Advice to Belinda and Jack
Belinda and Jack run the Back to Your Roots hairdressing salon, which is prospering. They would like to expand their premises and staff, and hope ultimately to open other salons in different locations. They are debating whether to continue to trade as a partnership or set up a limited company. The partners should adopt various aspects about their business. In advising Belinda and Jack, these particular aspects of their business would play a critical role. The two are running a joint venture, thus they are operation under a verbal agreement or a memorandum of understanding that brought them together. Business law requires that in such an agreement or memorandum, they had a clear guideline on how to run the business, rules and regulation, and objectives that they wanted to achieve (Crouch 2005, p. 10). It is recommended that they stick together and pursue the goals that brought them together, because if each goes their own way, their vision would collapse. The reason is that running a partnership is important as it reduces the burden that characterises sole proprietorship. When one partner is committed in other areas, another associate would continue with the business without any hitch.
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The fact that their venture is prospering is a clear indication that they are good business managers. It is advisable that that they adhere to business principles and law to make sure that the venture remains sustainable (Deakin & Morris 2005, p. 237). One of the business laws is that the partners must respect and follow the agreement that formed the joint venture, whether it is verbal or written. They have to adopt proper business skills in a hairdressing saloon, which include providing quality services to the clients, ensuring that they have the latest products in the market, updating themselves with the latest styles that customers want, and making sure that they apply appropriate customer relationships. The ability to treat the customers well will determine the chances of retaining their regular customers and attract new ones (Freedland & Kountouris 2008, p. 52). Some of the customer relationship practices that they should adopt include welcoming clients in a cordial way, honesty, being jovial, using business tone when addressing customer, and acting on customers feedback appropriately (McWilliams & Matten 2010, p. 17). Indeed, these are very important for prosperity and growth of the business as they move into the future.
As the business grows, expanding the venture is a noble idea, because they will be able to reach a large clientele so that the venture increase profit and become sustainable (Grant 2005, p. 24). In expanding the business, they have to consider several variables. For instance, the location for opening a franchise must be accessible and close to the targeted market. This is essential in making sure that the customers are able to access their services easily without spending more money to reach the premise. Second, they have to consider the competitiveness of the area for opening the new venture (Grant 2005, p. 31). This is important because if the area is very competitive, it might affect the growth of the new franchise. Therefore, they must ensure that the competitors in this new location do not pose a big threat to their business, and they can fairly compete with them. Finally, they have to control the way in which they open branches; this should be on the basis of need in an area, not because of the passion to have many branches in various location (McWilliams & Matten 2010, p. 24).
Expansion of the business goes together with the need for more staff to manage the new branches. Here, it is advisable that they recruit highly qualified people to join their staff, for instance, those who would carry the business vision and implement it for prosperity. The other important thing that they should consider is the motivation strategy to employ in an attempt to keep their staff happy (Lawson 2002, p. 93). Essentially, a motivated employee is happy and able to put more effort to develop a business, because each of them works with enthusiasm. Belinda and Jack must always ensure that they give incentives to their workers in various branches that their business operates. According to Lawson (2002), some of the incentives include good pay package, encouraging innovation, making the work environment safe, and solving emerging issues amicably. These incentives are very significant to employees in terms of increasing their morale and would benefit the entire business, because the motivated workers would stick to business ethics. Freedland & Kountouris (2008) argued that incentives might promote business contracts and personal relations.
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On whether to continue to trade as a partnership or set up a limited company, the latter would be most appropriate. Operating a limited company has several advantages over mere partnership as outlined herein. First, it increases profit for the business owners who may get up to 80% of the contract than in partnership. Second, it increase the owners claim for several expenses, including equipment, travel, calls, accountancy fee, internet use, and software. This increases net revenue for the owners/shareholders. Third, a limited company enjoys a flat rate on governments VAT scheme. This may increase the net revenue that the owners get, especially when the venture makes profit. Fourth, a limited company protects personal property when the business collapses. The reason is that the owners liability is limited to the shares available in the business, and managers personal effects cannot be used to settle the companys debts during collapse or dissolution.
Fifth, a limited company ensures that the person has overall control over personal financial affairs. Here, ones finances are free from interference by a third part or stakeholder of the company. Sixth, running a limited company gives the owners more credibility, because governments and contractors value and work with such businesses. In addition, Deakin & Morris (2005) indicated that having a limited company protects the entitys name. The reason is that once a person or partners register a business name as a limited company, the law protects it from other unscrupulous people who may be interested in transacting business using that name, and if found, they are liable for prosecution (Deakin & Morris 2005, p. 239). Furthermore, operating a limited company reduces accounting fee, because many accountants prefer to work for such entities and charge them less than they do with partnerships (Freedland 2003, p. 69). Considering all these benefits, Belinda and Jack should set up a limited company to expand their growth opportunities, recognition and efficiency.
In an attempt to employ a new member of staff, the contractual terms that Belinda and Jack should include when constructing the contract of employment must adhere to the industrial laws of the country (Crouch 2005, p. 10). The contract must be precise and stipulates the employment agreement that both the potential worker and employer must sign (Countouris 2007, p. 102). Moreover, the employee must first read and understand the terms well and their legal implications before signing the contract. In case of dispute, the employee must provide a copy of the contract so that it becomes easier to find the party who has breached the contract. It is also important to note that contracts may vary based on the particular business (Deakin 2003, p. 14). Based on the United Kingdoms law of contract, an employee has obligations and minimum rights that the employer must respect and provide articulate in the contract document. They include obey lawful orders, reasonable notice periods, safe work system, and keeping the company secrets (Deakin 2006, p. 101). On the other hand, the employer must respect the employees personal information and intellectual information; therefore, should keep them confidential (Deakin 2006, p. 102).
In fact, when constructing the contract of employment, the terms should include the following. The employer and employees name and address, date of commencement of the contract, and that of continuous employment, number of hours a day, scale of pay, job group, and time for releasing payment (weekly, bi-monthly or monthly) must be in the contract (Malmberg 1999). Terms and conditions for leave, public holidays, in case of sickness, and injury are also important aspects that Belinda and Jack should include in the contract (Malmberg 1999, p. 27).
The other important aspects of the contract include period of notice that the employee should give prior to terminating the contract and the modality for settling the dues and benefits when the contract is terminated (Malmberg 1999, p. 28). As well, the job title, task description, nature of the employment, disciplinary procedures, and place of employment are also important and must be included in the contract document (Blowfield & Murray 2011, p. 58). The prospective employees should have adequate time to read and understand the document before appending signature, because once a person signs a contract, the terms bind all.
The final aspect is that the contract should contain applicable collective agreement, in which the employee is a party, because it would influence the terms and conditions for employment in the business (Freedland & Kountouris 2008, p. 57). In such agreement, the employer may not necessarily be a party, but its application would affect the contract significantly. According to the UK business laws, disclosing such information is important, since the employee would be liable if they did not reveal such an agreement, and it affects their performance.