, before you can distribute the assets to the beneficiaries.

6. Arrange for payment of all of the estate's legally enforceable debts, including funeral and probate costs. All of the debts must be paid out or the funds allocated to pay such debts, before any distributions are made to beneficiaries.

7. Prepare the deceased's final tax return. If you are not familiar with the tax laws related to estates, you may want to consult an accountant for expert advice.

8. Create any trusts provided for in the deceased's Will. A trust is a legal arrangement that requires assets to be held by a Trustee for a specified period of time - typically this will be when a minor beneficiary reaches a certain age. The income may be paid out or accumulated for distribution to the beneficiaries once the trust conditions have been satisfied.

9. Arrange for payment of legacies and distribution of the estate residue to the beneficiaries. This cannot occur until all estate debts are paid but in general, but if the estate is not overly complicated the distribution generally will occur within the first 12 months following the death of the testator.

10. Keep complete and accurate records of everything you do. You may be required to produce these records as evidence if anyone contests the will or questions your actions as an executor.

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If you are about to make a Will for the first time, you may find that choosing an executor to administer your estate can be one of the most difficult - but possibly the most important - decision you will need to make with regards to your Will and estate planning.

Your executor (also called a "personal representative") is the person you appoint to carry out the instructions in your Will, to distribute your property according to your directions, and to wrap up your estate after you die. You can name one person to act alone, or several people to act together in this role. You also have the option to appoint a trust company or your lawyer to act as your executor, if you don't want to place that responsibility on a family member or friend. And make no mistake - it is a lot of responsibility and it's a task that can take years to accomplish.

What does an executor do?

The executor is responsible for dealing with all matters related to distributing and winding up your estate. The duties of an executor include such things as:

• meeting with the deceased person's family, legal and accounting advisors, business associates, and other interested parties to discuss the provisions of the Will and to make funeral arrangements, if necessary;
• arranging for probate of the will;
• notifying banks, brokers, debtors and creditors of the estate;
• finding and assembling all of the estate assets and property and determining their value;
• filing life insurance, pension and death benefits claims;
• reviewing all of the deceased's financial and tax records, including those for any business in which the deceased has a significant interest;
• reviewing insurance policies, titles, leases, mortgages, and contracts relating to the estate assets or to which the deceased is a party;
• collecting all income, receivables and debts owing to the deceased or the estate;
• paying all outstanding debts and liabilities of the deceased or the estate;
• estimating the amounts required for legacies, taxes, and other costs required to settle the estate and ensuring there are sufficient funds to pay them (including selling estate assets if and when necessary);
• conducting any legal claims made by the estate and defending any lawsuits against the deceased or the estate, including settling any such claims;
• preparing the final income tax return;
• managing trusts for minors (if applicable); and
• distributing the estate assets to the beneficiaries.

Things to think about when deciding who to appoint as your executor

When you name someone close to you to act as the executor of your estate after your death, it's an indication of the high esteem and trust you have for that person. And certainly you should appoint someone that you trust to manage the estate property and assets until they are all distributed according to your instructions in your Will. But you must also consider the fact that the role of an executor is a demanding, time consuming and often complicated one. It involves dealing with all the legal, fiduciary and tax implications of a death, as well as coping with the financial and emotional needs of the beneficiaries.

Choosing an executor who cannot handle all of these pressures may result in a delay in settling your estate, which in turn can result in higher fees and costs that can eat away at the estate funds. This will leave fewer assets for distribution to your beneficiaries.

Talk to the person about your plans, and find out if they are willing to act in that capacity. It is essential that you have their consent before you name them in your Will.

When choosing someone to act as your executor, consider the following questions:

1. Does the person reside in a different province, or even in a different country? If so, the court may require that a bond be posted. If that is the case, the person chosen must be willing and able to post the bond or apply to have it waived.
2. Are you setting up a trust for minor children or dependent adults in your Will? Your executor must be willing and able to administer that trust for some time, presumably until the children reach adulthood or the dependent adults pass away. If they cannot commit to that lengthy time frame, consider setting up the trust under a Trust Deed and appointing a trustee who is able to handle the long-term responsibility.
3. Will your executor be emotionally able to carry out your wishes at the time of your death? This is a very important consideration if you plan to name your spouse or an adult child as your executor, because they will be grieving your loss and assisting other friends or family members in coping with your death. The emotional stress they are experiencing must not detract from their ability to carry out their duties as your executor.

Alternative choices to provide future certainty

It is a good idea to name an alternate executor in case the person you name as your original executor is unwilling or unable to act when the time comes. Another option is to retain a trust company or a lawyer to administer your Will. They will perform all the required duties, including administration of trusts, for a fee.

Divorcing a franchisee is the act of removing a franchisee from, or asking the franchisee to leave, the franchise system. It can be messy and difficult, just like divorcing a spouse. But sometimes it's the only solution.

There are three ways in which you can accomplish the split:

1. The most desirable option would be to transfer the franchise to another qualified franchise prospect. This can be done while the original franchisee is still occupying the location in order to facilitate a smoother transition. If this is not possible, you can send in a management team to manage the location until a new franchisee is found to take over the location.
2. A less desirable option is to close the location down through court action against the franchisee.
3. The third option would be to allow the franchisee to continue operating independently from the location using a different brand not associated with the franchise system. This is not recommended, for reasons which are outlined below.

Transfer of the Franchise

This is the best method of removing a non-system franchisee from the franchise system, because you are in control of the process.

• The franchisee pays for the ads, advertising that the franchise business is for sale.
• The calls from the ads and any other leads are taken by the franchisor or its agent.
• The franchisor processes the candidates as it would any candidate for an unopened location, using the same recruitment criteria.

A key problem that franchisors face is the pricing of the franchise business. If left to the franchisees, they tend to overvalue their business. For this reason, it is best to enlist the services of an outside third party that specializes in evaluating companies, to determine the fair market value of the business.

Ideally recruitment of a new franchisee can be done while the existing franchisee is still managing the business, however there will be times when the relationship has deteriorated to the point where the franchisee's presence will be a deterrent to both the transfer of the franchise and to the system as a whole. When this occurs, the franchisor is faced with two possible actions:

1. Place a manager in the location to manage the business until a suitable transfer candidate is found. In this case, the costs of the manager would be paid for from the gross sales of the location. Any losses would come out of the price paid by the transferee for the business. Any profits would go to the franchisee.
2. Close the location. This option would undoubtedly result in legal action being taken by the franchisee. Before considering this option, BE SURE that your documentation is strong enough to support taking such drastic action.

Closing the Location

There may be occasions when the continued operation of the location by the franchisee is so detrimental to the franchise system that yuou are forced to take immediate injunctive action to force the closure of the location. Be prepared for the following:

• Thorough disclosure of all documentation justifying the need to close the location. It will be helpful if you can prove that the franchisee is negatively affecting the reputation of the brand and that your other franchisees are suffering financially as a result.
• A legal challenge by the franchisee to prevent the closure. This will add to your legal bills. However, if you have properly documented the problems you will probably get the injunction. It has to be black and white, however, with no grey areas, otherwise you stand little chance of success.

As part of the injunction you will also file a suit for damages which may include:

• Loss of royalty revenue due to the location being closed.
• Payment of royalty revenue in arrears, as by this time the franchisee will undoubtedly have stopped paying royalties.
• Your costs for the legal action.

It is NOT TRUE that the courts take the side of the franchisee because of the David & Goliath syndrome. The courts always look at fair dealings. So if the franchisor has been fair in all of its dealings with the franchisee, and the franchisee has not been equally fair in its dealings with the franchisor, then the courts will find in favour of the franchisor.

Allowing the Franchisee to Operate as an Independent

This is never recommended. If the franchisor allows this to happen, it will mean the destruction of your franchise system. At no time should this be considered as a viable option.

_{Image by Gerd Altmann from Pixabay}

Contrary to the belief of many franchisors, legal issues are not usually the result of inconsiderate, selfish franchisees, although there are isolated instances of these. Most legal issues arise due to three actions or omissions on the part of the franchisor:

1. Failure to provide complete disclosure of material facts to potential franchisees.
2. Failure to recruit the right type of franchisees.
3. Failure to provide ongoing support, communication and training.

Disclosure Fails

Most jurisdictions have full disclosure legislation which demands that Franchisors provide Franchisees with full, true and clear disclosure of all material facts related to:

• The Franchisor,
• The Franchisor's owners, directors and officers, if they are critical to the success of the franchise and/or the Franchisee's location,
• The Franchisor's financial health,
• The Franchisor's ability to manage the business as indicated by:
  • length of time operating the franchise business
  • length of time within the industry
  • whether the Franchisor or any of its key people have been insolvent or involved in a legal action against them relative to the awarding of franchises,
• The Franchise Agreement and the key clauses which govern the Franchisor/Franchisee relationship.

Failure to comply with the provisions of this legislation can result in severe penalties including:

• The return of the initial franchise fee
• Any losses incurred by the Franchisee up to the point of dispute
• All costs associated with construction of the franchise location
• All inventory costs
• All legal costs.

A 2000 ruling in Alberta Court of Queen's Bench (Marshall v. Little Mac Enterprises Incorporated and the Security Company of Excellence Incorporated Action #0903-00468) illustrates the importance of disclosure. This case is significant for three reasons:

1. It clearly analyzes the elements of what may or may not constitute a franchise and therefore be subject to the Franchises Act.
2. The broad interpretation given to the Act by the Court.
3. The awarding of damages to the Franchisee in the amounts envisioned by the drafters of the Alberta Franchises Act. In this case, the Franchisee launched an action before large amounts were expensed by the Franchisee. What is significant is that the Court awarded the Franchisee costs incurred which were the initial franchise fee and the interest associated with financing the franchise fee.

Even if disclosure is not required in your jurisdiction, it is important to provide full disclosure to all franchise candidates regardless of their geographical location. Full disclosure sets a positive tone to the relationship between the parties.

Recruitment Fails

Recruitment tragedies are the major reason for deterioration of the Franchisor/Franchisee relationship. Rushing the recruitment process, or recruiting individuals who do not fit the profile, will result in a mismatched Franchisee who will not follow the operating system and will result in an inordinate amount of work for the Franchisor as the Franchisor develops the necessary documentation for termination. You will usually know within the first six months if you have made a bad recruitment decision. When this happens, it is important to first focus on assisting the Franchisee in developing the business from their location. Document all your efforts! That includes all visits to the franchise location, all telephone calls, emails and communications with the Franchisee, all support provided by outside services (e.g. advertising agencies), and all requests for assistance or other services made by the Franchisee and your response to these requests.

Document Everything!

Documentation will enable you to provide evidence of your efforts to assist the Franchisee in establishing and growing their business. It is good business practice to document all communications, support and assistance with all of your Franchisees from the very beginning of the relationship. Apart from your efforts to assist the Franchisee in developing the business from their location, you will also be documenting and giving written notice to the Franchisee of any and all breaches of the Franchise Agreement committed by the Franchisee. Your notice should set out the following:

1. Each breach and the section of the Franchise Agreement that the breach relates to.
2. The length of time that the Franchisee has to rectify the breach.
3. The consequences of not rectifying the breach within the given time.

Your documentation should include the Franchisee's response and efforts made to cure the breach, and what actions you took if the Franchisee failed to remedy the situation. If you want to ensure compliance, the prescribed penalty must be assessed if the Franchisee does not cure the breach. DO NOT indicate a consequence which you do not intend to follow through on. If you are unsure of the actions that you can take, consult your franchise lawyer.

Be prepared to take the ultimate action – divorce – if the Franchisee continues to breach the provisions of the Franchise Agreement. Providing for the final termination of the Franchise Agreement can be traumatic for both the Franchisor and Franchisee. This is the case even if the Franchisee has become a problem and a liability. If you have followed all the proper steps as noted above, termination will not be a huge expense. There will be costs associated with the removal of a non-system franchisee, but you can reduce these costs by proper documentation and proper support throughout the relationship.

Support, Communication and Training Fails

Failure to provide proper support and training can present a serious problem for the Franchisor, since the Franchisee's breach will be as a result of the Franchisor's poor operating practices. Obviously the thing to do is to ensure that you manage the franchise system so that all members of the system benefit. If, however, you find yourself in the opposite situation and the Franchisee is in breach as a retaliatory action, then focus on doing the following:

1. Immediately meet with the Franchisee and work out a plan for them to rectify the breach so you can resume providing the necessary services. Make this a workable plan for both parties and STICK TO IT. Make sure that it isn't one-sided.
2. Document both the breach and the actions that both parties will take to resolve the breach and strengthen the relationship. Both parties should sign off on the document to indicate their intent to carry through.
3. Develop and implement an internal plan of action to assist the Franchisee in building and growing the business.
4. Be constant and consistent in the support provided until all breaches have been resolved. Give the process at least six months, during which time you should document all of your efforts to assist the Franchisee.
5. If after six months the relationship and breaches have not improved, it's probably time to end the relationship.

Make sure your franchise system is prepared for, and has a procedure in place for, divorce from a franchisee. By demonstrating a sincere attempt to resolve the differences and assist the franchisee in business building, you will be able to minimize the financial consequences of divorce. And remember - the best way to prevent legal issues is by managing your system to avoid the "Fails" outlined above.

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Have you considered moving your business online, but are not really sure what that will entail? You're not alone. Businesses large and small have expanded their reach by adding an online presence to their brick-and-mortar environment.

The internet offers a great opportunity for all small businesses, and along with that power comes unique challenges. Sure, every business owner faces issues daily, however, online entrepreneurs have some especially challenging queries which require specific, no-nonsense answers. These answers are often hard to find in the highly technical or overly promotional web sources.

As a small business consultant and online business owner myself, here are the answers that I share with my clients. Be armed with knowledge to successfully face these instances with educated confidence and go forth and prosper in your online business.

Q. Do I have to collect sales tax on online sales?

A. Whether or not to collect taxes is one of the most confusing aspects of running an online store. Knowing how much to charge and what laws and regulations apply to your location is complex.

Currently, internet sales taxes are governed and collected by individual state governments. Because of the non-physical nature of internet businesses and the varying state laws, there is a movement to pass a federal law regarding internet taxes called the Marketplace Fairness Act.

Sales tax is due on all internet purchases in 45 states, and you are required to collect sales tax on your online transactions. Learn about your state's specific laws in this internet sales tax guide.

Q. How will Europe's new privacy law affect my website?

A. On May 25, 2018, the EU enacted the General Data Protection Regulation (GDPR), which requires all businesses and organizations to inform consumers of how their personal information is being collected and used online. If your website collects any private data from a resident of the European Union, you must provide your site users with details as to how that information will be collected and used and give site visitors an opportunity to agree to the use, collection and storage of such information.

In order to make sure your site is compliant, you will need to adjust your privacy policy, get users' consent to use cookies, and limit the data you collect via your signup and other forms.

Q. What is an appropriate budget for online advertising?

A. Many business owners wonder how much they should set aside for online advertising because the model is very different from the print ads that they are accustomed to purchasing. And there are so many different online ad platforms, such as Google Adwords, Google Shopping, Facebook Ads, Instagram and LinkedIn, among others, that it can quickly become overwhelming.

Based on industry standards here is a good formula you can use as a starting point for your online advertising budget:

• Spend 3% of your annual revenue on online paid search (Google, Bing, Yelp, etc.) and digital marketing activities, and
• Spend 1% on social media advertising and marketing (Facebook, Instagram, LinkedIn, etc.)

This is calculated using the standard rule of 10% of annual revenue as advertising budget and then proportioning an amount to online ads.

Q. What kinds of tasks should I outsource?

A. Small businesses, and especially startups, can greatly benefit from today's gig-based, internet-fueled economy. Digital workers are ready and able to provide expert work at affordable prices.

The easiest and most beneficial items to outsource are bookkeeping, payroll, scheduling and logo branding design, which I did recently with good results.

Only use reputable services to ensure good quality and follow-through. Look for firms that have developed good workflow processes, excellent online workspaces and that have full customer support teams. Research potential service providers by looking for customer reviews on Google+, Facebook, Twitter and other social media streams. Check with the Better Business Bureau to see if there are any complaints filed against them.

Q. Is there an affordable way to improve my search engine rankings?

A. Many SEO (search engine optimization) tactics - those site changes that get you listed higher on Google's search results pages, are easier to implement yourself than you might think.

Especially vital for local businesses is to make sure your NAP (name, address and phone number) are correct and consistent across the web, because if Google gets confused it will downgrade your site and you will lose visibility and a corresponding drop in traffic.

Another way to improve your rankings is to focus each page of your site on a specific keyword phrase so that the search engines will be clear of your page content.

Q. Are there other cost-effective ways to promote my company online successfully?

A. The internet is a great, and often free, place to promote every business type.

Microsoft founder Bill Gates once said that "Content is king". This statement in a 1996 essay he wrote about the future of the internet means that supplying information - whether to inform or entertain - is the best way to promote your brand, products and company online.

Get started right away by creating a company blog and posting top quality content which is of interest to your target customer. Post new articles to your blog on a regular basis. In addition to increasing your site traffic, it signals your authority to search engines which will then reward you with higher page rankings over time.

Once your blog is published you can distribute and promote this material across the web and on free social media sites such as Google+, Facebook, Pinterest, Twitter and other sites.

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About the Author:

Marsha Kelly sold her first business for more than a million dollars. She has shared hard-won experiences as a successful serial entrepreneur on her Best4Businesses blog, where she also regularly posts business tips, ideas, and suggestions as well as product reviews for business readers. As a serial entrepreneur who has done “time” in corporate America, Marsha has learned what products and services work well in business today. You can learn from her experiences to build your business.

As a small business owner, you know how important it is to have enough funds on hand to keep your business running. These available funds are known as working capital, and they are needed to run a healthy business.

Inadequate working capital levels are cited by the SBA Small Business Administration as one of the top reasons for small business failure. As such, learning about and securing proper levels for your company is crucial.

What is Working Capital?

Simply put, working capital is the difference between your current assets and current liabilities. Current assets are those that can be converted to cash within a year, while current liabilities are debts and obligations due within a year. Without enough working capital, you may not be able to pay creditors or meet your operating needs. But how do you know how much you have, and how much you need?

How to Calculate Working Capital

To determine how much working capital your business has, you can use this calculator. It calculates working capital by using four inputs – annual growth, current target ratio, total assets, and total liabilities. Annual growth refers to your expected annual growth for the next year, while the current target ratio is current assets divided by current liabilities. For most businesses, a ratio of around 2.0 is optimal.

There are a number of factors that influence how much working capital a business needs. For instance, seasonal businesses need more working capital to keep them afloat in the off-season and to meet the higher expenses that often occur during preparation for the peak season. When deciding how much working capital your business needs, consider your industry, growth rate, and fixed costs.

Working Capital Loans

So, now you know how much working capital you have, and how much you need. But where do you get it? Small businesses often need additional working capital to get through difficult periods. A working capital loan can help fill temporary funding holes and keep your business up and running. Working capital loans are designed specifically for small business owners who need short-term capital. These loans are often available through online lenders, and offer real advantages over traditional bank loans.

Working capital loans are generally easier to get approved, faster to get funded and more convenient to use, providing fast capital when you need it. Repayment periods tend to be shorter, months rather than years, as the loan is intended to get the business through a short-term cash flow problem.

Applying for a Working Capital Loan

When you apply for a working capital loan, lenders will consider several factors to determine if you qualify. Some banks will ask for your financial statements and a balance sheet, then they will check your business and personal credit scores, the length of time your company has been in business, and annual revenue.

Alternative lenders will not wholly rely on your credit reports instead they will review your actual business metrics and transactions in your accounts such as; bank, accounting software and credit card payment processors. You'll need to provide financial statements and a balance sheet.

Lenders vary in what businesses they prefer to lend to. Some will provide loans to businesses with credit scores below 500, as long as they are generating sufficient revenue or have been in business at least a year, while others require higher credit scores, greater revenue, and more years in operation.

Utilizing Working Capital

Now that you know how much working capital you have, you can think about the best way to use it to benefit your business. In addition to fixed costs, you can use working capital to build and improve your business. These monies can be used to pay for expensive equipment that often requires large upfront payments.

You can also fund your businesses expansion with new or remodeled office space, a second location, and other improvements are common. Also, you can expand your staff, hiring new staff and paying for their training. Every industry has its own best uses of working capital. Hair salons often invest in advertising campaigns while auto repair shops buy car accessories to sell and install in customer's vehicles.

Finally, working capital can provide a sense of security. With a generous cushion, you are prepared for any setback or unforeseen circumstance that may arise – which affect all small businesses. With sufficient capital on hand, you can rest easy, knowing that your business expenses can be met.

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About the Author:

Marsha Kelly sold her first business for more than a million dollars. She has shared hard-won experiences as a successful serial entrepreneur on her Best4Businesses blog, where she also regularly posts business tips, ideas, and suggestions as well as product reviews for business readers. As a serial entrepreneur who has done “time” in corporate America, Marsha has learned what products and services work well in business today. You can learn from her experiences to build your business.

Whether you have a great new startup idea or a long-running business, you’ve probably come to one inevitable fork in the road: financing.

It’s the extra capital you need to take your company to the next level, be it for funding resources, creating a new marketing budget, or securing a deal with an overseas manufacturer. Entrepreneurs in Connecticut know full well the challenges faced as its highly-competitive markets cater to some of the wealthiest income brackets in the country.

Small business owners face particularly unique challenges when it comes to financing—and trust me, I know all about these. I’m a serial entrepreneur who’s been through the wringer having started one of my companies from scratch, growing it, and eventually selling for $1,000,000.

One key financing lesson I’ve learned is that there are many options for entrepreneurs to choose from, each with their own advantages and disadvantages.

So let’s go over some of these finance choices—ranging from 401k rollovers to invoice financing and beyond—to discuss which one is right for you.

Financing Strategies for Startups

Small business startups are already enduring enough challenges—getting new customers, establishing a good reputation, and the list goes on.

Thankfully, there are a number of great ways to fund your business during its earliest stages.

SBA Bank Loans: One of the simplest and common routes to take is a bank loan, specifically through the Small Business Administration (SBA). The government has vested interests in ensuring a vibrant economy and, thus, has allocated a certain number of funds to help out startups. Just remember, you’ll still need a great credit score and significant security (like your home) to qualify.

Grants: Aside from this, there are also grants. Every year, countless private and public organizations offer grants to help innovative or helpful new technologies and services. By visiting www.grants.gov, you can browse many thousands of potential funding sources to give your startup that extra boost.

Crowdfunding: A somewhat unconventional yet burgeoning new option is crowdfunding. Thanks to the internet and websites like Indiegogo and Kickstarter, you can now receive hundreds, thousands, or even millions of dollars through the generous donations of thousands of people from around the world. Even better, since 2016, the JOBS Act loosened regulations so small businesses can promote their stocks for financing on these crowdfunding sites.

Seed Financing: Seed financing, either through startup incubators or some venture capital firms, provide another option. While firms specializing in venture capital generally do not invest in startups, there are exceptions, such as with Accel Partners. Similarly, startup incubators and accelerators are organizations that facilitate the needs of small businesses and can provide financing.

Friends and Family Investments: Sometimes, though, you can avoid the “official” routes and consider investments from family or friends. It may seem unconventional but it’s a totally viable option that could mutually benefit you and the partner. Indeed, securing funding from someone you know personally can actually boost your odds of being invested in from “official” investors, since it indicates your credibility and trustworthiness.

ROBS / 401(k): There's also ROBS, an often overlooked treasure trove in the form of your 401(k) retirement account, which you might have thought was strictly for use after 65 – but think again. I used my 401k to fund my startup business. Here's how I did it.

ROBS—Rollover for Business Startups—allows you to transfer the money from your 401(k) and use it to finance your business’ startup. In order to do this, you must follow these steps:

1. Create a C Corporation: turn your business into a C Corporation (others, such as LLCs or S-Corps, do not qualify).

2. Estabalish a 401(k) Within the Business: the company must have the capacity in place for these retirement securities.

3. Roll It Over: shift your current 401(k) into the new startup.

4. Regard Your Startup as an Asset: the rolled over 401(k) funds can be invested into assets.

5. Investment Becomes Capital: the newly-invested money into the C Corporation is now available as capital for financing.

The ROBS financing option for small businesses is a great one to consider when you need that extra lump sum of cash.

Although like all investments this approach could ultimately fail if your business fails, there are some upsides compared to traditional investment options. Specifically, the 401(k) funds are before-tax and no implications exist towards your credit history.

Financing For Established Businesses

If your company is already established, there are a number of specific financing options that could work for you.

These include invoice factoring and invoice financing (also known as accounts receivable financing). Although there are many similarities between these and their overall functions, specific differences exist that make them uniquely suited in certain scenarios.

Invoice Factoring

Invoice factoring basically allows you to sell outstanding invoices for cash. The invoices are essentially sold to a third-party entity, entering them into an exchange.

In general, you can enjoy roughly 80% of the advance immediately. Plus, you’ll no longer have to waste so much time hounding your clients for unfulfilled checks.

Invoice Financing

Invoice financing (also known as accounts receivable financing) works by selling your accounts receivable. In turn, those pending payments become cash that can be used for all types of business-related expenses.

Effectively, you are selling an asset, which is much different compared to purchasing a loan. Although some of the mechanics are similar, the key difference is that it doesn’t come with the baggage of “going into debt.”

Your customers and their reliable credit history essentially become an asset you can capitalize.

Companies like Fundbox, for example, offer invoice financing services . The process involves connecting with your business’ accounting software and then divvying up funds to you within your overall credit limit. Funds are generally transferred to you within 1 business day.

One of the key differences between invoice factoring and invoice financing is that in the latter, your company retains more control and privacy – something I know from personal experience. In contrast, the factoring route usually involves a more invasive third-party company that often contacts your clients about payments.

Other Alternatives

The internet has brought an unprecedented level of innovation and connectivity to the world. With this has come a broad new set of services, including within the realm of financing, referred to as Fintech.

Many reputable services online that offer reliable lines of credit to help fund your business needs. One of the great conveniences with these lines of credit is that they often come with exceptional terms such as to pay back loans within 6 or 12 months after drawing funds from your account. In other words, your full credit available amount remains in your account, but you are only required to pay it off after a period of time starting once the money is taken out.

Additionally, instead of paying interest on the credit, you only have to pay low monthly fees, ranging from 1% to 4%. Applications can be filled online and approvals can be done simply by connecting to your business’ accounting software, such as QuickBooks.

Aside from lines of credit, there is also working capital. As obvious a source of funding as this may seem, it is often overlooked amid the hectic day-to-day operations of a business. Working capital is based on a ratio of currents assets and current liabilities.

Within these variables exist the potential for short-term funding options that may not be immediately apparent yet could go a long way for sustaining your needs.

Conclusion

Financing is necessary for both startups and established businesses. The aforementioned options come with their own unique offerings that could be a perfect fit for your needs.

The 401(k) rollover plan is one of many startup funding options available to aspiring entrepreneurs. Alternatively, invoice financing or factoring can help find wealth within unpaid invoices. With lines of credit and working capital, you can discover even more nuanced business financing options.

As competitive as the business world can be, there are plenty of helpful financing solutions that can bolster your company when you need it most.

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About the Author:

Marsha Kelly sold her first business for more than a million dollars. She has shared hard-won experiences as a successful serial entrepreneur on her Best4Businesses blog, where she also regularly posts business tips, ideas, and suggestions as well as product reviews for business readers. As a serial entrepreneur who has done “time” in corporate America, Marsha has learned what products and services work well in business today. You can learn from her experiences to build your business.

Listening is often more effective than talking for establishing rapport with employees. A good manager must also be a good listener. When an employer listens to employees and demonstrates that they have heard and understood an employee's concerns, the employee feels more at ease and less anxious about the interview.

Developing good listening skills can be a major challenge, but there are some guidelines you can follow to hone your skills and learn to really hear what your staff are saying.

The "art of listening" can be broken down into three main skill types, all of which are equally important:

• Selective Listening, which means hearing everything that is said but screening out all but the key points that are pertinent to the issue at hand, and reacting to them.

• Responsive Listening, which involves verbal and non-verbal acknowledgment (such as nodding) that what is being transmitted is, in fact, being received by the listener in non-judgmental fashion.

• Empathetic Listening, which involves communicating that you have internalized what has been said and that the message transmitted by the speaker is one now shared with the listener.

Your level of involvement in a conversation will greatly influence what the speaker chooses to say and to what extent they decide to open up to you. The more they feel they are being heard, the more likely they are to tell you what it is they really want to say.

There are several rules to follow if you want to learn to listen effectively:

1. Envision your mind as a clean slate.
2. Listen sincerely and earnestly.
3. Listen "naively", without prejudice.
4. Listen empathetically.
5. Keep your ego in check.

17 Ways to Improve Your Listening Skills

1. Shut up and listen. This is the #1 most important guideline. It's impossible to talk and listen simultaneously. When you are engaged in listening, let the speaker have the floor.

2. Show genuine interest. While listening, you should convey a lively curiosity and concern to the speaker. This listening style will encourage the employee to speak freely. The open dialogue that follows should allow you to learn about their career aspirations, fears and doubts.

3. Focus on the speaker. Are you giving your full attention to the person speaking or is your mind wandering? Concentrate. Shut out background noise and distractions. Ensure that the meeting spot is relatively soundproof and that other people in the workplace cannot overhear what is being said.

4. Empathize with the Employee. Each employee has problems, needs and concerns that they consider vital and personal. Put yourself in their shoes and try to see the workplace environment as they see it.

5. Make sure you understand. If you feel you don't fully understand something or feel you may have missed a point that the speaker was making, ask for clarification now before it catches you up later.

6. Hold your fire. Plan your response only after you are certain you have a complete picture of the employee's point of view. Don't jump to conclusions. A pause by the speaker – even a long pause – doesn't always mean that they have finished. Rather, it can signify a regrouping of thoughts in the person's mind before they carry on.

7. Watch the speaker's body language. Be attentive to the person's physical motions and gestures. Actions can impart as much information as words, and often are a better indicator of the speaker's frame of mind.

8. Listen for concepts, not just for words. Take a mental step back and try to visualize the larger picture instead of just picking up on isolated words and phrases in the person's dialogue.

9. Interject on occasion. An occasional "Yes, I see," or "I wasn't aware of that" shows the employee that you're tuned into their message. But don't overdo it, or you could come off sounding patronizing.

10. Block out your own concerns. Personal fears, worries, and problems of the listener can make focusing on the speaker's message difficult. It's not easy, but it is essential to check your personal concerns at the door.

11. Prepare in advance. Remarks and questions prepared in advance will free your mind to listen. Before the interview, write up a checklist of items you would like to discuss with the employee.

12. React to ideas, not to the person. Don't allow personal quirks and mannerisms of the speaker distract you from the content of their conversation. Focus on the issues at hand and try to overcome any emotional attitudes or prejudices you have.This can be difficult if the person is someone who often makes complaints about co-workers, is habitually absent from work or displays other characteristics that may make them difficult to work with. Those traits may be a symptom of work-related fears which your discussion may help to uncover and alleviate.

13. Don't anticipate the outcome. Avoid mentally jumping ahead of the speaker, anticipating where the conversation is going. Instead, sit back and let the speaker steer the discussion.

14. Take notes. Make notes of the important points of the conversation so you can refer back to them later.

15. Ask questions. Monitor your own attentiveness by asking questions to confirm that you have understood the employee's points. Asking questions will help you to distinguish valid concerns from internal fears and anxieties.

16. Listen to others as you would like to be listened to.

17. Ask others to rate your listening skills. Practice on a spouse or family member.

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Bill C-45 has passed the Senate. Once enacted, the Cannabis Act will make it legal to smoke pot in Canada, and to grow a limited quantity of personal marijuana (up to 4 plants) on your property.

And while pot growers, distributors and smokers are very happy about the legalization of marijuana, condo boards and landlords across the country are scrambling to deal with issues which will impact all residents in every multi-unit dwelling in Canada.

Potential risks and grounds for complaints

In most provinces and territories, condo boards and landlords have the legal authority to impose restrictions on smoking of any kind in common areas and exclusive use areas such as balconies or decks. They can also ban growing marijuana in individual units for health and safety reasons.

Regardless of whether a certain behaviour is legal, there are common interest factors at play, i.e. the risks that such behaviour may pose to the building and to other residents of the building. In the case of smoking and/or growing pot, these include:

• increased risk of fire and a resulting increase in insurance costs which affects all occupants;
• dangers of second-hand smoke;
• noxious smells;
• damage to the unit from moisture, which could result in mould and water damage to floors, walls and windows;
• increased costs for electricity and water in buildings where these are not separately metered.

Any one of these factors can create friction between residents, particularly in a condo or strata development where the residents are typically the property owners who are simply interested in protecting their own properties from hazard and damage. Regardless of whether you have the right to smoke within your unit or not, the smoke and the smell will travel through air vents and around doors and will inevitably end up invading other people's air space.

The steps condo boards can take

Condominiums that do not already have smoking restrictions in place can enact rules that ban smoking pot in areas that are commonly owned and from growing pot in their units. Many condominiums are opting to go completely smoke-free, although existing owners would be grandfathered.

Tenants in a condo unit are required to abide by the condo bylaws and the building rules, and the unit owners are obligated to make sure their tenants do so. 

However, the legal obligations of landlord and tenant are not so easy to interpret when it comes to rental buildings.

Are landlords left in the lurch?

There is a patchwork of provincial regulations across Canada when it comes to giving landlords the legal authority they need to establish smoke-free and grow-free rules for rental units. The table below outlines the current (as of June 2018) laws and proposed amendments to specifically address smoking and/or cultivation of recreational marijuana.

Accommodating the needs of medical marijuana users

The main stumbling block to enforcing compliance of the rules and bylaws put in place by landlords, property managers and condo boards will be whether or not they will apply to medical marijuana use and whether such restrictions might be a violation of a user's Charter rights.

In R. v. Smith (2015), the Supreme Court of Canada found while smoking medical marijuana exposes its users to carcinogenic chemicals and higher risks of bronchial disorders, it also provides quicker access to the medical benefits of cannabis. In light of that finding, any restriction against smoking must take into account the smoking of marijuana indoors by disabled individuals who are using cannabis for medical purposes and who find it difficult or impossible to go outside to smoke it. A medical marijuana user who cannot go outdoors to smoke without significant difficulty may need to be accommodated by the condominium corporation or the landlord, as the case may be.

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