/Pricing/Accounting;/U/Blog;

Most entrepreneurs start by basically trying to meet every
consumer’s needs. This is very useful, but as your business grows, you tend to
lose sight of why you even started the company in the first place; your
customers.

 

The best way to stay in
tune with your customers is to understand your customer; a way to do that is by
being your own customer. For example; if you have a storefront or an
over-the-counter business, have a friend visit and report back to you. This
way, you have an idea of how your business is being run; how your customers are
being taken care of, and you’ll probably identify more ways to improve
services. You might see these as more work, but your customers are a top
priority. Regardless of how busy you are, regularly check in with your customer
experience.

 

Most people would agree
that the main reason why startup businesses fail or can’t seem to start on the
product or service they are trying to build is the lack of understanding about
the actual customer they want to buy their product. It is a fundamental
necessity to understand the target customers; their needs and motivations.

 

Ways at
which being your own customer helps your business

 

1. You will save more on
research. 

A way to understand your customers is through a
series of interviews, questionnaires and surveys. All these can be very
important and valuable but very costly. However, it can’t beat knowing what
your customer needs because you are your own customer.

2.  You become a better salesperson. 

You need
excellent sales skills for your business to have any chance of success. Being
able to sell your ideas to investors, partners and customers give you that
confidence and genuineness about your product. Your founder story is more
genuine because it’s your story.

3.  You will need passion to go with that
confidence to sell your ideas to different people. 

But you will need resilience
to fuel your determination. In any startup business, you will encounter
challenges along the way – your resilience pushes through those challenges.

4.  You are more invested in your business’
future success. 

You need to put some money into your business, but then you
also need to put in time and effort.

An example of a
great business builder is Steve Jobs. He built the iPod and its digital music
store, iTunes, for himself. He relied on his own instincts which were built on
his own experiences. He was in many ways, his own customer.

Look at
businesses like solving a problem. Many times, the inspiration for your
products can be brought out of your personal experience with that product.
Sometimes the solution to that problem might be expensive or occasionally the
answers you think of might not work, but then as you think of solutions, you
are levelling up in the skill of problem-solving. Sometimes solving a problem
without having to worry about how you are going to advertise it to the public
can enable you to make something more significant than what you expected the
solution to be.

The purpose of going into business is to earn a profit- and make some
cool cash. But then, the irony remains that to get money; you need money. In
other words, in business, you spend money to make money.

However, for most people- especially small business owners, it is not an
easy task deciding whether or not to pump money into projects like expansion or
acquiring new employees. If you are part of these people, this article is for
you!

Luckily for you, I would be sharing tips on how to make significant financial
decisions at crucial times in your business.

 

Here are some fantastic tips:

1. Don’t depend on the unpaid cash 

As a new person in your industry, chances are you would have customers
who are getting your products/services on credit. But then, don’t forget you
have bills to settle. Depending on money that hasn’t been paid (as a source of
income) would be a massive mistake if you want to both take significant
financial steps and pay bills.

Managing your cash flow should be your first agenda while making big
financial decisions. If not, your business could have a record-breaking revenue
on paper, but then would go downhill if there is a lull between when the work
is done, and the cash received. Until these customers pay their invoices, don’t
think of the advances offered to customers as cash. In other words, don’t
consider it as cash until it gets to your hand.

2. Keep documentation

Don’t skip this. Don’t skip this! You’ve got to have a method of
approach- and you can only do this if you have a clear understanding of where
your money lies. Don’t try to keep all the info in your head- get a financial
assistant software. Perhaps, excel spreadsheet could do the job.

I want to reemphasize on not factoring in cash you don’t have at hand.
For instance, if you are going to get paid for a service rendered today in
three months, factor the forecast on your spreadsheet. Do not base your
assessment on cash, not in hand.

3. Do a review

Choose a date in the month where you would make a review of your
spreadsheet. This is important so you wouldn’t be caught unawares by the bank.
When making big financial decisions, you might incur some expenses you didn’t
budget for. Ensure you include these budgets in your review.

Go further by making a possible forecast of how much impact
these financial decisions might have on your finances- do not forget to put appropriate
measures to tackle these hits.

4. Model different scenarios

Things might not always go
as planned. Make adequate preparations for worst-case scenarios. Taking some
time out to ask the question, “what if?” would help you weigh the chances
accurately.

Nobody can act you more
than you! If you would be making huge financial decisions, you might have to
consider several factors- both personal and financial.

Remember, if your company
must grow, its financial health must come first in any decision you make.

 

Personal branding
strategy is simply a fact of business life these days. In fact, as traditional
PR and advertising becomes less relevant (who is seeing these ads any more?), I
could argue that increasingly, the personal brand IS the company brand, especially
in smaller companies.

Branding strategy is
about creating an emotional connection to your product or service. It’s a lot
easier building a connection to a person compared to an ad or a piece of
company content.

Personal branding
will undeniably have a more important role in marketing strategy because it can
create a permanent and sustainable competitive advantage based on emotion.
There is only one you. That can be a legitimate point of business
differentiation!

For the love of Jeni

Here’s an example of
how a personal brand can become an integral component of a corporate branding
strategy.

Ice cream is
basically a commodity. You can tweak the ingredients and the flavors but there
are only so many ways to make and sell ice cream, right?

How is Jeni’s Splendid Ice Creams breaking from the pack to
become one of the fastest-growing retailers in America? Because people love the
company’s founder, Jeni Britton Bauer.

They love her
never-say-die founder’s story, passion, commitment to the environment, and
honest business partnerships. The love of a real person like Jeni turns the act
of buying ice cream into an act of devotion.

Of course she
creates a delicious product. But lots of companies do that. Compare the growth
opportunity for Jeni’s stores with Baskin Robbins (also yummy and expensive by
the way) — the largest ice cream retailer on the planet. How do you grow Baskin
Robbins? More ads that nobody sees? More flavours? Lower your price? Tweak the
logo?

Jeni is growing her
company through love.
That can’t be copied by competitors. Who do you love at Baskin Robbins?

To a large extent, Jeni is the brand.

 

The time is now

This is a
historically important trend — and one that is overlooked by much of the
corporate world — because it could only be happening now.

I started out in
business more than 30 years ago, pre-internet days! Back then, how would I
become known? How would it even be possible for a nobody like me to build a
personal brand?

Back then, becoming
“known” was in the hands of a gatekeeper like a newspaper or trade journal
editor, or perhaps an executive in the publishing industry.

But today, the
opportunity to become known in your industry is up to you. Everybody has the
opportunity to publish content and be heard, to build an audience and establish
the presence, reputation, and authority to have a meaningful competitive
advantage.

The advantage goes
to those with the vision and tenacity to do build that personal brand.

Advantage: Small businesses

For the most part,
large companies can’t take advantage of this trend. I can only think of a
handful of examples where the emotional tie to a company is based primarily on
the devotion to an individual — Oprah, Elon Musk, and Richard Branson come to
mind.

However, it’s so
much easier for a small business to establish a meaningful emotional connection
based on a personal brand.

In a small business,
the owner has a relatable founder’s story. The owner of a small business can
still be out with customers and show their smile, their heart, their passion.
They can be out in the community showing they care. And most important, they can
be part of the content story — the blogs, videos, photos and podcasts — in a
personal and intimate way.

If you’re an
entrepreneur or small business owner, establishing a personal brand could be
your most important branding strategy.

Personal branding strategy requires a new mindset

A branding strategy
based on an individual can be uncomfortable. I’m speaking from experience!

When I started my
company, I did not want to be the focus of attention. I wanted the focus to be
on our work and the amazing results we were getting with our consulting
engagements.

However, my
consistent and helpful content — published through this blog, The Marketing Companion
podcast, and my marketing books —
helped create a worldwide audience of true fans.

I started my company
in 2008 and finally by 2016 I reluctantly admitted to myself that my company
brand was … me. It took me eight years to actually feature my face on the
landing page of my website!

I’m an introvert.
I’m uncomfortable with self-promotion and being the center of attention. But I
also realized that the only way to stand out is to have the courage to show
myself and tell my unique and honest stories to you.

I stand out in a
very crowded field of digital marketing because there is only one me. You can
stand out in your industry, too … because there is only one you, too!

The key is having
the plan, courage, and resilience to go for it.

Personal branding is a process

If you take one idea
from this article, I hope it is this: Creating a personal brand isn’t about
luck. It is a systematic process.

The biggest thing I
learned when researching my book KNOWN: The handbook for
building and unleashing your personal brand in the digital age is that nobody
becomes known in their industry through luck.

You can become famous through luck. But
becoming known and a trusted a
personal brand requires consistent work over many months, and perhaps even
years.

It is a process, and
it is within reach of anyone. In the process of writing the book, I interviewed
97 people who have become known in a wide variety of professions all over the
world And they all did the same four things to become known:

1.   
They identified a
rational idea they wanted to be known for (this may be different from your
“passion”)

2.   
They found a unique
way to tell their story

3.   
They produced
quality content consistently without fail

4.   
They actively
engaged with an audience to nurture an emotional connection

Today, every person
reading this blog post has the opportunity to build a personal brand that leads
to business benefits. In many cases, this can be more powerful and effective
than any ad you could ever devise.

By the way, over the
last eleven years, I have never taken out a paid ad to promote my business.

And here is a
stunning opportunity — chances are, your competitors have no idea this is even
a thing. This branding strategy is still under the radar.

Is it your time to
shine?

To
most people, fall means the end of summer vacations, beginning of a new
school season or the return of all our favorite television series. Rather
than healing our collective sunburns and soothing our chafed skin, we admire
the changing colors of the leaves and finally dust off our sweaters and
winter jackets. Tech entrepreneurs, however, have a very different take. For
them, the start of fall signals not just the end of summer, but also the
commencement of tech-conference season. 

Slush, Digital Summit, IFA, MWC Americas, World Summit AI,
Consensus and more all either come back or start heavily promoting
their impending return in the fall. These events showcase the latest
technology and reveal trends that will guide us through the coming year,
charting rising stars as well as companies on the decline. 

Whether scheduling meetings with potential investors, checking out the
competition or putting out fires in the office back home, entrepreneurs
and business owners need to be able to stay on top of things even when they are
traveling between events. That’s no small feat when everyone’s in a
rush, asking for WiFi passwords, searching for hotspots or hunting
down free water and good snacks. In short, it’s chaos. Here are a few
helpful hacks for cutting through the clutter.

 

Upgrade
Your Business Cards

One of the hardest tasks associated with attending a tech
conference is getting noticed and remaining relevant. There are hundreds, if
not thousands, of business owners at these events trying to secure their next
round of funding or front-page feature. Reporters meet with new companies all
day, each showcasing the “next big thing” that will purportedly take the
technology world by storm.

Business cards that come with a twist are key for entrepreneurs
who want to be remembered when the dust settles. Unlike the traditional,
one-dimensional paper version that shares some personal information and
contact details, USB-enhanced business cards ensure that anyone you meet
has your company’s full pitch deck at their fingertips. Entrepreneurs can
preload USBs with press releases, custom graphics, marketing data and
more, and there are a variety of customizable USB business cards available via
retailers like DiscMakers and FlashBay. 

Solidify Your
WiFi

Next, it makes sense that one of the most important things
anyone will look for at a tech conference, an occasion inherently linked to
internet usage, is good and reliable WiFi. Success in this environment
depends on the ability to connect with the outside world. 

Unfortunately, there are too typically many people at these
conferences trying to connect at once, bumping up against lengthy and
unusal passwords or torturous“unable to connect” error messages. Skyroam,
which provides travelers with global WiFi solutions, can help remedy this via
their portable Skyroam Solis X product, which provides long-lasting
connectivity. The company’s virtual SIM enables unlimited WiFi in more 130
countries.

 

Keep
Your Eye on the Ball

It’s also essential to stay on top of your schedule.
Attending an event is never an excuse for missing an important deadline. While
these conferences are action-packed with interviews, announcements and
product launches happening left and right, entrepreneurs still need to make
sure their day-to-day businesses is running smoothly.

 

Streamline
Your Multitasking

Lastly, most entrepreneurs have mastered the ability to
multitask, but trying to type up lengthy emails, conduct investor research or
draft a proposal from a mobile device is still no fun. One solution is the
foldable keyboard by iClever, which connects to any smartphone or tablet and
has a battery life that won’t disappoint, as a single charge can last nearly 10
days, with eight hours of daily life. 

So as entrepreneurs from New York, San Francisco, London, Tel
Aviv and beyond descend on fall tech conferences to showcase their
ideas, consider the above gadgets, guidance and get-arounds to spring
ahead of the competition.

Stress is obviously something we’re all trying to avoid, but just because it’s something we try to prevent doesn’t mean it can’t be used to our advantage. Unfortunately, there’s no way of getting around it, so we might as well make the most of it. If we let stress take over our lives, we won’t get anything done.

However, there are actionable ways to turn stress into success that are easy to implement and maintain. By making a concerted effort to remain calm throughout the workday, you can encourage everyone around you to turn stress into success too. Here, we’re going to break down seven ways to do so and how to start right now. 

1. Breathe

Taking a deep breath is a simple way to calm yourself down quickly. It’s a trick for getting to sleep easier, but it can be just as effective at work. Focusing on the breath is a meditation practice that anyone can do anywhere. The trick is to stay consistent with your breathing.

You obviously want to avoid stress to begin with, but telling you to not be stressed would terrible advice. Tell your significant other to calm down in the heat of an argument and see how well that goes down. If anything, you should identify what’s causing the stress to begin with and working from there on ways to avoid making it worse.

• Count your inhales and exhales for thirty seconds without thinking of anything. If your mind wanders before you reach thirty, start over. Repeat until you reach thirty. Or download an app like Headspace for a guided meditation experience. 

2. Sleep More

If you’re waking up and going to work tired, you’re starting the day on a bad note, and it’s completely avoidable if you simply went to bed earlier. People are irritable when they don’t sleep. Simple tasks become harder and comprehension decreases. It can even affect one’s physical ability. All these factors can make work harder to accomplish.

It seems like being tired is out of our control, but it’s not. When we get more sleep, our cognitive abilities improve while our stress decreases. We become better learners, better team players, and become more positive people overall. When we don’t sleep, we put ourselves at risk of shorter lifespans, heart disease, and obesity.

• Set an alarm on your phone to remind you to get to bed earlier. You don’t have to close your eyes immediately, but you should shut your TV off, put down your phone and computer, and get into bed. Aim for at least seven hours of sleep. 

3. Schedule Relaxation Time

Are you a busy person that simply can’t find time to relax during the day? I’ll just be blunt and tell you you’re not that busy. Relaxing for even a half hour can be beneficial. Instead of catching up on emails during your lunch, go for a walk. Instead of waiting in line for your lunch, bring one. Your brain needs time to recover from a stressful day. If you don’t take care of it, you can’t expect it to fix itself.

Work your schedule around relaxation time. If you can’t spare a half hour to an hour, at least break up your day with shorter breaks. Five minutes here and there to breathe and look away from your computer screen to step outside can do wonders. If you stick to the schedule, you’ll learn to make the most out of the limited time you have.

• Set an alarm on your phone or computer to remind you to take a break. Or you can tell someone you work with to remind you and keep you honest. Having someone look after you is a great way to manage stress. 

4. One Task at a Time

Doing too much at once is a great way to induce stress. We all have those busy days at work where we’re given more and more work. In fact, many people say that if you need something done, ask the busiest person to do it for you. If you find yourself in that situation where you’re the busiest person in the office, make a point of doing one task at a time.

If you’re trying too hard to go back and forth between tasks, you won’t give each one the proper attention they need and you’ll drive yourself crazy knowing you’re not working to your fullest potential.

• Create a schedule with reminders and stay on top of it. You can do this on your phone or with task management software like Trello or Asana. Plus, everyone you work with can see what you’re working on so they’ll know whether or not it’s okay to ask for your help or to leave you alone if you’re swamped.

5. Don’t Get Too Lazy

So far this entire article has been about avoiding stress; it might come off as being counter-productive to keep yourself busy to avoid stress, but let us explain. If you plan ahead to make a big push and get all your work done for the next month so you have nothing to worry about, you’re going to get yourself in the mindset that you have nothing to do. When the time comes where you get a ton of work again, you’re not going to be prepared mentally.

By remaining busy at a very manageable level, you’re keeping your mind sharp for when the real push comes. Some stress can be motivating. We all tend to work faster and harder when there’s a deadline to meet. If you’re the type to stress about not having anything to stress about, this is a great way to avoid that scenario, as well.

• Create a schedule and organize tasks by priority. Big projects should have more time to finish. Smaller ones should be done quickly. Finding a balance between the two is key. If you’re waiting for approval, don’t sit around waiting. Do a smaller task in the meantime. 

6. Switch Up the Scenery

Sometimes, all it takes to reduce some stress is seeing things from a new light. This includes where you sit, what’s on your desk, and talking to new people. If you’re near a window that’s never open, open it. If that window lets the sun in, and there’s room on your desk, buy a plant (they’ll even remove toxins in the air). If you find your desk is too cluttered for a plant, clean it.

You can also encourage your boss to repaint the office, bring in new chairs, or switch out regular desks with standing desks. There’s a ton of ways to go about switching up the scenery to reduce stress. These small changes are known to boost productivity. The more of an effort you make to keep things from getting stagnant, the more likely your employees will mimic that concept in their own work.

• Create a poll and determine what other employees think is best to increase productivity. Follow through on that poll provided the results are within reason. 

7. Talk to Each Other

You’re working with other people! Act like you’re a team. Take a quick break and catch up every once in a while. If you’re stressed, tell someone. Maybe they are too. You can help each other by venting, or, at the very least, complain about the stress together. The point is to not be a stranger. Who wants to go to the same place with the same people every day and never actually get to know them?

That other person might also have some valuable insight on what’s making you so stressed out. If they have a different job than you, they might be able to look at your situation from a fresh point of view. It’s not a guarantee, but at least you’re trying to resolve the stress. If you’re actively trying to reduce stress, you will get there eventually.

• Make a point of meeting someone new or catching up with someone on a regular basis. This will not only help you become less stressed, but help the other person too. This will create a stronger bond, a better work environment, decrease stress, and increase productivity.

The Final Word

Stress is an unavoidable consequence of our everyday work lives. There are going to be times where we’re going to deal with it, and there are going to be times where all it seems like it’s doing is piling up and finding its way into our personal lives. However, in limited amounts, it can be used to our advantage. For example, working with a deadline can increase productivity if you’re known for procrastinating.

The goal though is to limit it as much as possible, by working as a team, staying organized, making subtle changes in your personal life via meditation and getting more sleep, and changing your perspectives on certain tasks. We cannot expect stress to disappear on it’s own. We all know that the more we let it fester, the worse it gets. The more it builds, the higher the odds of a mental breakdown.

By removing stress, we become better people mentally and physically. The more in tune we are with our emotions, the more we can focus on our work. This increases productivity, which ultimately increases the employee experience, and finally the customer experience. These seven actionable ways to turn stress into success are a great way to get started today.

One of the most important topics to discuss when the online realm is concerned is definitely online security. While an average online consumer probably doesn’t sweat too much about this issue, online business owners and website owners are definitely the ones that should. As a business owner, your top priority should be cratering a safe environment for your consumers and visitors.

However, unless you know precisely what to look for and how to actually make your website a safe environment for anyone visiting, you might have a difficult time ensuring it. That’s why we’ve created a list of some of the crucial aspects of website security and the things you’ll need to pay special attention to when ensuring it.

Choose your web host carefully

First and foremost, unless you’re really careful when choosing your website host chances are that you won’t have a particularly good time. A solid hosting company, for instance, won’t leave room for any backdoor access to your website. They will take care of the regular maintenance, provide you with proper uptime and, most importantly, proper security which promises that you’ll be able to offer your visitors top-notch user experience.

Many business owners make the mistake of choosing to go with the cheapest hosting company, not realizing that, in most cases, this is the wrong way to go. We’re not saying that you should choose the most expensive one either; simply make sure that you’re happy with what the company offers you and don’t let the price of their services affect your final decision.

Create strong admin passwords

Sometimes, we may tend to forget the most important and obvious step regarding internet security and that is passwords. Unless you create a strong admin password and thus ensure that your website is not easily accessible, all of your other efforts will be in vain. The passwords that are easy to remember are usually very easily hacked with brute force attacks, so make sure you create an elaborate combination of upper-case and lower-case letters, symbols and numbers when creating your admin pass.

Moreover, avoid using the same password twice under any circumstances and never write down your password in digital form and store it somewhere on your computer. If you’re unable to remember your passwords, however, you should write them on a piece of paper and carry them in your wallet. This method, although old-fashioned, has proven to be the most secure one. 

Use multi-factor authentication

No matter how strong your passwords are, chances are that sooner or later they can be breached. The fact is that with the technology constantly evolving. It’s only a matter of time before hackers will equip themselves with new tools or software that will allow them to penetrate even the strongest of passwords. 

You should implement multi-factor authentication for any relevant account.

The way it works is that it adds another layer of security to your login credentials. In other words, aside from requiring your username and password to login you will also have to provide a security code or a token that will be sent to your phone or other mobile device. The additional layer of security is vital as it makes it more difficult for potential hackers to tap into all of your devices at the same time and find all the information they might need to access your sensitive data. 

Make sure that your web software is up to date

If your website is hosted on a CMS, do know that the majority of them receives regular software updates and patches. These updates and patches do not only serve a purpose of enabling you to use new functions and features but, more often than not, they contain necessary security upgrades as well. Unless you make sure that you update your web software on a regular basis, chances are that your website will easily become vulnerable to outside attacks and prone to security breaches. And since that’s definitely something you do wish to avoid, try to stay on top of any and all software updates.

As an example, if your website is hosted by WordPress, avoid using third-party plugins and updates. The main reason is that the third-party software may cause conflicts in your website code that can create vulnerabilities and security risks you weren’t even aware of.

Instead, work on developing your own website features that will be compatible with your website’s code. This option will definitely cost you a bit more in a financial sense, but it will certainly pay off from the security point of view.

Use an SSL Certificate

The “S” stands for “secure” in the Hypertext Transfer Protocol (HTTP). By implementing an SSL Certificate as an additional layer of security in your website, you’ll provide your customers with a safe environment. The SSL certificate is where they can do business and leave their sensitive information without having to worry that it will be easily accessible by a third party. 

Restrict admin logins

While we have already mentioned the importance of having a strong admin password in place, we haven’t discussed the importance of not sharing that password with just about anyone. The fact is  the more people knowing your password makes your site more vulnerable. Having access to the admin account makes an even higher vulnerability on your website.

That’s why you should restrict admin logins to only specific employees and IPs. Protecting and paying attention in this way and you’ll be restricting access to your website to anyone with an IP that’s not included in the list. Protect your site no matter if anyone in or out of your company manages to obtain your admin pass or not. 

Monitor your network

By conducting regular network audits and keeping a close eye on everything that’s going on around you ensures that your network is safe and that you have proper security measures in place. You should also conduct regular penetration tests. What “a test” means is that you should simulate cyberattacks on your network or specific areas of your network in order to ensure that the security measures you have in place are sufficient.

If you have done enough protection for now — great. You may also discover that there’s any room for improvement. If this is not something you’re particularly handy with, make sure you hire the right professionals that will take care of this important step for you.

Play well with Google

Finally, while this part doesn’t concern your website security per se from your standpoint, it does play a huge role in making your website more appealing to Google. Generally speaking, Google favors websites that are safe to browse, the ones that feature excellent web design and that are well-optimized and organized. It’s no secret that the websites that Google deems worthy (according to these and some other parameters) will have an easier time reaching a higher position on SERP’s.

Taking care of your SERP’s will, in turn, bring more business your way. It becomes quite obvious that striving towards making your website as secure as possible won’t be appreciated solely by your audience, which is excellent news for anyone trying to reach true business success. These security steps are the most crucial ones you will definitely want to implement in your website.

You’ll want to make sure that the audience finds your site appealing enough to want to do business with you. Of course, there are certainly other things you can do to boost your business’s appeal, but that’s a topic for another time.

There is a lot of confusion about
what is a business debt – partly because there is a real cross over between
someone borrowing in a business or personal capacity.

 

To simplify it, we need to define
what personal and business debts might be.

 

If an individual borrows money in
their own name, for personal spending such as buying a TV, clothes, a car or a
house in their own name, that is clearly a personal debt.

 

The borrower is liable without any
ability to deny their responsibility for paying back that debt.

 

If they borrow money to establish,
support or fund a business, for instance borrowing $25,000 from a bank to develop
an e-commerce website to sell cosmetics, then that money is clearly being used
for business purposes, but is still a personal debt.

 

However, a business can have several
different structures that impacts on the personal liability of the owner or
directors.

 

The main business structures in New
Zealand are:

 

Self-employed or sole proprietor – someone
trading in their personal capacity

A partnership – several people working
together

A limited company – has its
own legal personality.

 

What is my personal liability as a
sole trader?

 

An individual is liable for business
debts when they are self-employed and run their business in their own name.

 

If the business owner enters a hire
purchase agreement to buy a vehicle it is a personal debt.

 

Also, if they sign a lease agreement
for rent of commercial premises, they are personally liable.

 

What is my personal liability as a
partner?

 

As a partner in a partnership
business, you are automatically jointly and severally liable, that is, personally
liable for all the debts of the partnership.

 

That means if one of your business
partners becomes personally bankrupt, you and the other business partners are
then liable for any and all the business debts of the partnership.

 

This can be historic, for example if
a leaky home case is filed against an architectural partnership that designed
the house but is no longer trading – then the partnership and the individual
partners are still liable.

 

If one partner is insolvent, the
solvent partners take full liability for the outcome of the leaky home hearing
and the costs awarded to the building owner.

 

What is my personal liability as a
director or shareholder?

 

Essentially, directors and
shareholders cannot be naïve and think they are protected if their company goes
bust.

 

There are lots of ways a director or shareholder
can be liable for the debts of the company.

 

·       If a director or shareholder gives a personal guarantee in respect of
the company’s debt, they become personally liable for that debt.

 

·       Directors and shareholders are liable if they allowed the business to trade
fraudulently or recklessly, and they are found liable by a liquidator or the court
for some or all of the company debts.

 

·       There is personal liability if the Inland Revenue proves that some of
the debts of the company relate to trust funds that were inappropriately
administered by the directors or shareholders.

 

·       If an overdrawn shareholder loan account accrues, it is then repayable
by the shareholders as a loan to the company.

 

·       When drawings or dividends drawn are excessive it is much the same as
taking a loan from the company and if the business goes bust – the directors
will need to repay the funds.

 

·       The same goes for making excessive personal expense claims against a
company, for example buying a fishing boat and claiming it as sponsorship or
vehicles.

 

·       Also, if you have borrowed money in your own name and invested that
money in the company by way of shareholder advances or share capital then you
are still liable to the lender for that loan, even though you didn’t personally
use the money – the business did.

 

 

Personal debt risks with guarantee liabilities

 

Guarantee debts normally arise where
a director or shareholder has signed the following in their personal capacity,
as well as director or shareholder:

 

·       Bank loans

·       Finance company loans

·       A property lease, even if that lease is subsequently assigned

·       A lease, finance or hire purchase agreement for plant, equipment or
motor vehicles

·       A service agreement in respect say phone, computer or other services

·       An agreement with a trade supplier, which sometimes may not explicitly
state that a director or shareholder may be personally liable, but may be as a
signatory to the agreement

 

Depending on the nature of the
guarantee, the creditor may also be secured by assets owned by the guarantor, a
family trust or other person, and sometimes this again may not be clear in the
terms and conditions.

 

As with any agreement, a person
really must fully read the documentation presented to them so that they don’t
inadvertently give a guarantee, when they had no intention of doing so. 

 

Taking legal advice before signing
any documentation is therefore advisable.

 

Keeping track of your personal liabilities

 

One of the most common issues seen
when businesspeople find themselves in trouble with debt, is that they don’t
actually know what they might actually be liable for. 

 

Maintaining a list of any guarantees
given is therefore advisable.

 

Getting into serious debt, or even
considering bankruptcy, isn’t part of business owner’s plan.

 

With good financial literacy, advice
and planning it can be avoided but should things get out of control it is
stressful.

 

However, there are solutions and
bankruptcy should be the last option rather than the first port of call for
entrepreneurs.