There are 4 key relationships that any business owner needs to focus on that will evolbve throughout your business journey. They are the relationship with you business partners, suppliers, customers and staff.
1. Relationships with your business partners.
To protect yourselves as shareholders, it is important that you have a shareholder agreement in place that handles the dealings amongst the shareholders – rules for selling shares, remuneration rules, what happens if somebody dies? Or resigns? How do we get rid of an obstructive shareholder?
You also need to agree on the rules for the running of your company and record these in a document called the Memorandum of Incorporation (MOI). The MOI will handle things like voting rights, quorums for meetings and powers of the directors.
We strongly advise on drawing up these agreements at the start of your journey. Parties are generally more open to a compromise position at the beginning when there is excitement around than when the fighting has started!
2. Relationships with your suppliers
Suppliers are vital to any business – if you can’t get raw materials you won’t be able to manufacture your products to sell. You will most certainly need support from your suppliers during times of growth when cash flow will become more challenging – either through an increase in credit limit or an extension of payment terms.
Stay close to them and communicate regularly with them. Share your successes with your suppliers so that when you do need their help, you are not a stranger to them!
3. Relationships with your Clients
A sale is only a sale once the cash is in the bank. Until you are paid, a sale is actually a loss to your business as you have parted with something that you have had to pay a sum of money for but to date have received nothing in return!
It is vital that you agree on payment terms, discount structures, credit limits, delivery terms and obtain suretyships from your customers prior to supplying them to reduce the chance of you losing money.
4. Relationships with your Staff
Your relationship with your staff is likely to be the relationship that causes you the most headache and anxiety. It is vital that there is constant communication and feedback from both parties to ensure everyone understands what is required of them which and this will go a long way to avoiding performance issues.
The employment contract defines the relationship between Employer and Employee and is the second most important document to have – the first being your shareholder agreement. The employment contract documents matters such as working hours, leave entitlement, roles and responsibilities of the person and most importantly, what they will be paid and will go a long way to avoiding performance issues down the line.
My Finance Partner has extensive experience with all of the above relationships. Contact Us should you want some guidance/assistance with any of the these relationships.
Comments