We're nearing the end of this email series, and now it's time to talk about the risks involved with partnerships, employees, and regulatory pitfalls.
- Business partnerships are like marriages. You're forced to spend a ton of time together, whether you want to or not. And eventually, no matter how much you like each other, there will be friction.
- In a business partnership, there is no tie-breaker, since each partner has an equal say. This inevitably leads to conflict.
- It is incredibly difficult to split work responsibilities equally in any small business. This goes double for a martial art school, because most of the real work is done off the training floor.
Also, spouses tend to want to get involved in their significant other's business. And if you enter a business partnership with someone who has a nosy spouse, guess who is going to lose out, every single time? You, or the person your business partner is having sex with?
The bottom line is, don't enter a business partnership. Ever. But if you do, get everything in writing, and make sure you have an iron-clad clause in your business partnership agreement that forces the other party to buy their partner out, should one partner want to dissolve the partnership.
Employees
Recently we discussed the law of agency, which pretty much makes you, the employer, responsible for everything your employees do when they are on the job. Hoo. Ray.
But, having employees isn't all bad, especially if you treat them right and take a few steps to protect yourself along the way.
For starters, every employee should get an employee policy manual that outlines their job description and work responsibilities, as well as policies on pay, benefits, and disciplinary actions. And, they should sign something that says they received that manual, they read it, and they agree to what it says.
Also, your employees should sign a nondisclosure and non-compete agreement when they are hired. The nondisclosure says they won't divulge your client lists, business operations, and other sensitive info to your competitors. And the non-compete says that if they leave your employ, they can't compete with you in any way, within a certain period of time and certain geographical distance from your school.
Make sure you have both agreements reviewed by an attorney, too. I've seen some non-compete agreements that were completely unenforceable, so make sure what your employees are signing makes sense.
Finally, make your employees go through background checks before they are hired. And if they are driving a company vehicle, make them submit to a urinalysis test. Also, it doesn't hurt to make your employees go through a sexual harassment prevention class, either.
All of this will serve to help you weed out people who shouldn't be in your employ. And if something does happen, you can at least show you did your due diligence to prevent it.
Regulatory Pitfalls
Most of the regulatory pitfalls you might run into as a martial art school owner stem from issues with employment laws. So, familiarize yourself with the various laws that govern how you pay and treat your employees.
Here are a few things that you need to do or avoid doing as an employer:
- Don't date or sleep with your employees; in fact, don't even attempt it. It is way too easy for a jilted lover or terminated employee to claim quid pro quo and sue you for sexual harassment.
- Don't discriminate on the basis of race, religion, sex, etc.
- Don't curse at your employees. In fact, it shouldn't even be necessary to raise your voice to them.
- Don't promise benefits that you don't intend to provide. Do give benefits that you promised.
- Pay your people on time, and pay them fairly.
- Pay all federal and state taxes on time and in full, including employee tax withholding, Medicare, and Social Security taxes.
- Don't try to claim employees are "contract labor" in an attempt to avoid paying taxes on them. If they have a set schedule, then they are a regular employee, and you can't just file an IRS 1099 form and send them on their way.
- Have your employees fill out all legal forms when they are hired. In the States, they must fill out an IRS form W-4, and a form I-9 for immigration.
- Post all signage that the government requires employers to post. Here in the States, this probably includes an EEO poster, an FLSA poster, and an OSHA poster.
Most of this is common sense, but some of it may be news to you if you've never had employees before. Knowing the laws first, before you hire, will help to keep you out of hot water.
So, read up on employment laws before you take on any employees. Also, treat your people right. Don't treat them like they're disposable. Pay them fairly and take care of your employees, and in nine times out of ten they'll take care of you in return.
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That's all for today. Next week I'll wrap this series up with a recap and a few final thoughts and tips.
