Unspoken reasons why businesses fail

March 20, 2017

On the surface, most failures in business can be attributed to a lack of market-fit, or simply running out of cash. But dig deeper and you will uncover the fault lines. In today’s business climate where as many as 75% of businesses fail, it is imperative that the underlying reasons for failure are understood and carefully avoided.

So what is it then; why do businesses fail?
You have the passion, the expertise, a bank full of cash and friends in higher places. Moreover, you are in the right place at the right time. And yet, your business is far from immunity. In this article, we look past the financials and bring you the unspoken reasons why businesses fail.

#1 Poor Culture

“If you want to build a ship, don’t drum up the men to gather wood, divide the work and give orders. Instead, teach them to yearn for the vast and endless sea.”

– Antoine de Saint-Exupéry

 

In simple terms, notable investor Brad Feld explains the quote well, “You can’t motivate people; you can only create a context in which people are motivated.” The context that Brad is referring to is a company’s culture.

What is culture?

Culture is the shared beliefs, values and practices. A company’s culture governs how employees and management interact and function both within and outside the context of business transactions. Often, culture develops organically over time and is implied rather than expressly defined. Every organisation has a unique culture – so why not let it be one helps you attract the best talent, amplifies their abilities, and lets them create their best work?

In today’s world where there’s a quick solution to everything, culture is probably the most underrated aspect of a business or any organisation. A strong company culture is the basis of a successful environment.

A culture of success does not just happen. Where do we start? What do we DO?

1)  Start by collectively establishing a set of company values …or ‘culture code’.

The earlier you set a culture of success, the better. A set of culture codes made up of shared values will guide your employees through what is expected of them, and what they can expect from you. When you have fewer than 10 employees, culture is easily and organically-adopted once established. Between 20 to 50 employees, you still have direct control and impact on the organisation. However, start now and don’t wait till you grow bigger – it will become more difficult for you to direct influence on individuals in the organisation.

2)  “Family therapy”

Have a “family therapy” session to collectively build your company culture code.

During “family therapy”, give employees 15 minutes of alone time. In the 15 minutes, they should envision and write down the values that would guide the company that they want to work in. Sharing these notes at the start allows everyone, introverts and extroverts, to voice their opinion.

3)  Stick to your values

Culture codes need not be unique or witty. However, they should be a guiding precedence for how individuals and teams behave, communicate, and grow. These range from age old business values such as trust, communication, positive and having an open mindset, to the newer startup values such as hustle and innovation or creativity. It is important to keep in mind that culture is still inherently implied. It is in the following through of these expressed values, that employees will be secure in their priorities and work environment. Even the most resilient person will wilt if the situation is unpredictable.

Enable your employees and encourage them to look beyond short-term, tactical projects to the bigger picture. Show them how what they do each day affects the company and its clients.

Cultivating a strong and resilient culture from the start is key.

#2 Legal Challenges

Legal issues are often one of the last things that comes across a Founder’s mind… if it ever at all! Some entrepreneurs seem to believe that the ill-fitted online templates are sufficient and they simply would not be as unlucky to encounter legal issues.

But what happens when they DO?
Sometimes even with the simplest of business ideas, there is a world of legal complexities in its execution that can contribute to a failure of businesses.

Displaying logos of your satisfied clients and products – have you protected yourself from the risk of trademark infringement? Starting a business with friends – does your Shareholders’ Agreement clearly state the roles, responsibility and equity of each individual?

Resellers such as marketplaces or e-commerce websites are taking on considerable risk as they could unknowingly be infringing upon Intellectual Property (IP) rights. Without an indemnity from the owner of the designs they sell, owners of the design’s IP are in a position to sue marketplaces of counterfeits.

Related reading: What you didn’t know about IP protection

Most notably, Alibaba has been accused of promoting the sale of counterfeit products. The lawsuit has been issued from Gucci, Balenciaga, Yves Saint Laurent as well as other brands owned by Kering. Although Alibaba has no control over what vendors sell, that does not shield Alibaba from legal liability as marketplaces are responsible for their vendors. Alibaba has since spent more than USD$160.7 million in year 2013 and 2014 alone, battling IP infringement.

Get your free legal health check report

Contacts and agreements clearly state and map out every possible scenario, saving you the headache when things do go wrong. However, business practices vary even within the industry. How can you then rely on a one-size-fits-all template to protect your business reliably? Save yourself and your business before you make more legal blunders – take a free legal health check, complimentary of Dragon Law. After all, prevention is better than the cure.

Most companies fail. It’s an unsettling fact for bright-eyed entrepreneurs, but old news to startup veterans. The statistics are disheartening no matter how you define failure. If failure is defined as declaring a projection and then falling short of meeting it, then the failure rate is a whopping 90 to 95%. The learning mindset is crucial. Take steps to be on your way to becoming the other 5% today.

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Think you’re ready to raise funding? Think again.

In the last decade or so, startups have been a hot topic of discussion. We constantly hear about various new edgy startup ideas, and someone or the other at this very moment has probably had his company valued at over a billion dollars. A great example of a startup that has been funded is that of Airwallex, a fintech company located in Australia.

We always question as to how did these lucky individuals get to that stage so fast. A lot of it is hard work, determination and a little bit of Lady Luck. But mostly these individuals would have you know that it is because their legal paperwork was done in a very proper systematic manner and whatever agreements and contracts are in place, they were all airtight from the moment that company started running.

Before even thinking about funding, take a step back and ensure that all your legal documents are in place from the onset.

Dragon Law for Startups

The ugly truth is that most startups take off at an alarming pace only to crash and burn. In order to mitigate risks and prevent collateral damage, it would certainly be wise to educate yourself on what those risks are and how to prevent damage from happening.

Legal documents have a vital role to play in safeguarding the interests of both, a business and its owners. Ensuring that certain essential documents are in place for your firm right from the get go will not only alleviate stress, but will also have you better prepared to fastback any future business relationships you may consider entering into.

For starters, here are some legal documents that every business should have:

Confidentiality Agreement:

Protecting sensitive information and keeping strategic decisions and company plans under wraps is often vital to the success of a company. However, when discussing the mentioned with friends, family or business partners, every company must have prepared with them a Confidentiality Agreement (or NDA). Under this agreement, the person being addressed is legally bound not to disclose your confidential information to a third party, and may only use that information for a specified reason.

Draft your Confidentiality Agreement for FREE with Dragonlaw

Shareholders’ Agreement or Partnership Agreement

A Shareholders’ Agreement is an agreement between the shareholders of a company and puts forward the key rules as to how the business will be run and the manner in which the shareholders are expected to cooperate, ensuring continuity throughout the life of the company.

Draft your Shareholder’s Agreement for FREE with Dragonlaw

 Employment Contract

An Employment Contract very clearly outlines the obligations and expectations of both, the company and the employee in order to minimise potential disputes. The contract addresses matters of employment such as a probation period, pay, benefits, hours, annual leave, and termination.

Draft your Employment Contract for FREE with Dragonlaw

Website Privacy Policy and Website Terms of Use

With the rise of e-commerce, there is a lot more personal data being shared digitally. Companies must clarify the scope of personal data usage and means of protection of the same through a Website Privacy Policy.

A Website Terms of Use sets out the legal relationship between the website operator and users, thereby ensuring that users agree to the company terms when using its website. This is most commonly done through a tick box we see on our screens.

Learn more about these documents

Now that your documents are in place, when the time comes for approaching VCs and angel investors – there shouldn’t much back tracking for you to do. If they throw questions or requirements at you, you won’t have the time or bandwidth to figure it out and impress them.  This is why it is important to have everything in place before you can even think of funding.

It is also necessary for you to know the terms and conditions attached to the funding and the background of the investors. It is important to make sure that the relationship is mutually beneficial to the investor and the company. Too often, companies sign on with the first party willing to invest without really understanding what it is that the investor can bring to the table for them. Big numbers and valuations mean nothing till there is a promise to work together in a direction that is agreed on by BOTH parties. If you haven’t discussed or planned ahead together, you may regret it in a couple of years.

 

Legal documents that every business should have when raising finance:

A simple Promissory Note details the terms of the loan and can avoid future disagreements.

Other businesses might be interested in helping you out. In that case, use a Commercial Loan Agreement to set out the terms and conditions of the loan. Sometimes, a director or shareholder decides to lend money, especially when the business is still relatively young and it is not so easy to obtain funding. Then a Loan from Director or Shareholder is the correct document to use. In the case a sister company helps out, you should use an Intragroup Loan Agreement.

You can ask private investors, such as venture capital firms or angel investors, to purchase shares in your company in return for an investment. You will need a Term Sheet, a Seed Investment Agreement, and a Share Certificate if you choose investment through ordinary shares. Alternatively, if the investment is funded through a convertible note, you will need a Convertible Note Term Sheet, a Convertible Note Subscription Agreement, and a Convertible Note Certificate.

A private investor can also invest in your company using a Simple Agreement for Future Equity (SAFE). This is a relatively new concept and is similar to a convertible note. Essentially, it is an agreement whereby the investor provides capital to the company and, in return, the company provides a warrant to issue shares to the investor at a later time and upon a specific event, such as at the next round of funding. You will also need a new Shareholders’ Agreement and a Directors’ Resolution to Issue Shares.

Overwhelmed? Likely. Costly? Yes!

Source:Dragon Law x Bid4Ad
 

The good news is that by adopting the use of the right technology you can be guided through this process all while saving time and cost with a traditional law firm.

 

Drafting legal documents with the Dragon Law app feels just like sitting down with a lawyer:

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The 5 changes you must make to your New Zealand employment agreements as of April 1

March 17, 2017

Keeping up to date with changes to employment laws ensures that you both you and your employees are protected by the law. Retaining employees is one of the biggest challenges faced by small businesses – helping your employees to understand their rights and being transparent about any changes to those rights, is an effective way to build trust and encourage a transparent work environment.

Significant changes have been made to employment laws in New Zealand, and all businesses must update their Individual Employment Agreements (IEAs) prior to 1st April 2017.

Below, we outline a summary of the new changes and how to incorporate them into your IEAs so that your business stays compliant.

 

Update My Employment Agreements

Dragon Law have updated their IEAs to reflect these changes. Log in to your Dragon Law account to create a new agreement for your employee and get compliant today!

Don’t already have employment agreements in place? Sign up to a Dragon Law account today and put IEAs in place for your employees to stay compliant.

1. Trial period

The most significant change to employment laws concerns the trial period in IEAs. The most common length of a trial period is 90 days. IEAs must now specify ‘90 days’ (or they can elect a shorter time period), but it must not state ‘up to 90 days).

Employers must ensure their IEAs state:

  • the trial period commencement date;
  • that the employee can be dismissed within the trial period;
  • the notice period of the trial period.

To protect yourself as an Employer, you must ensure that the employment agreement is signed before work commences – note that paid training or induction is considered employment. The reasonable time for an employee to receive a contract before commencement is in between 5 to 7 days.

For best practice employment procedures, you should think about implementing a 30, 60 and 88 day review of the employee’s performance. This will allow the you and employee to jointly evaluate the performance and for you to act in good faith if you decide to terminate the employment within the trial period.

In the case the employer has the intention to dismiss the employee during the notice period, then the employee must be paid off.

Additionally, the notice period has to be stated in the IEA, and it can vary between an employee in a in a trial period and those who are not.

Finally, employees can be dismissed during their trial period but in order for this to happen they must be noticed on day 89 at the latest.

2. Agreed hours of work

Every employee agreement must indicate the specific agreed hours of work. This can be stated either as: the number of hours, or the days per week that should be dedicated to the work.

The changes also mean that if employers expect their employees to be available when required, they are obliged to :

  • commit to working hours;
  • give reasonable compensation;
  • have a legitimate reason based on acceptable grounds.

In addition, contracts must specify the start and ending times.

3. Availablity provisions

When it comes to the availability provisions in your IEAs, the agreed hours of work must be reasonable in order to avoid any conflicts. In addition, any compensation for requested availability has to be fair and rational. Moreover, there has to be a genuine reason for the requirement.

4. Shift cancellation

Based on the new changes, you can now cancel a shift as long as you first:

  • give a reasonable notice for cancellation; and
  • reasonable compensation in case there are any late notices

When considering reasonable compensations in case of a shift cancellation you must:

  1. Figure out how much your employee would have earned during the shift; and
  2. the preparation costs for the shift

In addition, the employee is entitled to be paid if the shift has already started or if it is cut short.

5. Secondary employment

As an Employer, you may prohibit an employee from taking on a second job if the following requirements are met:

  • You have a genuine reason behind prohibiting or limiting the secondary employment; and
  • The reason is specified in detail in the individual employment agreement (i.e. restraint of trade, non-solicitation, etc.

Final thoughts

These changes will affect all businesses, so it is important that your agreements are updated to reflect the new laws. Having up-to-date agreements will help to protect your business and limit your liability. Keeping your employees informed of the changes to their rights and responsibilities will also help to create an environment of trust and compliance within your workforce.

 

Update My Employment Agreements

Dragon Law have updated their IEAs to reflect these changes. Log in to your Dragon Law account to create a new agreement for your employee and get compliant today!

Don’t already have employment agreements in place? Sign up to a Dragon Law account today and put IEAs in place for your employees to stay compliant.

Effective Ways of Job Searching

March 9, 2017

With the buzz surrounding the economic slowdown for Singapore in 2017, many workers are starting to worry about the stability of their jobs. Furthermore, recent figures released by the Ministry of Manpower indicated that the number of workers laid off in Singapore hit a seven-year high in the first nine months of 2016.

Should you be worrying about facing the axe? Absolutely.

However, retrenchment does not necessarily mean that it is the end of the world. Instead, you should think about what are your next steps to your career path. Here are some effective ways of doing your job search to increase your chances of landing a new job.

Let Employers Find You

Job searching requires a lot of effort. Why not reduce the hard work by making it easier for potential employers to find you?

Having a LinkedIn profile is a great way to get employers to notice you. Of course, it does not simply mean creating an account and letting it sit idly there. Put in effort to update your career achievements or perhaps indicate your intentions of seeking a new job and career aspirations as well.

You will be surprised to know that many recruiters actually browse through various LinkedIn profiles in search of suitable candidates for certain roles. Employers might even reach out to you on roles which you may not have even considered previously. Who knows, you might end up doing something more exciting as compared to your previous role!

Be Kept In The Loop

Want to be kept in the loop about new jobs that match your job criteria or from companies that you are interested in without having to scour job websites daily? Sign up for job alerts then! There are many job portals that offer free email or text messages alert whenever a new position is being advertised. Furthermore, these sites usually offer the option to customise your settings such that you only receive job alerts for those positions or fields that you are interested in, instead of constantly being swamped with unrelated job notifications.

Signing up for these jobs alert allow you to save time and swiftly apply for jobs that you might be interested in.

Spread The Word

To take your job search up a notch, one great way is to spread the word by networking. Networking is a great way to uncover unadvertised positions. At the same time, it allows you to find out more about various roles from the industry experts themselves.

Make an effort to reconnect with your professional contacts and do not shy away from letting them know your intentions. They might not have open positions on hand but could refer you to someone else instead. Remember, personal recommendation is akin to a golden ticket in the job hunt game.

In order to be a step ahead in the job search job, your job search activity should go beyond mere browsing of online job boards. It should include branding yourself and making the first move in reaching out and connecting with the right people. This would certainly widen your job search options and provide more career opportunities as well.

This is a guest post from RenQun Huang at Gpayroll
Want to read more articles related to payroll, HR & technology? Visit us at Gpayroll

Essential Features Of A Payroll Software

Choosing a payroll software is never easy. With the plethora of fancy features offered by the numerous payroll software vendors, it might seem as if all of it could very well solve your payroll woes – or not.
To help you narrow down your selection, here are 6 essential features that any payroll software should have:

Payroll Processing

A payroll processing function is a given in any payroll software. Most payroll software in the market offer integration capabilities, such as linking the system to leave applications, timekeeping, overtime pay rates etc. This saves a lot of payroll processing time from having to manually input the necessary payroll information.

Direct Bank Disbursement

A direct bank disbursement is likely to resonate well with both your HR department and employees. By disbursing monthly salary payments directly into employees’ bank account, it saves your company time and money from having to issue paper cheques. Additionally, it mitigates the risk of a lost cheque or fraud cases. The best part – the funds are available immediately after disbursement.

Tax Calculations and Filing

Payroll software takes the tedious paperwork out of taxes computation and filing. With automated calculations, it reduces the risk of human calculation error. Additionally, the system can pre-fill in the tax forms based on employees’ payroll information that is already available within the system. This alleviates the unwanted situation of submitting tax forms with missing employee information.

Furthermore, automated filing ensures that your company and employees’ taxes are filed on time. This can prevent the company from incurring penalties due to late submission.

Payroll Compliance

The payroll software contains all the confidential employees’ personal details and important payroll information. Additionally, technology is constantly evolving and hackers are becoming more sophisticated in their ways to hacking into payroll databases. Thus, a robust payroll compliance system has to be in place to prevent data leak or loss of critical payroll records and employees’ personal information.

Employee Self-Service

By incorporating an employee self-service, you are essentially passing some of the payroll work to the employees themselves. Employees can log in to view their own payroll history or fill in their time attendance – all of which would then be recorded in the system for seamless salary calculations at the end of the month. Furthermore, an employee portal can address certain queries that employees may have without them having to constantly call you just to answer a simple payroll question.

Accounting Integration

Similarly, with the enhanced integration capabilities of payroll software, accounting functions can be integrated into the payroll system as well. This can save both the accounting and HR team hours of time from having to manually key in monthly payroll details. Likewise, it minimises the chances of miscalculation, incorrect data entries or other “uh-oh” moments.

Payroll is simply one part of your business. Having that said, more time should be spent on other critical aspects of your business rather than spending your resources on solving your payroll woes.

As you look around for payroll software providers, keep Gpayroll in mind. In addition to payroll processing, auto tax filing as well as regulatory compliance, Gpayroll also offers eClaims and eLeave to further enhance your payroll processes. For more information on our products, do reach out to us via any of our communication channels.

This is a guest post from RenQun Huang at Gpayroll
Want to read more articles related to payroll, HR & technology? Visit us at Gpayroll

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