A senior solicitor in our Corporate and Commercial Team discusses the balance between social life and running a business.
Malcolm Jones discusses work-life balance when running your own business and how to plan for potential difficulties in a business relationship.
Transcript:
Presenter: That work-life balance is something everybody strives for. So I’ve been asking Malcolm from Newtons Solicitors, how can life get in the way of business?
Malcolm Jones: Well you’re right, James, you’re right. Life in the 21st century is tough without running a business. The pace of change is growing and growing and more and more rules and regulations to obey, and more and more uncertainty in the future to predict.
I was talking to a headmistress yesterday who said that she thinks of her children. 86% of the jobs in Harrogate – it’s so precise, I don’t know – 86% of the jobs those kids are going to be doing in the future don’t exist yet, so training them for it is obviously a challenge, but yes, if you want a nice easy life, I suppose you have a job with no responsibilities, you go home and you sleep at night. You could be unkind and say that’s all you’ll be able to do at night because you won’t be able to afford to go out, and of course that’s true, but some people start their businesses and they try and make money or they just have a passion for a service or commodity that they’re trying to sell and pass out to the rest of the world.
And I guess there are those who just go for that, who are just so totally committed to what they do that they lack empathy, they lack any understanding of the rest of the world, they go out, they probably make a lot of money, some of them may end up as presidents of the United States, but that doesn’t necessarily help when most people, who want to try and balance illness, family emergencies, a bit in the community, a bit of hobbies, maybe even think about their own fitness a bit.
P: So if there is somebody listening now and they’re finding it really hard, maybe they’ve got a short-term problem with their business or a long term one, we’re going to have a look at some tips to help ease them through it, from Newtons Solicitors. So if there’s a short-term problem happening, what are the top tips that can help them?
MJ: Well I suppose one thing is to address expectations of your customers, especially in terms of allowing a bit of room for a delay if you’ve got an emergency or something.
I know it depends on what you’re doing. If you’re installing central heating boilers, it probably doesn’t matter if it’s a day or two late. If you’re taking somebody’s wedding photos, it’s hopeless if you turn up the week after it’s all happened. And you can feed that through into things like your contracts, your terms and conditions, your marketing materials so that you aren’t promising more than you can deliver, and you get the expectation sorted so that people are happy with what you provide rather than disappointed because you’ve promised more than is possible.
And I guess the other thing that’s probably worth mentioning is that for some professionals, you have to have somebody who will step in if you can’t do it. And it’s worthwhile for anybody, really, if it’s a shop to make sure there is some sort of backup so that in an emergency there’s someone who can do something.
Now, again, that needs thinking through, because I remember one case a few years ago where one small business owner found himself in the Magistrate’s court and wasn’t expecting anything particularly to happen but was actually sent to prison and… I don’t know, I’ve spent a lot of time in the law, James, but I’ve never done any criminal work, but you kind of slightly expect that if you’re given a prison sentence you’d be able to go home and turn the heating off and find someone to feed the dog, but it doesn’t work like that apparently. If you’re given a sentence, that’s it-
P: Straight to prison!
MJ: -straight to prison! The point of the story, though, is that this particular person did plan with a person doing a similar business to step into his shoes to keep the thing running, and that person didn’t do it. When he came out a few weeks later, his regulator at the time said, “Well you haven’t been looking after your clients, and so you’re not fit to work in this business any more.” So that was the end of his career, and he came to me to say, “Well what can I do about this fella who’s let me down?” but of course, he’d never got a proper agreement with him. It was all over a pint, “I’ll look after you if you look after me.”
P: Yeah, yeah, no paperwork.
MJ: What did it mean, did it really exist? And so he was a bit exposed there. It could have worked out – being a mutual thing, it would have worked both ways, but-
P: So that sort of alludes to the fact that you can end up thinking you’ve got a short-term problem and then it ends up long-term, where this gentleman you’re talking about has lost his career. So suddenly, him and his family, if he had one, what do they do then? So if there’s a permanent problem, or long-term, how can you solve these problems? Maybe, you know, selling your business, or… how does it work?
MJ: Well, if there’s more than one of you, that’s something that’s always very sensible to try and do is to get the sort of agreement together that if somebody’s out, maybe they have a period where they are still being paid, maybe they have a period when they don’t, but ultimately whoever’s left can buy them out in some shape or form.
It’s very common to have, whatever you want to call them, joint venture agreement, shareholders’ agreements, partnership agreements, depending on the structure of the business, and that can provide for someone to effectively retire and for them to be paid, maybe over a period of time, so there’s money there to earn out of the business to pay them, maybe because of life policies in case somebody dies, and then their family can get some benefit from their share of the business. What you don’t want is to build up half a business and then find you’re letting someone else run it and take the profits out of it and you’ve no way of forcing them to buy it from you. That’s not great.
And that sort of thing, insolvency, yes, is a possibility if it does go that badly wrong, there are various alternatives to just going bankrupt and putting the company into liquidation which may be suitable and may mean that over a length of time you can keep going and keep some sort of income coming in.
But it’s all planning again, and keeping the eye on the ball and making sure that there’s some sort of business continuity, maybe there’s insurance to cover some of these things, a way through all the likely scenarios. But yes, it takes time, it takes money, it takes effort and that’s not easy to find at the beginning.
[music]P: We see, don’t we, with all these big businesses that are run by big corporations that are struggling, whether it’s the high street brands that are disappearing or big family businesses that were, you know, that were once huge – look at Sears in America, that’s on the verge of collapsing. So if companies like that are struggling, then small family businesses, they really need to be thinking about the future, even if they look like they’re in a really strong position at the moment, their family have been well-looked after by the business, they need to future-proof, don’t they? They need to think about what could happen.
MJ: Well we’ve come full circle, haven’t we, to how fast the world is changing and how difficult it is to predict what will be wanted next year, never mind how that’s going to be supplied. Is it worth having a shop at the moment? Is it all going to be online fairly soon? I’m sure there’ll be some shops survive, but what makes them different from the ones that don’t? It’s not easy.
But that, I guess, is the justification of the reward for having your own business, be it profit, be it satisfaction, be it that passion to supply what you want to supply. If you get it right, it can work very well.
P: And no matter what happens, Newtons are here to help, aren’t they? If they need help they can come to you, they can get advice, surely.
MJ: Yes! My side of it is to try and anticipate problems to work out arrangements so that people can get out of them or they never arise in the first place. But of course, we have colleagues that can get them out of scrapes if that’s how it ends up, but hopefully not.
P: Perfect. Malcolm, thank you so much for your time today and your advice.
MJ: Thank you.
Running your own business can be challenging, but can also offer great reward. For more information or support with corporate law and running your own business, please get in touch with our team today.