DIY Business Health

Our super talented small business lawyer and guest blogger Jessica Kerr of Sinclair + May is back with her take on DIY business health from a legal perspective. I so wish I'd contacted Jess before setting up the studio but at least we have her wisdom now!

In all things, I’m a big believer in preventative health.  I minimise sugar, maximise vegie intake, go to sleep the same time each night (or try to), manage my stress levels and am always washing my hands during cold and flu season!

I take the same approach with my clients in the legal advice I provide, working with them to keep their businesses healthy, rather than reaping the rewards of misfortune.

So here are some useful steps you can take to keep your business in good legal health without needing to engage a lawyer, and so you know the warning signs for when you should get a lawyer involved. If you’re ever not sure whether you’ve crossed that line, I offer a free 15-min check-in service where people can book a time via my website to run something past me and I’ll either give you some pointers to do it yourself or suggest another way forward.

Tight trading terms

Simple, well-drafted terms and conditions protect your business against all the what-ifs

They set out how you do business, including the following:

●      what, how and when you get paid. It will be better for the business relationship in the long run if you clarify payment expectations and processes at the outset. If you don’t spell it out, you risk late payment or disputes.

●      how you do business – what you will deliver and when, and what your client needs to provide to you along the way (such as feedback on drafts or website content). This helps manage expectations and helps you organise and predict your workflow.  This is why you can’t use someone else’s terms and conditions because the way they work is likely to be different to yours.

●      what information must be kept confidential. Clients want comfort that what they give you will be kept confidential and vice versa.

●      who owns what material and what can it be used for in the future. For example, if you are a photographer, can the photos you take for a client be used for whatever purpose in the future? Will you require attribution? How you answer these questions will be deeply personal to your business. But you want to make sure everyone is on the same page up front.

●      what tasks can be delegated to contractors or employees.  Will you be doing every aspect of the work? If not, make sure clients know who are they dealing with.

You can incorporate the process of providing terms and conditions to your clients via your quoting or onboarding process, eg through 17hats or Xero.

The risks of copying someone else’s terms and conditions infringe their copyright and may not be tailored to your business and leave you exposed. I’ve seen some hilariously bad examples of this – terms and conditions that refer to the courts of another country or State; or refer to services when the business is product-based; or are internally inconsistent because they’ve stolen bits and pieces from a bunch of places.

Lease health

If you have premises, your lease can affect the value of your business, so it is important to know it inside and out. Make sure you can always locate it! If you need to answer a question about your lease, you’ll need to do so quickly. You should also:

●      Diarise when you need to exercise options to renew. Do this at the time you sign the original lease.

●      Make sure you budget for rent increases. The lease will state how the rent goes up over time, either by market rent review, CPI or fixed percentage increase. Calculate this and incorporate this into your budget.

●      Run your lease past your insurance broker to make sure you have all the insurances required under the lease.

●      Understand your make good obligations at the end of the lease (and budget for them!)

●      Make sure your guarantors understand what they’re up for. A guarantor agrees to personally guarantee all of the obligations of the tenant under the lease. These obligations can extend beyond the payment of rent to things like the cost of making good damage to the premises or, if you breach the lease and terminate early, compensating the landlord for things like re-letting the premises and their legal costs.

Staying safe on social media

First thing to remember is that it is not just about what you put on your social media pages. It goes without saying that you can’t make comments that are false or misleading on your page. But if someone puts incorrect, misleading or offensive comments on your page, it is your responsibility to remove them. This means you need to make sure someone is regularly monitoring your social media pages for such comments. 

Second, you need to implement social media policies in to your business.  This should cover not only who gets to post on behalf of the business but also personal use of social media during work hours or comments made on their on social media accounts. 

Third, make sure you have the right to use the images you post online. The easiest way to stay safe on social is to create your own images and use them.

And finally, remember your social media accounts are an asset of your business that can be considered a valuable asset of your business if you sell it.  You should keep the login details secure to make this process easy. And if you are buying someone else’s business with a significant social media following, make sure the purchase agreement lists these accounts as one of the assets that will come with the business.

Business structure

It is important to get your business structure right from the start.  By business structure I mean whether you are a sole trader who contracts with other people, or do you operate as a partnership, a company or under a joint venture agreement.

This is particularly important if you are collaborating or partnering with other business owners, or if you want to bring on investors in the future.

Revenue is one way to determine when you should incorporate. An incorporated company will require more administration, expense and attention to detail than an unincorporated small business, and so you should be making upwards of $75,000 to justify the expense of setting up the company and register for GST and an ABN. I’ve written more about the other benefits of incorporation here.

I hope that’s helpful. I haven’t gone into trademarks, business names, employment, confidentiality, collaborations, occupational health and safety or consumer law (it never stops as a business owner, huh?)  Follow my blog or Insta for lots of tips on these, and if you think you need additional guidance, book a free 15-min chat with me here.

 

Rebecca Mutch