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Posts Tagged ‘small business’

The Telecommunications Industry Ombudsman (TIO) has announced that it is broadening its definition of small business by applying a new criteria to determining what a small business is.

Prior to 1 July 2012 the TIO largely dealt with consumers and also ‘small business’ customers, which until now has left many businesses outside the tent when it comes to TIO intervention.

From 1 July 2012, the TIO has announced that it will be applying the following criteria to determine what a small business is:

• the number of employees – this should be 20 employees or less but the TIO takes a flexible approach to account for variations in employment practices. For example, businesses that seasonally employ more than 20 employees (such as agricultural businesses) or that are engaged in the manufacture of goods and employ less than 100 employees, are not excluded
• the annual turnover – generally this should be under $3,000,000
• the nature of the business, and if that type of business is typically small or not-for-profit or does it operate from the owner’s home. The TIO will also consider whether the nature of the business gives the business little or no bargaining power to negotiate the terms of any telecommunications contracts with its provider
• the way the business is structured or managed. For example, is a business independently owned and funded by a small number of individuals who make most of the important business decisions?
• the issue in dispute. For example, does it relate to basic services generally purchased by residential or small business consumers or to complex technologies or systems used by larger businesses?

While the decision has been welcomed in some circles, some ISPs and Telcos have expressed their frustration that more customers will now come within the jurisdiction of the TIO. Critics claim that instead of operating as an independent party to facilitate a resolution of disputes, the TIO acts as a consumer advocate.

Tags: small business, telco lawyer, telecommunications law, telecommunications lawyer, TIO
Posted in General, ISP and Telco Law, IT Law | Comments Off

Business sales are part of most succession plans, and getting it right can make the world of difference. Most small business owners engage the services of a licensed real estate agent or licensed business broker.

This is usually the first and only dealing with a business broker or agent. Key issues that you should consider when dealing with a business broker / agent:

Term of Appointment

All contracts with business brokers and agents will have a minimum period of appointment, with an additional period called a continuing period after this time. You should consider appointing an agent for a set period with no additional or continuing period, this will make your agent work harder and will help you avoid being locked into a relationship which isn’t working.

Commissions

Business brokers and agents almost always charge their commission on a variable basis, for example 5% of the sale price, but often charge additional fees / charges. You should be clear to find out, before signing an agreement, whether this is the total of the agent or business broker’s fee, or whether there are additional advertising and retainer fees payable. If you don’t ask this question, it can be a costly mistake.

Remember, you can negotiate, you may offer a lower commission with an incentive payment where the broker/agent achieves target sale price – it pays to shop around. It’s not always about the commission, do your research, to make sure the agent you pick is selling.

Contracts

Finally when you find a buyer and the deal is ready to be done, you need to sign a contract of sale of business (and in some cases a share sale agreement). Many business brokers and agents use a standard form document, while these documents are generally suitable for a very small number of businesses, they can’t always address the complexities of each individual sale. You should never rely on a business broker or agent to prepare a contract for you, lawyers commonly see a number of mistakes that business brokers and agents make, for example:

1. changes to the standard form contracts, which can lead to unintended consequences;

2. in most cases special conditions need to be drafted, business brokers and agents are not lawyers, they do not understand the legal complexities of contracts and are not qualified to draft special conditions – lawyers have seen many examples of poorly drafted clauses which have the reverse legal effect to what was intended;

3. clients can suffer severe tax consequences as a consequence of contracts that do not properly consider tax and corporate planning issues.

Before you sell your business you should always speak to your lawyers and accountants to obtain the right advice – and before you appoint and broker/agent do your homework.

Tags: business sale, commercial lawyers, contract law, lawyers, small business
Posted in General, Uncategorized | Comments Off