The game of business - are you setup for success?

08 Mar 2017
Being in business is like playing a board game. The board on which the players move around is comparable to the countries where the business is conducted. Many businesses that trade in products, conduct business across multiple countries. Goods are sourced from one country and sold in another.

Each country has their own legal systems this can be compared to the rules of a board game. The rules dictate how players can move around on the board. Furthermore, there may be rules that are triggered when some events occur, which can send the players to penalised (e.g. go to jail, paying a fine) or give they players certain advantages for a period of time (lowered taxes on certain services etc.)

When you run a business you are playing the game, you can move around on the board and you must adhere to the rules. The aim is to grow your business by making the most of the opportunities on your way as well as overcoming the obstacles.

How well you play the game is a combination of experience, skills, and attitude. Also, a degree of risk taking is required - but the savvy business person knows how to build in protection mechanisms and leverage the game to their advantage.

The game is further complicated by the additional players. You may rely on some of them for supplying your with goods or services, others players may be your customers or employees. Strong relationships with the other players can help you win the game. Each relationship can be negotiated and tailored to the two players. However the relationship can be brittle if the agreements are not formalised, e.g. by being put down in writing or some events have not been considered.

Things can run smoothly or run sour – it is a roller coaster ride, not a straight-forward journey. Keeping the relationship steady through difficult periods is the real test of your business. This is where contracts and agreements will help you, they can accelerate your business or they can slow it down. It's all in the fine print and here is a couple of tricks to a head start..

Get in the game - register your company

Make sure you choose the company structure that offers you the best terms for doing your business. (You can read our blog post on company structures here).

Know the other players and their points of views

Below is a typical list of relationships to consider. Each relationship will require an agreed set of terms.
  • Customers
  • Suppliers
  • Employees
  • Advisors
  • Service providers
  • Sales agents
  • Investors / financiers
  • Business Partners

Establish your point of view

It is important to do understand how terms can affect the performance of your business. Remember, everything can be negotiated as long as both parties agree and stay within the boundaries of the law. So don’t let the legal tail wag the dog". The savvy business person knows that contracts and legal agreements is a result of what they want out of a relationship. This not prescribed by the law or a lawyer. This is for you to figure out.

To help you on – we suggest you take a look at this book, “The Business Model Generation” by Alex Osterwalder and Yves Pigneur

Combine the business model with a cash flow analysis. The right payment terms can boost your business, the wrong terms can suffocate it. Here’s a good blog post about how to do a cash flow analysis

Negotiate terms and manage the relationships

First dream of best case scenario then consider the worst case. What will help grow your business, what will hold it back? What terms will the other party accept? What do they consider fair?

Standard contracts can give you a head start to what is considered ‘normal’ and ‘complete’. They are great because they don’t cost a fortune and it can be quick to get setup with the contracts you need to do business. Tact law offers a wide range of legal templates - many of them are free.

If you are on the receiving end of a contract, you may benefit from getting input from a lawyer. Using an online contract review service, such as Tact Law can work to your advantage. It offers a quick way to get access to a lawyer who specialises in that particular type of contracts you have questions to. Simply ask your questions alongside submitting the contract and a lawyer will be able to provide you with clear answers within a day or two.

It is worthwhile regularly reviewing the terms of the agreements with the other party. Circumstances may change that will give cause to new situations to consider, for instance: over time your relationship evolves towards an extended collaboration. An annual review is considered good practise, or triggered by an event such as circumstances changing, e.g. the company is being sold or a founder is stepping down.

Stay on top of changes that affects the business

As businesses press ahead to gain competitive advantage, expectations of customers evolve and so does science – opening up a realm of new possibilities. Laws and regulations will need to change and adapt in response. Business owners must keep an eye on legislative changes as they can impact the terms in their contracts. Trade organisations can be a helpful source for staying abreast with new rules and regulations.

Working in a routine for regularly reviewing changes will keep you nimble and ready to take advantage of opportunities before anyone else. It’s like doing regular exercise and eating healthy foods – routine and steadfastness will yield incredible results. Read our other blog post ‘the business diary: secrets of achievement’ for how to organise your business calendar for maximising your business success.

Getting help

Succesful exits

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