The bigger picture – selling your business.

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Ok, so it’s great that you’ve got your own business and that you’re doing so well. BUT, the question is do you want to be doing this forever? I don’t think so. If your business isn’t getting passed on to another generation then you’re probably looking to, one day, sell it and make a hefty profit! This post is a heads up about the things you need to be doing NOW, in order to build a product (yes, your business is your product) that sells quickly and at the best price possible. Here are my top tips!

Keep it clean – Your business must not have skeletons in its closet. I’ve said this before. Either you eradicate those skeletons or you confess to them, preferably the former. If you have unpaid bills, taxes or ongoing litigation, your business will not sell or it may sell BUT at a DISCOUNTED price. This is because instead of purchasing a nice shiny product, the buyer is purchasing a whole lot of risk. Risk is financial uncertainty and in business we despise financial uncertainty. We are constantly mitigating against it. So, clean up your business and keep it clean. Carry out your due diligence REGULARLY. Do not neglect complaints from clients or scary regulatory letters. The buyer of your business will carry out its own due diligence and it will be thorough. Would you buy a car without a test drive or seeing under the bonnet? Nope, I didn’t think so.

Show them the money – If you want to sell your business you have to be super transparent with your numbers. Start planning now to make sure that your business has a financial record to attract a good buyer. Maintain a healthy working capital, renegotiate supply contracts and make sure that you are getting the best deals for your business. Also, get on top of your debt. Pay off as many of your loans as possible. Think about what is actually costing your business money. If your business requires a lot of machinery, are you using all of that machinery? Can you sell some of it? Don’t forget your forecasts – get them ready and back them up with evidence.

Create and implement a business manual – It is amazing how many of my clients do not have systems and procedures for the simplest of things to do with the day to day operation of their business. If you sell products worldwide, you should not be selling those products on ad hoc procedures. You should have a clear process that the buyer of your business can step into tomorrow and operate. You should have systems in place for every aspect of your business. You should have formalised documents. Get your lawyer to draft standard form employee contracts, terms and conditions, disclaimers, policies etc. Also, is the structure and ownership of the company clear? Make the ownership as clear and as transparent as possible.

Show them your A team – Behind every great business is a strong and passionate management team. Your management team is a big part of your business’ valuation. It is therefore crucial that you consider if your business can retain good employees – this may require considered incentives. The buyer of your business will want all your key people to be a part of the sale. It will also want the assurance that your business is not a DIY job; show off your professional support. Your lawyer, your accountant, your consultant all make an impression. Those relationships matter because they instil confidence in the buyer that everything to do with your business has been done properly. Also seek advice from your A team. What do they think? Get your lawyer to review your business structure and advise you as to whether you need to change it in order for it to be an attractive purchase. Your lawyer will take you through the whole process and organise all of the legal paperwork to ensure that there are no unnecessary complications before and after the sale. You really need everyone on board advising. I have worked on an international acquisition where the whole deal was restructured because of tax. It was cheaper to do it another way! Three days before closing we had to change everything!

You may be far off from selling your business at this point in time, but if you want a big pay out someday, you should start doing all of the above now!

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BREXIT explained.

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Before you read this, just in case you didn’t know, BREXIT refers to the possibility of Great Britain (aka the United Kingdom) leaving the European Union after the referendum in June 2016. It’s a play on the words Britain and Exit. In this post, I am going to try and explain the Brexit debate, however, please know that thelegalknow is wholly against BREXIT. I will therefore TRY to be as neutral as possible in this post.

What is a referendum?

A referendum is a general vote by the electorate on a single political question which has been referred to them for a direct decision. In the UK, David  Cameron, the current Prime Minister has approved a referendum asking the British public whether or not it thinks that Britain should remain in the European Union. The big day is Thursday 23 June 2016.

The exact question will be “Should the UK remain a member of the EU or leave the EU”?

What is the European Union?

Five years after World War II ended, France and Germany came up with a plan to ensure that their two countries would never go to war against each other again. The result was a deal signed by six nations to pool their coal and steel resources in 1950. Seven years later a treaty signed in Rome created the European Economic Community (EEC) – the foundations of today’s European Union. The UK was one of three new members to join in the first wave of expansion in 1973. Today the EU has 28 member states with a total population of more than 500 million.

At the heart of the EU are laws designed to allow most goods, services, money and people to move freely within EU member states.

The four key institutions which work together to run the EU are as follows:

  • the European Commission – the EU’s administrative arm – is responsible for proposing and drafting EU legislation;
  • the European Parliament – represents EU citizens – is responsible for approving draft proposals, together with the European Council, from the European Commission and making them law;
  • the European Council – represents member states – is responsible for approving draft proposals, together with the European Parliament, from the European Commission and making them law; and
  • the European Court of Justice – is responsible for upholding EU law in member states to make sure EU law is applied in the same way in all EU member states. It also settles legal disputes between national governments and EU institutions. Member states are required to comply with the court’s rulings and may be fined if they do not do so. This is completely separate from the European Court of Human Rights in Strasbourg, which interprets the European Convention on Human Rights, the EU has its own Charter of Fundamental Rights.

Each member state effectively appoints representatives to each of these institutions.

Why is there a referendum?

The British government promised to hold a referendum on EU membership before the end of 2017. There have been growing calls for a vote on whether to stay or leave the union, as it has allegedly become more powerful and expensive. The BREXIT campaign worries that the UK is paying more in membership fees but gaining little in return other than increasing immigration.

Why does Brexit matter?

The Brexit campaign maintains that by breaking free from the EU, the UK could reduce taxes for its citizens and reduce the burden of immigration. However, those campaigning to stay in the EU contend that if the UK should decide to go off on its own, the move could create widespread job losses and economic uncertainty. Currently, the EU is the UK’s largest trading partner. If enterprises in the new EU are reluctant to do business with British companies, British companies could face substantial setbacks.

Additionally, if Brexit occurs, the UK, just like Norway and Switzerland, will still have to comply with EU rules without having any influence over them. The UK’s exports would be subject to EU export tariffs and they would have to meet EU production standards. It could be even more costly for UK exporters if they face EU legal arguments against UK standards – there could be a lot more court cases (LAWYERS will get richer, YAY). There is therefore a feeling that the UK is always likely to be better positioned to secure beneficial trade deals as a member of the EU than as an individual and isolated player.

What will be the impact on the EU if Brexit occurs?

The potential implications of Brexit are complex, as they hinge largely on what economic actions the UK takes after splitting off from the rest of the EU and how the rest of the world reacts to such a move. The impact would be widespread and drawn-out. The actual process of the UK leaving the partnership and establishing new agreements with remaining EU countries would take years. Many businesses would face immense uncertainty during this time.

In order to reduce this uncertainty, Brexit advocates are weighing potential options. They’re considering either supporting a second referendum on which model to pursue or making an effort to create a consensus behind what the UK’s trade deals would look like after the nation’s exit. Sounds like a political mess to me!

So there you have it. BREXIT in a nutshell. You should hopefully now have a vague idea of what’s going on. I tried to stay neutral but I love and care about business and the arguments to STAY in the EU make economic sense to me. The pennies we would save in domestic tax pail in comparison to the billions we could lose in trade with the EU and the world (President Obama made America’s view very clear). If you are a UK business owner/entrepreneur reading this, please make sure that you VOTE and vote for what you think will be GOOD for UK BUSINESS not UK AESTHETICS.

Please like and please share. Comment below if you disagree! I’m happy to be educated.

How your business can help the world.

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Ok so what does business facilitate unintentionally, every day that can assist in breaking down barriers, prejudices, discrimination etc in one swift swoop…they bring PEOPLE, all kinds of crazy, different people together! Admittedly the intention isn’t initially to get everyone to hold hands and appreciate their various differences but it certainly ends up that way. You see in our common quest to make money, we end up fostering relationships with everyone and anyone because money doesn’t care about gender, sexual orientation, faith or race and that’s THAT. Anyone can make it.

Manufacturers and suppliers are all over the world, we drop an email to China, New York or London with a click. If there is a big event in our industry, we doll ourselves up and go and meet the cool kids with eager hand shakes and smiles of “give me your business“. In business, we don’t care whether your hand is black or white, if you are paying we will shake it and if you are talented we will hold it. Take McDonalds for example, there is a restaurant in pretty much every country with an airport. I’ll never forget the joy of seeing those golden arches after almost 3 months of eating spicy food (delicious as it was) for breakfast, lunch and dinner in beautiful India. I ate three McChicken sandwiches in one go at a familiar table, in a familiar decor and with a familiar service, nevertheless they also had masala fries and tandoori nuggets; amazing. McDonalds know that DIVERSITY and CULTURE is good for business.

Even the legal industry in the UK has recognised this. Traditionally pale, stale and male with degrees from Oxbridge only, the English legal profession is now more diverse than ever. In fact, globally, major law firms are continuously expanding all over the world, recruiting from oversees and right round the corner. Just go on to the website of Clifford Chance, Norton Rose Fulbright or Linklaters and have fun clicking on the sites of their many global offices. Even the ordinary pop star knows that culture and diversity pay, if you ever meet Beyonce, ask her where she HASN’T performed or Justin Bieber how many endorsements he has done in Japan! Ok you get it, but how does this HELP?

You see, in recognising that diversity and cultural awareness is good for business you help the world to stay connected and to integrate. Entrepreneurs, businesses and startups are key tools in building a community of human beings and not a community of “us and them” which politicians love to exploit. Imagine how much more we can achieve if we actively encouraged diversity and it wasn’t just a by product money making. If you own a restaurant and your beef suppliers are a farm in Scotland, a work trip to Scotland could really encourage relationships and mutual understanding. Or if you manufacture your clothes in China, going over and seeing with your own eyes, the place where your stock begins could encourage your Chinese team and also enlighten you to improving conditions for workers over there (this is an issue for another post on another blog). I’m sure this can all be put more elegantly but you get the gist right. I did a post on Corporate Responsibility which touched upon this BUT this post isn’t about your branding or your promotion its about YOU consciously making your company an educator to its employees and a friend to its customers; that’s how your business can help the world.

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5 ways to spot a bad lawyer!

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Lawyers are service providers. Fact. If you engage a lawyer to service your business, start up, whatever, you are doing the right thing. For it is said that “a man who is his own lawyer has a fool for his client”. In an ideal world the power should be with you, the client, however, unfortunately, not all lawyers are like me (passionate about progressing you and your dreams) they are more interested in er …fees, thus compounding that awful image that lawyers are greedy. So here are a few pointers on how to spot if your lawyer is not putting YOU first and may just be all about the fees.

1 You have to chase for an update

You should never have to chase for an update. A good lawyer will keep you regularly informed about the work he or she is doing for you. Obviously this is within reason but the updates should be regular in the context of the service you have paid for. E.g. “Hey Bob just a quick email to let you know that we have submitted your application…Hey Bob, we have received confirmation of receipt of your application… Hey Bob, your application has been accepted.”

2 You are presented with the unexpected – frequently

No one can foresee everything, that’s impossible BUT a good lawyer will have anticipated damn near all the risks! He or she will not only have communicated these risks to you, he or she will have factored them in to your agreed fee structure, i.e. “Hey Bob if this curve ball is thrown at us, this would likely happen and our fees would increase by X amount”. If you are frequently being told to pay a bit more because something has come up, this could be a sign that your lawyer is not thinking about the bigger picture for you.

3 You don’t understand what’s going on

This is a no brainer. A good lawyer wants you to understand how they are helping you. If you are confused your lawyer may be trying to squeeze a few extra pounds out of you by keeping you in the dark.

4 You only get bad news

Sometimes your legal situation might just be a bit rubbish but generally your lawyer should be coming up with solutions or alternatives. If you are paying for continuous bad news I would query why you were advised to embark on your pursuit in the first place. For example, advancing a bad claim or defending a good one.

5 You are not offered other services

A truly fantastic lawyer will be thinking what else he or she can offer to help you achieve more? Your lawyer should be suggesting other bespoke services for you such as seminars or even referring you to a specialist firm that can help you with a niche problem.

If you think you have a bad lawyer, raise your concerns with them and give them a chance to improve. They’re probably stressed out on lots of other work and your queries may help them to refocus on client quality!

Let me know what you think below and please share!