Small Business – Kean Smith

7 October 20217 October 2021

Small Businesses – settling business disputes quickly

In my post dated 3 November, 2020 titled “Operating a Small Enterprise? – do not let this destroy your operations” I wrote that “[a]s a small enterprise operator you should take steps to avoid settling conflicts in court, avoid litigation. While litigation is a legitimate means of resolving conflicts it has some disadvantages that are not suitable for small enterprises. You are probably fully aware that litigation can be costly and time consuming. If you are operating a small enterprise to create additional sources of income then it is likely that you do not have a budget for litigation nor do you have time to dedicate to attending court. Litigation should be avoided and you should employ alternate forms of dispute resolution. I am referring particularly to Arbitration, Mediation and Negotiation.” – (Source: Smith, K. A. (2020, November 3). Kean Smith. Kean Smith. https://www.smithkas.com/?p=439)

In this post, I wish to take a deeper dive and focus on small businesses using arbitration to resolve their contractual disputes instead of litigation in national courts. For the purpose of this article, let us agree that a small business has 50 or less employees (generally the same number of employees used in the UK and the USA). This category will include business owners from various sectors of the economy including Construction, Professional, Retail, and Transport.

As part of managing your commercial risk you should consider using arbitration. This can be done in a way to avoid costly and time consuming hearings. This will definitely decrease your cost and allow you to resume your regular business more quickly than waiting years for a trial date in the national courts.

I have heard stories of multiple contractors operating small construction companies complain about their final stage payment worth tens of thousands of dollars being withheld because of a dispute which is being litigated. Issues like this can be resolve faster through arbitration rather than commencing litigation through the national courts.

The most effective way to have access to this arbitration option is to include it as a term of the contract. So in short, seek advice about including an arbitration clause in your contracts. I believe this will go a long way in mitigating the risk of protracted and costly disputes.

Please feel free to direct any questions or comments to Kean Smith at kean@smithkas.com or Kean’s Linkedin profile

21 August 202121 August 2021

3 Steps – Contracts for small businesses and small non-profits

Did you know that “[p]rior to the [COVID-19] crisis, 22 per cent of young people were not in employment, education or training (NEET), one in seven young men and one in three young women. The decline in employment caused by the COVID-19 crisis has not been compensated by returns to education and training. Hence, the NEET rate has risen in many countries and remains higher than before the crisis.” (United Nations website)

As a result of this protracted issue of youth unemployment, more youth are exploring small business ventures as a means of gainful employment.

In this blog I wish to share three steps that you can take to assist you with demonstrating that a contract exist.

The three steps are as follows:

Make sure you are clear who are you contracting with. For example, are you contracting with a person or a company?
What are the terms of this contract? What is/are the service(s) that you will deliver and what are the obligations of the person/company that you are providing the services to? (Note that these terms should be put in writing using a basic email, invoice or text message and sent to your client for confirmation. Use the client’s name in this correspondence).
Require a deposit from your client and give them a receipt once the deposit is received.

The benefit of using these three steps is that you will be using and documenting basic elements of a contract. Many small businesses experience breaches of contract and do not have any recourse because it is difficult for them to demonstrate that a contract exist.

Following these three basic steps will assist you with demonstrating that a contract exist if the contract is breached.

Feel free to direct any questions to Kean Smith at kean@smithkas.com or comment below.

7 May 20217 May 2021

Non-Profit’s Corner: “How to mitigate the risk of being fined”

No matter where you live on this planet, if you have an account at a financial institution then you are aware of Customer Due Diligence information. No doubt your financial institution would have required you to produce at least proof of identification and proof of address when you opened your personal account.

As a result of ongoing concerns about Money Laundering and Terrorist Financing, international and national financial services industry and their clients must implement systems to mitigate these concerns.

Small Businesses and Non-Profit Organisations (“Non-Profits”) are not exempted. In fact, you are probably aware that businesses must be prepared to provide source of funds information for large deposits. Such information may entail showing invoices, contracts or any additional supporting documents required by the financial institution.

It is in the best interest of Non-Profits to maintain sufficient details of their financial transactions including monetary and non-monetary donations. As someone responsible for the administration of a Non-Profit registered in The Bahamas, you should be aware that your organisation face being fined if it fails to produce financial records if and when required to do.

Section 15 (1) of the Non-Profit Organisations (Amendment) Act, 2019 states that:

“(1) The Registrar may impose an administrative fine not exceeding five thousand dollars, if after an investigation it is proven that a non-profit organisation has failed, without reasonable cause to produce financial records reflecting all monies received and expended.”

Please note that financial records have a specific definition under the NPO Act as Amended requiring Non-Profits to explain transactions in sufficient detail to show that funds have been used in a way that is consistent with the organisation’s objectives. Additionally, Non-Profits must maintain sources of its income and the same must be reflected in its financial position.

In order to mitigate the risk of fines, Non-Profits should maintain their financial records in a way that is easily accessible and detailed. Furthermore, whatever you do, develop a practice of being responsive to the regulator, the Registrar. This will help develop and maintain the credibility of your Non-Profit with the Registrar General’s Office.

Feel free to direct any questions to Kean Smith at kean@smithkas.com or comment below.

27 January 202127 January 2021

NPO Project No. 9 Review Project

In September, 2020, I launched the NPO Project No. 9 which offered advice and research assistance to section 19(3) exempted organisations under the Non-Profit Organisations Act, 2019 (“NPO Act, 2019”) that was having difficulties registering or not knowing how to register under the NPO Act, 2019. The services were offered without charge.

Today I am launching another iteration of the NPO Project No. 9. I am launching the NPO Project No. 9 Review Project (“The Review Project”). The Review Project will assist qualified organisations with reviewing their existing Constitution or Governing Rules and make recommendations of suitable amendments. Interested organisations will be required to complete a short means testing form to determine whether they qualify for the free review.

Reviewing document (Photo by Adeolu Eletu on Unsplash)

Interested organisaitons can reach the project initially by sending an email to kean@smithkas.com and should include “Inquiry – The Review Project” in the subject of the email for a prompt response.

Please feel free to direct any questions or comments to Kean Smith at kean@smithkas.com

9 January 202110 January 2021

Don’t start your next project without understanding this

In my post made on 28 October, 2020 entitled “Funding shortfall for your NPO? … then let’s be more strategic” I discussed the importance of building capacity within civil society organisations. Today I wish to share the structure of a project management team and the importance of engaging a project manager.

A project management team is comprised of 1. the project board, 2. the project manager and 3. the team manager.

The team manager reports to the project manager and the project manager reports to the project board. The project board reports to corporate, the programme manager or the customer. This is the hierarchy of a project.

Any project board you put in place will be responsible for the overall direction and management of the project within the constraints set out by corporate, the programme manager or the customer. The role of the project manager will be to plan the sequence of activities, monitor how well the work is progressing and for the day-to-day management of the project within the established constraints. Furthermore, the project manager also monitors and mitigates any and all risk to the project. (Office, T. S. (2017). Managing Successful Projects with PRINCE2 (2017th ed.). The Stationery Office.)

Please make special note that the project manager is not ultimately responsible for the success of the project. The person who chairs the project board, the executive, is ultimately accountable for the project’s success and is the key decision maker. (Office, T. S. (2017). Managing Successful Projects with PRINCE2 (2017th ed.). The Stationery Office.)

I am sure you are aware of directors or programme managers of organisations who develop projects and also act as the project manager. Doing this is not an effective way to run a project. There should be no overlap of the project board and project manager roles. Such overlap will put the project at risk because the executive of the project board, who is ultimately accountable for the project, will lack objectivity since he/she will also be performing day-to-day management of the project.

In order to avoid conflicting roles, you should appoint a project manager that is not a member of the project board. Doing so will also allow adequate focus to be given to deliverables or products and adequate management of risk to the project.

Please feel free to direct any questions or comments to Kean Smith at kean@smithkas.com

15 November 202015 November 2020

Resolving Financial Services Complaints

You are probably fully aware that Non-Profit Organisations need access to people, resources and institutions to operate and deliver services to their clients. One critical service needed is financial services. In this post I will share a method which can assist you with resolving time consuming complaints and saving on legal fees.

Just like Governments and Businesses, Civil Society Organisations utilise financial services everyday. Such financial services include Banking, Insurance, and Real Estate. From time to time you may experience poor service which results in loss to your organisation. In order to address these issues you must know which body regulates the financial services provider. If you do not know which institution regulates them then just ask them. Banking, Insurance, Investments and Real Estate services should be regulated in all developed economies. For example, Banking in The Bahamas is regulated by The Central Bank of The Bahamas, Insurance in Canada is regulated by federal and/or provincial regulators. In Ontario, Canada insurance is regulated by Financial Services Regulatory Authority of Ontario. Investments in the United State of America is regulated by the US Securities Exchange and Commission, and the National Trading Standards Estate Agency Team regulates estate agency work in the United Kingdom and letting agency work in England.

So if you have an issue for example at an insurance company then you should follow the following steps:

Written complaint – if a verbal complaint does not resolve your issue with the Customer Service Officer then submit a written complaint to the branch manager of the financial services institution. Of course you should include as much relevant detail as possible in your letter e.g. account name and number, date of the poor service and the impact on your organisation or business. If possible then include a copy of the receipt or transaction. If you do not receive a reply after five working days then send a follow-up letter. If you do not receive a reply within three more working days then take the next step.
Complain to Regulator – contact the relevant regulator and submit a written complaint following the complaint process of the regulator. Regulators have different complaint processes which are normally set out on their websites. Follow the steps as set out. If no timeframe is given for a reply then follow the five plus three working day rule in the first step above. If you receive no reply from the regulator then take the next step.
Targeted follow-up with Regulator – call the regulator and follow-up with the Manager responsible for complaints (if you are given an email to contact the Manager then use email instead of a phone call but maintain the same timeframe). When doing so ensure that you have a copy of your complaint letter and follow-up along with the dates you submitted them or make reference to them if asked to send an email to the Manager. If you are not able to reach the Manager on your first call then call again three days later. If you are not able to reach the Manager during your follow-up then take the next step (make a note of the days you called for or tried to reach the Manager) .
Targeted follow-up with Executive Management – call the Regulator and ask for the person who answers directly to the Board of Directors for the day to day operations of the regulator. This maybe a Governor, Superintendent or Executive Director. Once you reach that office indicate that you need the Governor’s assistance with reaching the Manager and share which steps you have already taken to reach the Manager. Please mention the complaint, and the follow-ups (written and verbal) already made.

Following these four steps can be very effective. I have worked seven years with three financial services regulators in two countries. From my experiences taking these steps always result in your complaint being address. To help yourself you should make a written complaint and follow-ups if necessary. Naturally you should retain copies of all letters of complaint in a form that is easily retrievable and shared. If you are able to follow these steps and the recommendations then you will assist the financial service provider and/or the regulator with addressing your compliant as promptly as possible.

All the best and do well.

Please feel free to direct any questions or comments to Kean Smith at kean@smithkas.com

3 November 20203 November 2020

Operating a Small Enterprise? – do not let this destroy your operations

We all know that in light of the steps taken to mitigate the spread of the COVID-19 virus, the global economy has contracted. This economic contraction has resulted in recessions in countries resulting in business closures and increased unemployment. According to the International Labour Organisation, as of June, 2020, “[more] than nine in 10 of the world’s workers continue to live in countries with some sort of workplace closures, with the Americas experiencing the greatest restrictions …”[i]. This reality has resulted in many of us and people that we know taking steps to adjust our lives and seek alternate employment or additional income. One way this is being done is by people working part time or creating additional sources of income by offering services e.g. tutoring, cleaning, delivery services or selling homemade desserts. If you are about to start a small enterprise or have started a small enterprise then I wish to share how to avoid one aspect that can destroy your enterprise and new source of income.

One thing that is certain in all relationships including business relationships is conflict. Another way to describe conflict is disagreement. Simply put conflict occurs when you and your client has a different understanding of exactly which services were agreed and when they should be delivered. In many cases, this difference of understanding only becomes apparent during or after the services are delivered and before full payment for the services have been made. If you have experienced this then you know that this scenario is very frustrating for for both parties.

As a small enterprise operator you should take steps to avoid settling conflicts in court, avoid litigation. While litigation is a legitimate means of resolving conflicts it has some disadvantages that are not suitable for small enterprises. You are probably fully aware that litigation can be costly and time consuming. If you are operating a small enterprise to create additional sources of income then it is likely that you do not have a budget for litigation nor do you have time to dedicate to attending court. Litigation should be avoided and you should employ alternate forms of dispute resolution. I am referring particularly to Arbitration, Mediation and Negotiation.

Handshake … a symbol of agreement (Photo by Charles Deluvio on Unsplash)

These alternate forms of conflict resolution are less costly than litigation and can produce a resolution in less time. I recommend that if you are about to start a small enterprise or have started a small enterprise that you seek advice and become more familiar with these alternate forms of conflict resolution and include them as part of your business strategy.

In closing, I wish you all the best with your enterprise. Do well. Do very well.

Please feel free to direct any questions or comments to Kean Smith at kean@smithkas.com

[i] Hard times forecast for global job recovery in 2020, warns UN labour agency chief. 2020. Available at: https://news.un.org/en/story/2020/06/1067432 [Accessed: 3 November 2020].