How to Hire Employees

Being exhausted from working around the clock driving your business forward can actually be a good thing. Despite the bags under your eyes, the gravelly voice, and potential spontaneous hair loss, all that stress can serve as a signal that your business has advanced to the point where it’s time to hire some help. As tempting as it can be to continue to assume all the responsibility for your company and reap all the financial benefits as well, it may actually be more profitable in the long term to surrender some of the immediate dividends and take back some of your days.

There are two basic paths to take when hiring someone:

The first, and most obvious is to hire an assistant. Any business has mundane components, or a series of tedious small jobs, that are seemingly unrelated to the main focus of the company. They include everything from answering telephones, sending out emails, filing, billing, laundry, getting coffee, etc. When hiring someone to handle all the jobs you don’t want to do, the goal is often to find someone who’s driven, pays attention to detail, doesn’t sleep, and is willing to work for less than they’re worth.

This method of hiring, especially at such an early stage in the growth of your company, is akin to exploitation and will further limit the growth of your company. The types of people who will end up working for you are those that simply need a job. The kind of employee you should be looking for is one who wants to work for you, not one who is putting themselves in a position of indentured servitude. The reason for the drawbacks with this method of hiring is due to the fact that it means that all the jobs in the company are accounted for. It might be effective to get by on a day-to-day basis, but a ceiling is reached the minute your employee becomes truly effective at their job. The net result will be a former employee who uses their experience at your company as a means to get a job that’s more meaningful to them.

The second method to hiring is to find a partner. Anyone who has seen Derek Sivers’ riveting TED talk from 2010 about how to start a movement knows that as the leader you’ll get all the credit, but the true catalyst to starting a movement is the involvement and commitment of your first followers. As Sivers points out, it’s important to embrace your first few followers, or employees in this case, as equals. When things began, you may have been the very embodiment of the company, but by embracing your first employees as equals, the focus now becomes the company and not the individual roles that are being filled within it. Suddenly, instead of all the jobs in the company being accounted for by you and your various assistants, new jobs are being born through the cooperation and vision of your close circle of followers.

So what is the key to finding a great partner?

The real trick to finding a great partner is to position oneself within reach of people that are like you, but with complimentary skills. For example, an audio professional might want to align themselves with an expert in film and video where suddenly you have a production company capable of offering an array of services instead of focusing on just one. It’s also important that they be at the same relative stage in their career so that you can both grow together without one feeling like they are dragging the other. And finally, your partners should hold the same core values when it comes to what they feel is important for the company to thrive – citing artistic differences as the cause of the destruction of a promising union has almost become cliché.

The very last thing to consider is how you attract the right people to your business. It’s important, regardless of the channels you use to draw attention to your company, that in the job description it clearly indicates that candidates will be immediately positioned at the same level, and be performing the same duties, as the founder of the company. Be forthright about your own abilities, your goals, and your expectations and make it clear to the people you decide to interview that their involvement in the company represents an opportunity to be a part of something that has the potential for real growth.

The net effect of this second strategy is not only having a willing partner who will help lighten the load in the short term, but also a friend who will take ownership of their role and nurture the company with the same care as you in the long term. 

Finding Your True North

It’s no easy task explaining to someone what it means to be a business. To anyone who’s grown up with the mentality that they have to work hard in order to find a job at a company, meeting someone who is a company can be a perplexing idea that they just have trouble wrapping their head around. For example, there are a number of concepts inherent in the established paradigm that just don’t apply to the self-employed:

·         Setting one’s own work schedule and hours.

·         Determining one’s own rate of pay.

·         Working wherever they please instead of a set space, or office.

For anyone who has been successful at being their own business it often leaves others wondering whether they do any work at all. Answers to the questions, “What do you do?” and “How much do you make?” are purposely vague unlike those of their counterparts who might prefer the lofty title next to the reputable company name that commands a predetermined pay scale with benefits. But anyone who has ever set out to become self-employed knows that there is something that working for a company can not offer – the freedom to determine one’s own sense of vocational happiness.

It’s understood that working for a company brings with it certain sacrifices. In exchange for financial security we are often bound to working on someone else’s terms (hours, corporate structure, defined tasks, vacation and sick days). As much as being self-employed might represent a departure from this framework, it is not without sacrifice. In fact, leaving the corporate world behind to strike off on one’s own is often one of the greatest sacrifices anyone can make because it is automatically associated with uncertainty.

Self-employment is not for the faint of heart. The early days of starting a new business are often so filled with ups and downs (mostly downs) that it can often leave people despondent, regretting their decision, and scouring the want ads to get them back in the rat race. And, while taking temporary employment to stay afloat isn’t out of the question, throwing in the towel should be only be considered as an absolute last resort.

We have a long established history of measuring success in dollars and cents, but there is a sea change occurring right now. People are beginning to realize that happiness is becoming a more accurate barometer of success and that living every aspect of life on one’s own terms is a critical factor in one’s perception of their own happiness. To this day there exists a misconception that people that are self-employed don’t work as hard as people who work a set number of hours per week, but the greater truth is that there now exists a culture of people who don’t define success by the established set of terms.

If happiness and success, therefore, are so nebulous, what does it actually take to drive a new, passion driven, business forward and allow it to achieve remuneration along with fulfillment? Only you can decide that. But, locking on to the values that you aim to hold as a business, understanding why you are doing what you’re doing, and demonstrating your resolve will reflect upon others that your business offers value. Passion is infectious, and if you love what you are doing, then the people you serve will love how you do it. It takes time and the determination to suffer through hard times, but if you know where you are headed then you will get there.

Five Tips for Managing Client Expectations

Nothing is more essential to a successful enterprise than repeat business. Every satisfied customer allows your brand to be passed around by word of mouth potentially creating a snowball effect that could be the difference between the long-term sustainability of your enterprise, or it ending up being a fleeting experiment. Referrals are your best friends and a one dissatisfied could spell the end of your business and is to be avoided at all costs.

Whether you’re a web developer, digital media consultant, graphic designer, or content creator, the clients that come looking for your services will bring with them some level of expectation, and it’s your job to manage those expectations. Below are 5 handy tips and tricks designed to help you navigate the mind of your client, understand their demands, and keep them and their friends knocking on your door.

1) Get to know what they know – No matter what a client might come to you for, if you know what they know about what you do, it changes the level of expectation. Some clients might have an in depth understanding about what it takes for you to do your job and some might be completely clueless and the key to maintaining customer satisfaction in either case is the level of sensitivity with which you handle each. It should be clear by the terminology they use when they speak to you, or how they respond to any questions you ask, so just be mindful.

2) Know what you’re capable of – Nothing upsets the balance of someone’s expectations more than being given false information. If you design websites and a client has come to you saying they need their site to go live in 24 hours, sometimes it’s better to risk losing the client rather than promise them that it can be done and risk not completing the work. No matter how much extra effort you might put into getting it done, the chances are your client won’t be sympathetic to your plight. They are under pressure too and all they’re likely to remember was that the work wasn’t completed when you said it would be.

3) Don’t be afraid to involve your clients – Some clients might not have the faintest idea of what’s involved behind the scenes of a good marketing video, but everyone who’s in charge of a project appreciates having their ego stroked. The more decisions they make, or the more they see of themselves, there is an increased likelihood they’ll take ownership of the project and value the work you did alongside them. However, remember that there’s a fine line here – some clients are just too busy to be bothered, and some can become so involved that it compromises the quality of the project.

4) Be available – The work has to get done but it’s not advisable to turn the ringer off on your phone – ever! The service you provide is meant to be a direct response to what a client has in their mind and the work has to get done in the spaces between them communicating to you exactly what that is. Every fragment might prove useful in you being able to deliver on their wildest imagination and should not be ignored. A client will remember every time that they tried to reach you and were unable to because it was time that they set aside, time they thought was important, and time they eventually wasted. Time is money, and they can give theirs to someone who will offer them the time they need.

5) Let someone else disappoint them – It’s time for a reality check – you’re not the only one who does what you do. Out there in the world is someone who others can go to for the exact service that you provide, and it’s likely you’re not the only one they’ve called. It’s also not uncommon to find a prospective client that simply has completely unrealistic expectations, and there comes a point where it’s imperative to stand your ground on an issue (work load, deadlines, rate of pay, etc.) because the integrity of your business will be at stake. A prospective client might simply hire the cheapest option around and don’t be afraid to let them. The chances are likely that they won’t be happy with the work that got done and will go somewhere else the next time. Be sure that if they do finally come around to you, and not simply the cheapest option available, that you do deliver the value you promise.

Deducting Accounting and Tax Preparation Fees

Let's be perfectly clear - no matter what your political affiliations might be we can all agree that we hate paying taxes.

Whether it is your personal income or your businesses income, writing out that tax check can be extremely painful. That's why we look for ways to reduce them, especially deductions. Anything to lessen the tax burden is a good thing but what about getting those tax returns ready in the first place?

With tax codes being what they are, it's not easy to make sense of all the rules and regulations.

That's why we need a little accounting help every now and then. Can you deduct those tax preparation fees? The short answer is "Yes." But as with anything to do with the government, there is always a "catch."

Tax Preparation Deduction for the Business Owner

As the owner of a business you are eligible to deduct your accounting fees and tax preparation fees as a typical cost of doing business. Look for T2125 Statement of Business Activities and Line 8860.

This would be the fascinating "Legal, Accounting and other Professional Fees" category on your tax return. From the CRA tax code itself comes this official eligibility requirement:

"1. Except where there is a specific provision in the Act dealing with legal or accounting fees…, legal and accounting fees are deductible only to the extent that they:

(a) are incurred for the purpose of gaining or producing income from a business or property, and

(b) are not outlays of a capital nature."

Make sense?

Here's the translation: If you paid those fees in order to make more money for your business then they are deductable. How can there be any other reason for accounting but to make money? That would be with personal income situations. As far as the government is concerned, the T2125 form is just one piece of the total tax return puzzle. The rest of your personal income tax return has nothing to do with making money for your business therefore any money spent preparing those returns aren't deductable.

The Work Around

Yes, you would have to separate the accounting fees even if you're using the same accountant but your accountant should know this. One way around this deduction is for your accountant to assess 100% of their fees for your business returns. Then they would do your personal returns for "free." Who can blame them for spending all the time and effort on the business returns?

DIY Tax Returns

If you prepare your own taxes then you might be able to deduct the cost of software as part of the office expenses on the T2125 form. Again, this is only for business owners. As a regular employee who does their own taxes, you won't be able to make the deduction.


Another great reason for starting a business: More tax breaks!

Ways to Save On Startup Legal Fees

If you're starting up a business there will come a time when a good lawyer will be your best friend. However, that doesn't mean you need to utilize their bill-by-the-minute services for every legal decision you make. There are ways to avoid legal fees. Consider these options:

Go Boilerplate

If you've ever signed a renter's agreement for an apartment you were probably using a boilerplate contract. This is a template agreement already drawn up by a lawyer and is readily accepted by both sides. You might find that many of business contracts can use boilerplates that are available for free on many online legal resources sites. These contracts can include:

• Commercial building lease agreements
• Employee contracts
• Vendor agreements
• Non-disclosure agreements

Just because you're using a boilerplate contract doesn't mean you can't put in your own terms, dates and names. That's what these contracts were created for. Here's a dirty little secret: You know that expensive lawyer you hire to write up your contracts? They use the same boilerplates. You didn't think they wrote every word of a new contract did you?

Ask For a Fixed Fee

Much like the boilerplate contracts, there are also boilerplate services. Filing for a trademark or setting up a corporation are pretty much routine. The only changes that are made are the names in each of the contracts.

Does this mean you should be paying a lawyer by the hour to get those papers in order?

Not at all.

Ask around and see if you can find a lawyer to handle those kind of for a fixed fee. That means whether it takes them two or 20 hours it will only cost you one price

.

You could also offer stock options in exchange for legal services. The caution with that is giving away too much for the kind of "simple work" mentioned above. Your new investors might not be happy about that.

And, if you want to avoid hiring a lawyer for basic corporate services, consider using a document filing service (like CorporationCentre.ca!) to submit your paperwork at a much smaller fee than a lawyer may charge.

Part-Time Lawyer

You might find that after your initial start-up filings you don't need a lawyer all that much. However, you're now stuck paying a hefty monthly retainer to a law firm. Not a wise move.

Instead, look for a firm that can provide you with a part-time attorney. This is someone you can talk to once a week for a reduced fee. Save up your questions and make that weekly meeting count. You can also look into legal insurance. You pay a small premium in exchange for getting a lawyer only when you need them. That's a lot less than the big retainer fee.

If you should ever come across a complicated issue with taxes or find yourself being sued then you don't want to turn that into a DIY legal matter. Get a good lawyer on your side. For everything else, look for flexible options from your legal firm.

Overnight Success Doesn't Happen Overnight

The business marketplace is littered with so-called "overnight success" stories. Because we live in a microwave society, we want everything fast.

We want to lose weight in a weekend by taking a pill. We want to download everything in a blink of an eye. And we certainly don't want to wait for success.

Here are some truths about the overnight success phenomenon that you should think about the next time you hear one of these stories.

It is the exception, not the rule.

Do you seethe with envy every time you read about an overnight success story? One of the most popular is how Roxio, the makers of the app sensation Angry Birds went from zero to hero overnight.

Yes, it was a great success story and they probably never have to develop another game (but they will). However, the truth is Angry Birds was the 53rd game that this company created. That would be 52 other games that went through development, testing, marketing, implementation and lackluster sales.

Overnight success? Hardly.

Sure, a company can get fast results and see their profits soar in a short amount of time, but for the majority of businesses success can't be rushed.

You're hearing the hype.

It looks good for a company to promote themselves as an overnight sensation because we all like a winning story. It also makes for good press to have the Cinderella syndrome play out of someone being plucked from obscurity and plopped down in their dream life.

However, a little digging will reveal the truth behind the hype. Even the simple act of filing corporation papers takes time.

The reality is that a company's success is often built on a lot of past failures. Those failures might not all be related to that company but you can bet the board of director, the developers and the sales staff have had years of experience in the business world that lead them to this point in their careers.

In fact, if someone has worked for just five years prior to starting that company, they are bringing close to 10,000 hours of experience. So, any time you hear a story about an overnight success just ask yourself, "What are they leaving out?"

Being number one could blow up your company.

Under the heading "be careful what you wish for" comes the notion that a true overnight success might actually blow up your company. Imagine the potential success of a Super Bowl commercial.

Not only will literally a hundred million people see that spot play out but it could also go viral, bringing in millions of more viewers. If that business isn't ready for the onslaught of potential customers then their website could crash, their staff will revolt and they'll lose a lot of business.

Planning for success is just that: "planning."

That should mean being ready when it finally arrives.

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Tips for Small Business Owners and Startup Founders

Having a terrific idea for a business is only the beginning. Getting that idea from the "drawing board" to production is going to be a long and challenging journey.

The good news is that there are many resources and experienced folks standing by to help in your endeavor. The moment you embrace the simple fact that you’re not on your own, the better off you'll be. Here are some other helpful tips for small business owners and startup founders:

Bank Working Capital

You're going to need money for your startup. There's no way around that. Beyond lining up investors to back your business plan, you also should have some capital in the bank. This might not necessarily be for your business, but for your personal expenses. There will come a time in the initial phase of your start up when you're transitioning from a salaried position to entrepreneur. In other words, you're not going to have a steady paycheck, but you still need to pay the bills. A good starting point would be to have savings for at least four to six months of personal expenses. A decent size savings account will also let you float loans to your company to cover a wide range of expenses.

Start Small but Aim Big

Every great business owner has a story about humble beginnings. This is when a handful of employees worked together in "low rent" conditions to get things going. Although you know how big you'd like your business to become, it is not going to start out that way. Start small, working out of a space that won't cost you a lot of money. Your current home, apartment or parent's garage is as good a place as any. You also don't want to hire staff unless you've got a lot of work for them to do and all of that work should be generating income. The goal is to ramp up towards success.

Keep Records of Everything

No matter what, where or how you spend money for your business, there should be a receipt for that. You want to make sure you're keeping clean records of all of your expenditures and income. At the same time you also want to protect you personal assets. This is why it is important to incorporate your business and begin to run all your expenses through that entity. It's not a lot of money to set up a corporation and it will certainly pay for itself many times over.

Get a Plan of Action

You need a business plan. This can be a multi-page document or a graphic laden power point presentation. Either way it will become your road map towards success. That doesn't mean you have to strictly adhere to that business plan. You're going to make adjustments all along the way. However, with a well thought out business plan you'll be able to appreciate the trajectory of your business. That is also something your investors are going to embrace.

How to Pay Yourself as a Business Owner

You've worked hard to start your business and are certainly entitled to a paycheck. The question then becomes how best to pay yourself as a business owner. You essentially have two options: salary or dividends.

There are pros and cons with each method.

The best course of action will depend on your personal and business finances. Here are the factors to consider:

Paying Yourself a Salary

When your business pays you a salary it is considered personal income which means you'll have the opportunity to contribute to the Register Retirement Savings Plan (RRSP) and the Canada Pension Plan (CPP). How much you put into the RRSP is up to you.

However, there are maximum contribution limits. The CPP is an automatic deduction which can set up for a nice retirement fund.

In other words, the longer your work and pay into the CPP the more of a "nest egg" you'll have upon retirement.

With regard to taxes, when you pay yourself a salary, the corporation can deduct it as a business expense. On the other hand, as personal income, it is subject to taxes.

How big do you want your tax burden to be? That could determine whether or not you pay yourself a salary. 

Taking payment as a salary means you have to set up a payroll account through the Canada Revenue Agency. This means filling out T4 slips and the rest of the required paperwork. Another tax issue with a salary is that you won't be able to mitigate a business loss if your profits go up and down over the course of several years.

Paying Yourself Dividends

You'll have more cash on hand with dividend payments because they are taxed at a lower rate and don't have any automatic deductions taken out for the CPP. It's also very easy to pay yourself in dividends. Just write a check and square it up with the accounting.

By taking dividend payments you are essentially saying you'll be handling your own retirement. Not only would your CPP be less but you are prohibited from making contributions into an RRSP. If you take dividend payments you could also be precluded from taking additional tax deductions such as childcare expenses.

Overall you need to consider your company's cash flow needs, not only for current business, but also down the road. A qualified financial planner should be able to look at your business and help you make a decision that will provide you and your business with a decent level of financial security.

Starting Your Business with a Clean Slate

Breaking up is hard to do. That's true for relationships and also for ending your contract with an employer.

Whether you're moving on to start your own business or have been hired at a company that could be considered a competitor, you'll want to make sure you can start your new job with a clean slate.

A lot of the following issues might be covered in your employee contract. It's worth discussing with an experienced lawyer to make sure you can get up and running without a potential lawsuit slowing you down. 

Here's what to look out for:

Intellectual Property

It is obvious that anything you created or invented during work hours for your company is owned by that company. This would be considered intellectual property. Where it gets fuzzy is any work you did on the side during off hours. Things could be further complicated if you used any type of company equipment like a computer or software for your own inventions. There could be a strong claim for that property you created.

Non-Competition

It stands to reason that if you're good at your current job, then your start-up would be related to your skill set. That might be cause for concern if you are going to be in direct competition with your current employer. Most contracts have a non-compete clause that can last up to a year. It might take that long to line up your investors and launch your business but you'll you might be restricted from doing any kind of work that is deemed "the competition." Worst-case scenario, you sit out the year and spend it planning.

Non-Solicitation

This is often referred to as the "poaching clause." Just because you've created solid working relationships with a lot of clients doesn't mean you can "steal" them all for your new business. It's a tricky area. A client can go to any business they want as long as they don't violate a contract. The mere fact that you're starting up on your own might be enough incentive for the client to jump ship. From a legal standpoint you'll be covered if you don't actively solicit that client.

If you have doubts about any of these areas then you'll be better off checking with a lawyer. Additionally, you should consider your future plans when accepting any job. If your goal is to become your own boss then a restrictive employee contract which prevents that from happening might not be worth signing.

There is nothing wrong with negotiating. Just make sure you're not getting trapped into a contract which will stop you from pursuing your dreams.