Here are the second part of the 18 New Year's resolutions for founders and entrepreneurs.
If you'e missed out the first part, click here to read the first 8 new year's resolutions that founders and entrepreneurs should include as part of your new year's resolutions.
1. Understand contracts and the terms
Every entrepreneur or founder should not sign a contract that they do not understand. You may not agree with every provision, but you should know the consequences and legal implications when signing a contract. Refuse to be bound by a term that you don’t think is acceptable or understood.
2. Review and improve your contracts for important agreements
All agreements that you use again and again in your business should get a review. You should contact your legal counsel to review your usual agreements annually or when there is a change of business model by your legal counsel. Get your lawyer to vet and craft the terms to reduce exposure and limit your business’s potential legal liability.
3. Tackle issues directly (and put them in writing)
Conflicts can arise for many reasons with another party. If there’s a problem, review the relevant contract and determine the appropriate actions based on the agreed terms. Put things in writing. In my experience, ignoring issues or concerns will not make them go away. Things can worsen as it may result in unintentionally waiving rights or consent to a new scenario that may deviate from the originally agreed terms.
4. Deal with employees matters methodically and carefully
Do not mischaracterise employees as independent contractors or freelance workers because you cannot afford to pay their regular salaries.
The pandemic will be challenging for entrepreneurs struggling with cashflows. Do not change existing employment terms unilaterally, including reducing employees’ salary without their express consent. If you need to do a pay cut or layoff, do not ignore applicable employment laws. Or worse neglect your statutory obligations like paying the Employees Provident Fund (EPF), Social Security Organization (SOCSO), Employment Insurance System (EIS), Inland Revenue Board (IRB) etc.
5. Formalise agreements with employees to protect the business
In addition to the existing employment or services agreements, when necessary, enter into a non-competition, non-solicitation, confidentiality agreements with key employees.
6. Pay taxes
The issue of taxation was mentioned in the Bible about the Roman dictator Julius Caesar during the Roman period. Here’s a reference to Mark 12:17:
“Jesus said to them, ‘Render to Caesar the things that are Caesar's, and to God the things that are God's.”
Unfortunately, we cannot ‘choose’ if we can pay or not pay taxes, so we have to pay them if we are eligible taxpayers. Do not delay in paying your taxes as a way to “managing cash flow”. Failing to declare income or under-reporting sales in your annual tax reporting, and deducting applicable monthly tax deductions against your employees will result in fines, penalties, and even personal liability.
7. Get the relevant insurance coverage for your business
Assess your current insurance policies and coverage with your usual trusted insurance agent and ensure that your business is adequately insured. If you do not have an insurance policy in place, get an insurance agent to assess your business if you should get certain aspects of the company covered like personal accident, theft, general liability, etc. Make sure you understand the fine prints, and you are not paying an unnecessary premium.
8. Get the best team of professional advisers
Ask around and engage competent company secretary, legal counsels, tax adviser, and accountants with relevant industry experience. Find an adviser or a professional who is willing to work with you as a ‘team member’. Don’t work with someone who looks at his time all the time (i.e. ‘by the hour’ mercenaries or hired guns). If you are a startup, ask for a ‘startup friendly’ package. Finally, a professional may come highly recommended or an expert in a particular area. But before hiring someone do ask yourself, “Do I like him or her as a person?”
9. Assess and evaluate financing options
Assess your current funding sources. If you’ve taken money from a venture fund or an angel, look at your current funding terms so that you can anticipate any financial challenges or funding needs. If you are raising money, make sure you know how much money you need, including the proposed terms. And make sure to read our first part and second part of a legal guide to fundraising.
10. Draw up a succession plan
Technically, a legal entity exists in perpetuity, and the business owners can change. Every business owner needs to come up with a succession plan in place. Some business owner may want to plant their exit by selling the company to another more significant player or a strategic investor. Even so, you may not get to maximise your full business value if you rely too heavily on certain vital people or critical relationships. In practice, it can be hard to assign a person a formal agreement with a crucial hire. I mean, a good talent may just leave if he is unhappy with the business owner on how perceives his treatment when he sees that his boss is making a big bonus from selling the company.
Starting this year with completing even a couple of these resolutions can ensure that this year could be a healthy, happy and exciting one for your business. Of course, getting these resolutions done while keeping up with a healthy lifestyle and spending quality time with family and friends will make this new year a good one.
Izwan Zakaria is the managing partner of Izwan & Partners, a corporate and technology law firm. He is also the author of The Startup Law Blog, a website covering legal topics and trends affecting technology entrepreneurs and startups in Malaysia. He can be contacted on Twitter at @izwanzakaria1 or email at izwan@izwanpartners.com.
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