9 Strategies to Avoid Business Partnership Purgatory

by Marissa Levin

Partnerships are one of the most important – and one of the messiest – parts of business.

Right now, I am working with clients who:

1: Are building a great partnership

2: Are trying to get out of bad partnership

3: Have narrowly escaped a seemingly good partnership gone bad

To grow beyond a solopreneurship, a business owner often needs to enlist the help of a partner. There are many reasons for this including:

1. Not enough hours in the day for one person to do the work of multiple people.

2. Almost always, a single person does not have the opposing skill sets and thought processes of both a CEO and COO. The CEO is the visionary and the strategist; the COO is the realist and the implementer. The CEO focuses on the “Why” and the “What,” while the COO focuses on the “How,” the “Who,” and the “When.”

3. Every growing business needs a checks-and-balances system.

When a business owner enters into a partnership, of course everything is wonderful. It’s like dating. Partners only see the best in one another. They can’t possibly imagine anything going wrong to break them apart. They have discovered the yin to their yang. They meet each other and think, “You complete me.”

In my work and experiences with dozens of business owners, I have seen firsthand how a business can flourish with a healthy partnership. I’ve also seen partnerships erode into living nightmares that suck the life out of you.

I’m currently working with a dynamic-duo real estate team who hired me as both a one-on-one executive coach, and a partnership coach to move them to their next levels of growth, individually and collectively. Scott Koval and Sarah King Taylor of JS Realty have done everything right to establish their partnership. They work well as a team for these reasons:

Thoughtfulness. They did not rush into the partnership. They worked together as independent agents for a long time before deciding to partner.

Balance. They balance each other out regarding roles and business interests. Sarah is the visionary/strategist; Scott is the operations expert and implementer.

Equality. They bring an equal amount of experience and value to the partnership. Their client portfolios are balanced, so there is no sense of superiority from either partner. One partner is not indebted to another for helping them become established.

Shared industry knowledge. Both Sarah and Scott bring a similar level of industry awareness. They each know what works and doesn’t work in a partnership in their industry.  

Primary Drivers. They are each building the partnership for the same reasons: they want to provide the most ethical and trusted service in their industry. While profitability is important, money is not their #1 driver.

Core Values. They share similar core values, and are both committed to creating relationships that result in “customers for life.” This made the exercise of creating the company’s values, mission, and vision enjoyable and easy.

Shared Vision. They share the same vision for growth. Both want to grow smartly, rather than aggressively. They are strategic in their growth plans.

Commitment to Learning. They both believe strongly in personal and professional development. Both Sarah and Scott understand the value of executive coaching, as well as continuing education for themselves and employees.

Legal Coverage. Sarah and Scott have done an outstanding job of covering all of their legal bases. They recognize that eventually, one partner may want to leave, or may encounter other personal issues, so they’ve created buy-sell agreements to eliminate any difficulty.

On the other hand, some of my current and past clients have experienced great distress from partnerships gone wrong. 

Potential Pitfalls of Partnerships

Here are some scenarios that put a partnership at risk down the line:

1. Sharing capital instead of expenses:

Whenever you share your own capital (money, resources, information or property), you automatically give away your enterprise ability. Work out an arrangement where expenses are shared in an “associative” arrangement. It also makes it easier to walk away if things go wrong.

2. Partnering with someone because you can’t afford to hire:

This is a partnership killer right from the start. If you’ve got the idea and someone else has the skill, simply hire him or work out an independent contractor agreement. Don’t give away what you don’t have to.

3. Lacking a written and signed partnership agreement:

Due to the nature of partnerships, every detail and obligation must be clearly defined and written out, and agreed upon by all parties. This is best done with a written legal agreement drafted by a well-qualified, mutually agreed-upon lawyer.

4. Overlooking a limited partnership:

One of the main downfalls of a partnership agreement is the assumption of liability each partner makes for the other. A way around this is a limited partnership, where the limited partner is not liable for the actions or obligations of the general partner.

5. Lacking an out or an exit strategy:

Big-time marriages start with a pre-nuptial agreement. In business and contractual terms, a pre-nup is analogous to an exit agreement. In any partnership agreement, define the terms of an exit strategy that allows you or your partner to walk away from the partnership, or that provides options to buy out the other party.

6. Expecting the friendship to outlast the breakup of the partnership:

Again, from the perspective of a marriage, how many ex-couples do you know who are truly friends? Not many, I suspect. So don’t go into any partnership with a friend expecting to remain friends after a partnership breakup.

Partnering with the right person can help you scale your business in ways that you would never be able to accomplish alone. The upfront planning will protect you and pave the way for great success. 

At Information Experts, I am the majority owner in a partnership with my husband, which I founded in 1995. He joined me in 2002 in a supporting executive role.

In 2012, I successfully transitioned out of the role of CEO (while still maintaining my majority shareholder interest), and into the role of Chairman to launch Successful Culture. Recently, I launched Leadership & Life with a partner. I am drinking my own medicine to ensure that we build a successful partnership and business.

Good luck!

How to Design an Agenda for an Effective Meeting

We’ve all been in meetings where participants are unprepared, people veer off-track, and the topics discussed are a waste of the team’s time. These problems — and others like it — stem from poor agenda design. An effective agenda sets clear expectations for what needs to occur before and during a meeting. It helps team members prepare, allocates time wisely, quickly gets everyone on the same topic, and identifies when the discussion is complete. If problems still occur during the meeting, a well-designed agenda increases the team’s ability to effectively and quickly address them.

You and Your Team

How to make them more productive.Here are some tips for designing an effective agenda for your next meeting, with a sample agenda and template below. You can use these tips whether a meeting lasts an hour or three days and whether you’re meeting with a group of five or forty:
Seek input from team members. If you want your team to be engaged in meetings, make sure the agenda includes items that reflect their needs. Ask team members to suggest agenda items along with a reason why each item needs to be addressed in a team setting. If you ultimately decide not to include an item, be accountable — explain your reasoning to the team member who suggested it.
Select topics that affect the entire team. Team meeting time is expensive and difficult to schedule. It should mainly be used to discuss and make decisions on issues that affect the whole team — and need the whole team to solve them. These are often ones in which individuals must coordinate their actions because their parts of the organization are interdependent. They are also likely to be issues for which people have different information and needs. Examples might include: How do we best allocate shared resources? How do we reduce response time? If the team isn’t spending most of the meeting talking about interdependent issues, members will disengage and ultimately not attend.
List agenda topics as questions the team needs to answer. Most agenda topics are simply several words strung together to form a phrase, for example: “office space reallocation.” This leaves meeting participants wondering, “What about office space reallocation?” When you list a topic as a question (or questions) to be answered, it instead reads like this: “Under what conditions, if any, should we reallocate office space?”
A question enables team members to better prepare for the discussion and to monitor whether their own and others’ comments are on track. During the meeting, anyone who thinks a comment is off-track can say something like, “I’m not seeing how your comment relates to the question we’re trying to answer. Can you help me understand the connection?” Finally, the team knows that when the question has been answered, the discussion is complete.
Note whether the purpose of the topic is to share information, seek input for a decision, or make a decision. It’s difficult for team members to participate effectively if they don’t know whether to simply listen, give their input, or be part of the decision making process. If people think they are involved in making a decision, but you simply want their input, everyone is likely to feel frustrated by the end of the conversation. Updates are better distributed — and read — prior to the meeting, using a brief part of the meeting to answer participants’ questions. If the purpose is to make a decision, state the decision-making rule. If you are the formal leader, at the beginning of the agenda item you might say, “If possible, I want us to make this decision by consensus. That means that everyone can support and implement the decision given their roles on the team. If we’re not able to reach consensus after an hour of discussion, I’ll reserve the right to make the decision based on the conversation we’ve had. I’ll tell you my decision and my reasoning for making it.”
Estimate a realistic amount of time for each topic. This serves two purposes. First, it requires you to do the math — to calculate how much time the team will need for introducing the topic, answering questions, resolving different points of view, generating potential solutions, and agreeing on the action items that follow from discussion and decisions. Leaders typically underestimate the amount of time needed. If there are ten people in your meeting and you have allocated ten minutes to decide under what conditions, if any, you will reallocate office space, you have probably underestimated the time. By doing some simple math, you would realize that the team would have to reach a decision immediately after each of the ten members has spoken for a minute.
Second, the estimated time enables team members to either adapt their comments to fit within the allotted timeframe or to suggest that more time may be needed. The purpose of listing the time is not to stop discussion when the time has elapsed; that simply contributes to poor decision making and frustration. The purpose is to get better at allocating enough time for the team to effectively and efficiently answer the questions before it.
Propose a process for addressing each agenda item. The process identifies the steps through which the team will move together to complete the discussion or make a decision. Agreeing on a process significantly increases meeting effectiveness, yet leaders rarely do it. Unless the team has agreed on a process, members will, in good faith, participate based on their own process. You’ve probably seen this in action: some team members are trying to define the problem, other team members are wondering why the topic is on the agenda, and still other members are already identifying and evaluating solutions.
The process for addressing an item should appear on the written agenda. When you reach that item during the meeting, explain the process and seek agreement: “I suggest we use the following process. First, let’s take about 10 minutes to get all the relevant information on the table. Second, let’s take another 10 minutes to identify and agree on any assumptions we need to make. Third, we’ll take another 10 minutes to identify and agree on the interests that should be met for any solution. Finally, we’ll use about 15 minutes to craft a solution that ideally takes into account all the interests, and is consistent with our relevant information and assumptions. Any suggestions for improving this process?”

Specify how members should prepare for the meeting. Distribute the agenda with sufficient time before the meeting, so the team can read background materials and prepare their initial thoughts for each agenda item ahead of time.
Identify who is responsible for leading each topic. Someone other than the formal meeting leader is often responsible for leading the discussion of a particular agenda item. This person may be providing context for the topic, explaining data, or may have organizational responsibility for that area. Identifying this person next to the agenda item ensures that anyone who is responsible for leading part of the agenda knows it — and prepares for it — before the meeting.
Make the first topic “review and modify agenda as needed.” Even if you and your team have jointly developed the agenda before the meeting, take a minute to see if anything needs to be changed due to late breaking events. I once had a meeting scheduled with a senior leadership team. As we reviewed the agenda, I asked if we needed to modify anything. The CEO stated that he had just told the board of directors that he planned to resign and that we probably needed to significantly change the agenda. Not all agenda modifications are this dramatic, but by checking at the beginning of the meeting, you increase the chance that the team will use its meeting time most effectively.
End the meeting with a plus/delta. If your team meets regularly, two questions form a simple continuous improvement process: What did we do well? What do we want to do differently for the next meeting? Investing five or ten minutes will enable the team to improve performance, working relationships, and team member satisfaction. Here are some questions to consider when identifying what the team has done well and what it wants to do differently:

1. Was the agenda distributed in time for everyone to prepare?
2. How well did team members prepare for the meeting?
3. How well did we estimate the time needed for each agenda item?
4. How well did we allocate our time for decision making and discussion?
5. How well did everyone stay on-topic? How well did team members speak up when they thought someone was off-topic?
6. How effective was the process for each agenda item?

To ensure that your team follows through, review the results of the plus/delta at the beginning of the next meeting.
If you develop agendas using these tips, and the sample agenda and template below, your team will have an easier time getting — and staying — focused in meetings.





Roger Schwarz is an organizational psychologist, speaker, leadership team consultant, and president and CEO of Roger Schwarz & Associates

8 Ways To Build A More Valuable Brand

by Mark Di Somma

We talk a lot about the pressures on brands to perform and about the difficulties of staying competitive in huge and rapidly changing markets. Nevertheless, global brands experienced a 12 percent increase in value in 2014 – and there are powerful lessons for all those responsible for brands in how they did that. If demand generation is part of your role, here are eight things that you can be doing to retain reputation, stem decline and make the most of upswings in economies and consumer preferences.

1. Be part of a rising category – According to Millward Brown, the top 10 apparel brands, for example, grew by 29% last year. If you have brands in this or another of the rapidly growing sectors, that’s a clear prompt to be investing to meet what is clearly increasing interest. If you don’t yet have brands in one of the rising categories, are there ways that you can naturally (and quickly) extend your brand into these burgeoning categories through acquisition, partnership, licensing and/or co-branding?

2. Be part of a resurgent economy – If your brand is spread across diverse regions, it makes sense to focus on those areas of the world where there is inherent economic growth driven by rising consumer confidence. To ride the wave, look for ways to get a foothold through an agency arrangement or work with an established player to increase their stock range. Also introduce premium lines to take advance of rising aspirations.

3. Tackle social issues – A number of sectors are fighting reputational issues at the moment. Brands in areas like fast food and soft drinks need to directly address their social impacts or risk being disrupted by healthy challengers. Equally brands with potential ethical issues – environmental, social, health-related, behaviour based or that involve processes that people feel strongly about such as animal cruelty – are going to need to show that they are actively minimising the downsides of what they do. Addressing reputational issues won’t necessarily mean growth, but it will help arrest declining sales.

4. Increase “share of life” (Millward Brown’s phrase) not just share of market by integrating and extending ecosystems. Apple are the masters of this approach, closing loops between product and content in order to retain control and to encourage consumers to stay and shop within their universe. By diversifying into new areas of interest and maximizing brand equity as they do so, brands can look for smart ways to be more involved in every person’s every day. As Nigel Hollis observes, “. Apple spans our needs for entertainment, music and productivity. Amazon fulfills our need for convenience with effortless one-click shopping and relevant purchase recommendations for stuff we never knew we wanted. Nike, with its Nike+ Fuelband, has transformed itself from a mere apparel brand to a companion and coach for runners.” They do this through that they offer and what they socialize.

5. Be more convenient – By deftly and increasingly merging digital and physical interactions. Seamless experiences also cut the friction that slows down sales and/or distracts consumers into going elsewhere, particularly as digital tools play an increasingly important role in consumer journeys. According to McKinsey, “Digitization is steadily becoming the main pathway for consumer journeys. The number of digital touchpoints is increasing by 20 percent annually as more offline consumers shift to digital tools and younger, digitally oriented consumers enter the ranks of buyers … [But] The greater number of touchpoints before purchase increases the odds a consumer will encounter a deal breaker along the digital highway.”

6. Personalize and localize – By bringing brands back to a vicinity that people know and turning up the sense of individualism, even the biggest brands in the world can find ways to make themselves much more immediate to consumers. This doesn’t have to be high-tech. Coke’s simple and highly effective named labels, part of its hugely successful Share a Coke campaign, showed how enhancing the sense of high-touch could transform people’s sense of ownership. Global brewers have also found that introducing niche, craft products tailored to individual markets and tastes has allowed them to tell a counter-story to their many micro-challengers. Sometimes the biggest thing you can do as a global brand in a specific market is to act small.

7. Beautify – Fashion never sleeps. We live in a highly visualized world where our eyes are used to a rapidly changing aesthetic. Continue to review and adjust the design and style of your products and your advertising so that your brand feels “now”. This is hard, but not impossible, for brands with long lead times – but it is also relative, and chances are your competitors face the same logistical issues that you do. By continually checking the appeal of what you offer, you can introduce your brand to new segments – as Heineken did, when they added a longer neck to appeal to younger drinkers – and resist the downward pricing pressure that inevitably accompanies products that feel “tired”.

8. Break the boring – Find simple, simple ways to make life more interesting. People feel time-poor but simultaneously they are bound by habit, ritual, expectation and what technology allows them to do. Simple things like all-you-can-eat upgrades on phone plans enable consumers to work with what they know but derive greater value and pleasure from doing so. All of these initiatives will, if they are successful, be matched. The secret is to bring them to market alongside a personality that people engage with, look to, and champion.

Value proposition canvas template

A value proposition is where your company’s product offer intersects with your customer’s desires. It’s the magic fit between what you make and why people buy it. Your value proposition is the crunch point between business strategy and brand strategy.

The  value proposition canvas includes elements from behavioural psychology and design thinking.

When you’re starting a new project or a new company you need quick and dirty toolsto help you focus on executing things faster and better. Good strategy tools exist only to help you focus on getting the right things done. The value proposition canvas is a simple tool that quickly gets you to the ‘minimum viable clarity’ required to start building and testing.

The value proposition sits at the pivot point of the entire business model. Mapping the business model of a new product or service is one of the most important parts of building a business strategy. Strategy frameworks have traditionally been the domain of MBAs but they are so important that these days the tools have been democratised for use by entrepreneurs, designers and technical teams.

Business model canvas

The Business Model Canvas is a toolkit from 2009 that drew on Michael Porter’s value chain maps and Peter Drucker’s theories of the firm (among other sources). The Business Model Canvas is a chart that maps the key things that a business needs to get right to be successful.

The Business Model Canvas condenses the main elements of a business strategy into a single page.

The Business Model Canvas has become the preferred tool for modern startups to use when rapidly testing a business idea. It’s attractive because it condenses years of business school and management consulting practise into a single page (with some straight-fowards questions for each section). – This is either a good or a bad thing depending on how much you love management jargon.

Any strategy tool is only as good as the facilitator or team who are using it. Each tool carries hidden biases and assumptions. So choosing a good tool is important. Strategy tools are great ways of providing structure to a conversation and allowing people outside of the pure strategy professions to think about whether they are doing the right things at the right time, in the right order.

Strategy frameworks are only as good as the facilitator and team that are using them.

Having used it in several client workshops, my issue with the Business Model Canvas used to be that it didn’t do enough to encourage empathy with customers and to force the startup to be accountable for how they communicated with their audience. In short, it didn’t place enough emphasis on the company’s value proposition.

A “value proposition canvas” is a chart that maps the key things that make up your product and why people buy it. There are many different value proposition canvases. Some are proprietary, some are open source and some are creative commons. Any canvas that helps you understand your customer, your offer and how the two fit together will help you clarify your value proposition.

Alex Osterwalder’s value proposition canvas

In 2012, Alex Osterwalder and his team released their Value Proposition Designer. Their version of the value proposition canvas is copyright and can only be used with credit to www.businessmodelgeneration.com. The Value Proposition Designer includes several bits of thinking from the Lean Startup movement such as “jobs to be done” and “customer pain”. It’s good, but it’s not perfect.

The Value Proposition Designer is copyright by Alex Osterwalder and team. For details see www.businessmodelgeneration.com

The Business Model Generation team have renamed their Value Proposition Designer as a value proposition canvas. My critique of the Osterwalder value proposition canvas is that:

• The product proposition side isn’t grounded enough in marketing, copywriting and persuasion techniques. It doesn’t guide the user into creative thinking and honest self-evaluation.
• The customer side isn’t grounded enough in behavioural psychology or customer behaviour research. It doesn’t guide the user into deep empathy for their customers or draw out enough new insights.

The psychology of why people buy things

I (like many brand strategists and advertising planners) often find myself standing in a supermarket transfixed, watching other people shop. I could literally stand for hours observing the range of human experience and emotions that go into making even the most banal decisions. So many different parts of a person’s brain are engaged when they make even the smallest buying decision.

If you’ve ever eaten a donut while on a diet then you know that not all human decision making is rational. – But even if purchasing behaviour is irrational, it’s still predictable. That’s why I’ve drawn from behavioural economics and choice psychology to rebuild the value proposition canvas. Modelling human behaviour and decision making is a rich an diverse field of study.  You can read more about how people make decisions in books such as Nudge, Predictably Irrational and Influence. Personally, I’ve drawn my models from the field of cognitive psychology and behavioural economics.

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My value proposition canvas template

I’ve created a canvas to guide startups into examining the human experience of their customers. This canvas contains questions and sections that manoeuvre users of the canvas into thinking through the customer experience.

Each section of the improved canvas includes questions to ask when filling in the chart.

The new product section uses the widely accepted marketing syntax of features and benefits with the addition of experience (from design thinking and UX). The product understanding sections include:

• Features – A feature is a factual description of how your product works. The features are the functioning attributes of your product. The features also provide the ‘reasons to believe’. Many FMCG marketers deride the importance of features because features are no longer a point of difference in most FMCG marketing. But for technology products and innovative new services the features can still be important.
• Benefits - A benefit is what your product does for the customer. The benefits are the ways that the features make your customer’s life easier by increasing pleasure or decreasing pain. The benefits of your product are the core of your value proposition. The best way to list out the benefits of your product is to imagine all the ways that your product makes your customer’s life better.
• Experience – The product experience is the way that owning your product makes the customer feel. It’s the sum total of the combined features and benefits. Product epxierence is different to features and benefits because it’s more about the emotional reasons why people buy your product. The product experience is the kernel that will help identify the market positioning and brand essence that is usually built out of the value proposition.

The customer section draws on nuero-lingusitic programming and psychology research into motivation. It focuses less on “pains” and “gains” because people can be motivated by both pains and gains in different ways. The customer empathy sections include:

• Wants – The emotional drivers of decision making are things that we want to be, do or have. Our wants are usually conscious (but aspirational) thoughts about how we’d like to improve our lives. They sometimes seem like daydreams but they can be powerful motivators of action. The wants speak more to the pull of our hearts and our emotions. I may need a car to get from A to B, but I want a BMW.
• Needs – The customer’s needs are the rational things that the customer needs to get done. Interestingly, needs are not always conscious. Customers can have needs that they may not know about yet. Designers call these “latent needs“. The best example is that none of us knew that we needed a portable music player until we saw an iPod for the first time (we also then suddenly wanted an iPod rather than any other perfectly good music player). The needs speak more to the pull of our heads and rational motivations.
• Fears – The dark side of making a decision is that it carries fear. Fear of making a mistake, fear of missing out, fear of loss and dozens of other related fears. Fears can be a strong driver of purchasing behaviour and can be the hidden source of wants and needs. Customer fears are often the secret reason that no one is buying your widget. For any product there is a secret “pain of switching“. Even if your product is better than the competition, it might not be a big enough improvement to overcome the inertia of the status quo.
• Substitutes – These aren’t the obvious competitors, instead look for the existingcoping behaviours. This is on the canvas because it shocks us into remembering that our customers are real people with daily lives who have made it this far in life without our product. No matter how much better your product is than the competition, if it isn’t better than the existing solutions then you don’t have a real world value proposition.

A key finding from the process of mapping a value proposition is often “we don’t have enough information to answer this section”. That is a perfect moment to adopt a lean startup approach and to get out of the building to ask existing customers and potential customers about their wants, needs and fears.

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Examples of a value proposition canvas

Mapping a company’s value proposition is a great shared exercise for a cross-functional management team. It gets people from outside the marketing team to contribute to marketing insights without having to admit that what they are doing is “marketing” (because marketing can be a loaded term for some professions).

Startup accelerator: UNCOVERING new value in an existing feature

The Innovation Warehouse is an angel investing syndicate with a co-working space for the member investors and their portfolio of startups. Building a value proposition canvas identified that a key need for a startup is a quiet and productive space.

The Innovation Warehouse value proposition was adjusted to highlight productivity.

The productive environment was already a feature of the existing space but wasn’t being promoted in the marketing materials. It was a simple matter to add the feature into the collateral to address the customer need.

Evernote: value proposition and marketing messages

Evernote’s value proposition is translated directly into their marketing materials. Their landing pages lead with copywriting that includes features, benefits and the experience on offer. Their product and customer are carefully matched.

Evernote’s value proposition is anchored on simplicity and speed.

The features, benefits and experience of the product are carefully matched with the wants, needs and fears of their target audience. Evernote uses multiple landing pages to account for different products and different audiences.

Evernote covers all the elements of their value proposition in a single landing page.

Evernote could improve their copy by addressing a few more of the common fears such as data loss, backups and data portability.

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Using the value proposition canvas in a workshop

The value proposition canvas can be used in testing and iterating a startup or new product concept. The canvas is useful a tool to:

1. Get people from different teams working together.
2. Test assumptions about customers and marketing priorities.
3. Rapidly define copywriting and brand messages for campaigns.

The value proposition isn’t a substitute for brand strategy and copywriting but if used well it will translate very quickly into usable and persuasive messaging.

The value proposition canvas is not a full brand strategy and doesn’t include the long-term story telling elements that you would need to create a well rounded brand over time. Even so, the value proposition canvas is a useful tool to use to establish product-market fit in a hurry.

The PDF and Keynote files are available for download so you can edit them and create your own canvas.

I’ve made the PDF (Value Proposition Canvas.pdf) and editable Apple Keynote Presentation (Value Proposition Canvas.key) files available for you to download so that people can print out the canvas, edit it and create their own versions. No need to attribute it to me, just say thanks on Twitter at @peterjthomson if you find it helpful.

The tool can be used to map your existing value proposition, your competitors and the proposition for any new products and services that you are considering building.

The post Value proposition canvas template appeared first on Peter J Thomson.

Starting a Business in New York: The Licensing Requirements

Starting your own business can be a fulfilling and rewarding endeavor, but it also comes with administrative and legal hassles. Apart from correctly incorporating your business, hiring employees, protecting intellectual property and developing marketing, there are a number of logistical considerations you must also address to begin conducting business.

5 Licenses and Permits You Need to Conduct Business in New York

One of these is obtaining the necessary licenses and permits. If State or Federal Authorities require documentation to conduct your business operations, failure to comply with such regulations presents exposure to heavy fines.

This post covers the five licenses and permits you will most likely need to conduct business in New York.

Permit to Conduct Business

In New York, as in any other state, you will need to register with the State in order to legitimately conduct business. Registering your business requires you to make several long-term decisions impacting your business, and therefore requires significant consideration. For example, at the time of registration you must decide on your name (affecting future possible trademark disputes) and the structure of your entity (affecting taxation and future investment potential). Depending on the structure of your entity, you will need to register with either the NY Secretary of State (Corporations, Limited Partnerships and Limited Liability Companies), or the County Clerk’s Office (Sole Proprietorships and General Partnerships). If your corporation is incorporated elsewhere, say Delaware, to conduct business in New York, you will need to file for a foreign (out-of-state) business license with the New York State Department of State.

Employment associated filing requirements

Before you hire your first employee, you will need to acquire an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The EIN is a 9-digit number that lets the IRS keep track of tax accounts of various business entities. If you form a corporation, partnership, or intend to hire employees other than yourself, then an EIN number is a requirement. Your corporate attorney can help determine whether or not you need an EIN and when and how to apply for one.

Sales Tax License

If your business is selling certain specified goods and services in New York State, you will be required to register with the Tax Department to obtain a Certificate of Authority from the State. The Certificate of Authority permits you to collect sales tax from your customers on each sale.

The requirements to pay sales tax depend on the kind of activity your business conducts. While different states vary on sales tax regulations, generally, you must collect sales tax on most tangible goods and services delivered to consumers in a state where you have a physical presence. Some typical exceptions to the general rule include: products for re-sale, wholesale products, prescription drugs, raw materials, and agricultural products.

In New York, the physical presence requirement includes having “affiliated persons” who solicit business, make deliveries, or have an interest in the business. This so-called “Amazon tax" is being implemented on a state-by-state basis in order to require e-commerce companies to collect sales tax. The divided state approaches make it difficult for e-commerce companies to navigate the patchwork of regulation, so make sure to consult a lawyer to ensure compliance.

 You must register with the New York Tax Department at least 20 days before you begin business. It is important to note that conducting business without registering could result in a fine of up to $10,000.

Local zoning requirements

Local zoning requirements are important when it comes to purchasing property for your business or altering the use of a pre-existing property. New York has three zoning districts: Residential, Commercial and Manufacturing. Depending on the nature of your business, you must ensure that the space you work out of falls under the relevant zoning district. Typically, the person constructing a building will need prior approval from the Department of Buildings, so you should ideally confirm with the Seller or Lessor of the property that it is compliant.

Federal Licenses and Permits

When a small business’s product or service is regulated by a federal agency, it will be required to obtain a federal license or permit. Your business will need a federal permit or license to operate within these sectors. A few examples include: Alcoholic beverages, Agriculture, Transportation and Logistics, and Radio and Television. A different regulator controls each sector, and therefore the application process also varies by sector.

It is important to manage, comply with and maintain your licenses. As a best practice, keep copies of all your permits and mark dates for renewals. Many licenses and permits may have accompanying rules and obligations.

The Legal Ins & Outs of Employee Handbooks: 10 Things You Need

 by Vincent DiForte

How should you handle a situation where one manager fires an employee for taking a 2-hour lunch and another only gives a warning?  How can you communicate rules and procedures around working from home?  What should you say to an employee whose attire is unprofessional?

An employee handbook can help with all of these situations and more. Employers struggle to communicate consistent policies and broach sensitive topics, so talk to a lawyer about drafting an employee handbook to help.

If you have employees, you should have an employee handbook — end of story.

While there is no formal legal requirement to implement one, a handbook allows you to communicate vital policies and procedures, which can prevent legal issues, and can protect your company in the case that there is an issue.

10 Things You Should Include in Your Employee Handbook

An employee handbook establishes a valuable resource for both employees and employers alike.  Employees will use an employee handbook to answer their various work-related questions, such as benefits and policies; for employers, it reduces misunderstanding, sets expectations and limits contentious conversations associated with enforcement.

Below we outline the essential components of a comprehensive employee handbook:

• Company Overview. The employee handbook should define the company’s goals and mission to create a sense of common purpose.

• Handbook Purpose. The handbook should clearly define its purpose. Typically this includes three statements: 1) that the handbooks purpose is to inform new employees of the policies and procedures of the company, as well as establish expectations; 2) the company reserves the right to update, revise or suspend the handbook at its sole discretion; and 3) the handbook supersedes and replaces any and all personnel policies and manuals previously made available or applicable to employees. 

• Disclaimer. Every handbook needs a disclaimer that unequivocally states the non-contractual nature of the handbook and preserves the at-will employment status of employees. This provides an important defense should a terminated employee bring suit claiming a clause in the handbook is a contractual obligation or that they could only be fired under certain circumstances

• Employment Policies. You should consult a lawyer to ensure you are in compliance with federal, state and local regulations that govern the workplace. To comply you may need Equal Opportunity Employment, Non-Harassment, Non Discrimination and Employee Eligibility policies drafted and included in your employee handbook.

• General Employment Information. The heart of an employee handbook establishes the policies and procedures of a company.  This includes, but is not limited to, standards of conduct, work and pay schedule, promotions, overtime, dress code and anything else important to your business. Again, there are federal and state laws that will dictate some of your policies and procedures so you should consult a lawyer to avoid violations.

• Leave Policies. It is inevitable that employees will need to take time off from work; therefore, establishing the company’s leave policies will facilitate a smooth employer/employee relationship. Your leave policies should include the types of leave covered – sick, vacation, jury duty, caregiving, maternity/paternity, military, grief, etc. – who is eligible, duration, paid vs. unpaid, and how leave is approved.  It is also important to reserve the right to terminate an employ for excessive time off.

• Health and Safety. Your handbook should include the workplace safety and security measures. You should consult a lawyer for compliance with laws that require reporting and procedures for handling accidents, injuries, and other health and safety related issues.  Here, you should also address the emergency and bad weather policies.

• Employee Benefits. A basic outline of the benefits offered, eligibility requirements and any relevant contact information is sufficient because there should be more formal documents describing in full-detail the various benefit’s you offer.

• Discipline and Termination Policies. Although the least popular section outlining the company’s procedures for discipline, an employee exit and termination are necessary. Companies can be obligated to abide by their own policies, so it is important to consult a lawyer on how your company will handle these matters—whether to set hard rules or assess on a case-by-case basis. 

• Acknowledgment. Your handbook should contain an acknowledgement form to ensure each employee receives, understands and agrees to what is set forth in the handbook. You should collect and maintain a copy of the signed acknowledgment in each employee’s personnel file.