Most business advice out there is on how to start and grow a business. And although this is crucial for obvious reasons, it’s also good to understand how to dissolve your business, should the need ever arise. Sad but true, not all businesses will last. In fact, between 70% to 80% of small to medium sized start-up businesses will dissolve within the first three years, for whatever reason.
Here are a few key points to consider, should you ever need to dissolve a business quickly and effectively:
Know your options
There are two ways to dissolve a business. Closing or dissolving a business means that your business is ceasing to operate due to either:
- deregistration; or
Deregistration vs Liquidation
When a business deregisters with the Companies and Intellectual Property Commission (“the CIPC“), it implies that the business is no longer registered and has no legal standing since it’s not doing any business, nor has any assets or liabilities. In essence, the entity concerned is removed from the CIPC database and ceases to exist once the CIPC application process has been finalised.
On the other hand, when a business undergoes a voluntary or compulsory liquidation (also known as “winding-up”) it involves the process of selling all the assets, paying off creditors, issuing any remaining assets to the main or parent company, and then simply closing the business. Liquidation or the “winding- up” of a business may happen in various ways, including the following:
- when a business is unable to pay its debts;
- as a result of a legal court process;
- by application of the creditors; or
- voluntarily, i.e. by application of the members.
Advantages of proper dissolution
As long as your business exists, it is liable to pay taxes and other fees. If you want to avoid those unnecessary expenses, it is important to ensure that the business is dissolved properly. Until you do so, your business will be held liable to file all relevant tax returns. Failure to file these returns will result in heavy penalties and fees associated with the late filing.
Another consideration to take into account, is that even if you have already stopped your business operations, legally the company/close corporation, directors, and officers (in some cases also shareholders/members) will still be considered as personally liable for certain aspects of the company business – unless you file cancellation legally.
Related: 5 Different Types Of Businesses
What happens to the employees of the company?
There is obviously a need to protect the employees of a business that is undergoing dissolution. In the past, the termination of contracts of employment meant that employees were not considered as dismissed and therefore they did not receive any protection or benefits the law offered e.g. severance pay in terms of the Basic Conditions of Employment Act or the right not to be unfairly dismissed in terms of the Labour Relations Act.
The amendment to Section 38 of the Insolvency Act applies to the insolvency of individual employers who trade in their personal capacity and to companies and close corporations wound up due to insolvency, with the effect that:
- contracts of service are suspended on the insolvency of the employer from the date of the winding-up order;
- during the suspension of the contract, the employee is not obliged to render any services to the employer, and the employee is not entitled to receive any pay or employment benefits arising from the contract;
- the employee whose contract has been suspended is deemed to be unemployed and is entitled to claim UIF; and
- an employee whose contract is suspended is terminated due to the employer’s insolvency is entitled to claim compensation for loss suffered by suspension or termination of the contract of service.
Furthermore, the trustee / liquidator may not terminate contracts of services unless he has consulted with:
- persons as required to by virtue of a collective agreement;
- a workplace forum;
- a registered trade union representing affected employees; or
- the affected employees themselves.
If the trustee / liquidator has not already terminated the services of employees, the contracts will automatically terminate after 45 days of the trustee / liquidator having been appointed.
Related: Small Business Start-up Guide
An employee whose services has been terminated in this manner is entitled to claim severance benefits as if he/she were dismissed for operational reasons, from the employer’s insolvent / liquidated estate in terms of section 41 of the Basic Conditions of Employment Act. Also in terms of section 197A of the Labour Relations Act, if a transfer of business takes place between an old employer and a new employer in the circumstances above, the new employer is automatically substituted in the place of the old employer in all contracts of employment in existence immediately before the old employer’s winding-up.
In conclusion, dissolving a business doesn’t have to catch you off guard or end in a power-struggle. If done properly, it can be a quick and simple process. Talk to a legal professional from the start, be transparent and make sure you follow the necessary steps.
Business Leadership: Leading A Culturally Diverse Business Team
The question every successful business leader needs to consider – How do we collectively experience joy and manage and/or avoid suffering as a business and as a team?
As I witnessed the rain dancing against the window panes of the Mega mall in Midvalley, Kuala Lumpur, Malaysia I started reflecting on how to lead a culturally diverse business team.
Thousands of Malay, Chinese, Japanese, and Europeans passed me in the hallways of this gargantuan construction and the Dalai Lamas’ wise words reminded me that at the core of it all, irrespective of what your nationality is or what your belief system is, in general:
“We all want to experience joy and avoid suffering”
A key question that every team leader should carefully consider is how do we collectively experience joy and manage and/or avoid suffering as a business and as a team?
How can we as a diverse team be united in the joys of experiencing an expanding and successful business with a wonderful and constructive culture and avoid the suffering of a failing business and the negative experience of a toxic culture? These are of course ‘loaded’ questions because inherent within these questions are the birthing of other key challenges –
How can we as Leaders create a relatively stable and inspirational environment from within which it is easier for each individual to unlock their vast potential when vast differences in upbringing, schooling, world views, and religious beliefs exists within one team. Especially when considering the ever changing and evolving business environment within which we operate?
Fulfilling the role of a Business Leadership coach, trainer, or life coach as the situation demanded over several years I have coached, Lead, or trained Pilipino, Chinese, Malay, African, and European people. A very key learning from my experiences is that a “cross cultural and shared understanding” can be created that transcends any spoken language or any national culture.
This common language and culture has many elements but for the purpose of this article I will focus on the three key aspects:
Have a united and focused purpose
When a united and focussed purpose exists for the business team that they collectively place higher than themselves the barriers of differences in upbringing, schooling, and world views can dissolve within their shared purpose. As business leaders we cannot refer to purpose too much, even more importantly that that, we must be living, walking and talking examples of the businesses’ purpose.
To simplify the concept of purpose it can be said that purpose is the highest intent for, or the very good reason why we do what we do. That reason is or should be even more important than ourselves. When we really love what we do and sincerely so our performance is likely to be very good, on the other hand if we totally dislike the line of business that we are in or totally despise our role within an entrepreneurial venture we are likely not going to unleash our unlimited potential.
It could be argued that the sole purpose for having a business is to make a profit. Through this article I argue that that is not a strong enough reason to sustain you and make you thrive even through difficult times. The strange thing is that when you truly live your purpose with all your might and tirelessly inspire your team to do the same the money comes anyway…
Servant heart and attitude
Rabindranath Tagore famously said:
“I dreamt that life was joy. I awoke and saw that life was service. I acted and behold service was joy.”
A servant heart is universal and transcends cultural difference, a sincere and giving smile is a beautiful language of its own that needs no translation. If that ‘servant heart and smile’ is underpinned by well-developed people and technical skills it multiplies into a potent combination of character, experience, and wisdom that has great influential power within any culture.
Whether it is through the use of interpreters, and even if it takes great patience, even when a lot of mistakes are made, persevere until everyone in the team understands that servant leadership is the key to winning the minds and hearts of others.
When all in the team becomes aware that we were only ever meant to master ourselves and thereby become better servants to all, this heightened awareness can unlock the unlimited potential within individuals in the team.
Respect for people and their worldviews
My favourite poet Rumi said:
‘The wound is where the light seeps in’
Respect all as we could not understand each individuals’ pain and hardships unless we went through it ourselves. Have compassion for all as we, in general expect compassion when we go through hardships. We can only imagine what sets of beliefs we would entertain where we to grow up in a completely different culture.
My endless curiosity and determination to learn has served me well as a coach for when your interest in others is sincere they tend to ‘open up’ to you and share and thereby you fasttrack your own learning and gain insights into your co-team members worldviews which in turn greatly enhances the team dynamics.
Be authentic and acknowledge your vulnerabilities, ‘wounds’ and shortcomings and be proud of your strengths for then your team members will help you to overcome your weaknesses and learn from your strengths.
15 Ways To Command A Conversation Like A Boss
If you’re the one talking, it’s your responsibility to make sure others are listening.
Conversations can elicit a range of emotions. They may be daunting, or they may be dreaded. They may be awkward, or they may be monotonous. The good news is, you, as a participant in any conversation, have more control than you think about whether these emotions overtake the dialogue.
Having a successful conversation is about striking the balance between preparedness and flexibility, between explaining your thoughts clearly and knowing when to pause or check in. It’s about being upfront about your preferences and ideas while being open to adapting them based on what comes of the discussion.
A fruitful conversation stems from establishing a rapport with someone. Show them you know where they’re coming from. Clarify that you understand what they’ve said. Be respectful of their time and don’t dictate back to them how you perceive them to be thinking or feeling. Keep questions open-ended. Experiment with new conversation settings or styles. And don’t give in to the internal voices that try to convince you to defer too much or suffer in silence.
To help you get your points across and help others convey theirs, read through the following 15 tips, which expand more on the ideas above.
Being A Born Entrepreneur Doesn’t Automatically Mean You’re A Born Leader
The person who has the vision to start a company might not be the person to grow the company.
More often than not, we tend to think of entrepreneurship and leadership as synonymous qualities.
Entrepreneurs are expected to break new ground, be innovative, start something new. It only stands to reason they would naturally take charge of what they’ve created and lead it.
However, it turns out that the required skills of an effective entrepreneur are almost entirely different from the required skills of an effective leader. As many CEOs of growing companies can tell you, there’s a vast difference between creating a business and growing one.
One of the primary reasons great entrepreneurs including Bill Gates, Steve Jobs and Henry Ford were so influential was precisely because they were both master entrepreneurs and leaders.
To successfully grow a business, an entrepreneur must learn how to become an effective leader. Here are the five leadership skills every entrepreneur must master:
Entrepreneurs, and especially solopreneurs, who run growing businesses are eventually shocked to realise it is impossible to do everything by themselves. Most entrepreneurs are uncomfortable with the idea of delegation. They want to do everything themselves because they have a natural sense of ownership over their work. They find it difficult to believe anyone else would do what needs to be done. After all, they were the ones who built the business from scratch all by themselves.
The reality is, though, as a business grows, so does the amount of work that needs to go into running it.
Leaders understand their own time and energy are finite resources. Great leaders understand that, to be most effective in the company, they must play to their strengths and delegate their weaknesses to others who are more qualified.
Steve Jobs famously played a very small part in building the OS and designing the original Apple computers. He knew how to grow a business, so he focused on what he could do and wisely left it to Steve Wozniak and his team to execute his vision.
The perk of being a lone wolf is that you know exactly what needs to be done and the right way to do it. But, that has to change when you find yourself a leader.
We all have horror stories of working for a manager who didn’t communicate instructions effectively, which inevitably leads to confusion and frustration from both parties. As a leader, you’ll need to clearly and succinctly explain everything from your vision to administrative tasks to your employees.
But, communication is not a one-way street. You need to know what to say and how to listen. Effective leaders don’t simply give orders. They accept feedback and criticism, as well.
A constant bridge of communication between a leader and an employee not only reduces inefficiencies but also leads to a healthier and more productive workplace for all.
Entrepreneurs seldom lack in the inspiration department. They were passionate enough to start a business themselves, but not everyone shares their enthusiasm. A key skill of any good leader is to inspire the people around them.
It’s not enough to simply tell people what their job is and expect them to do it. To get the most out of your team, you have to make them believe in your vision and feel like they’re actively making an impact in their role. This is especially important when working in a start-up.
The good news is that anyone can become an inspiring leader as long as they create a clear culture around the company’s vision, values, and beliefs.
When Howard Schultz returned to Starbucks as CEO, he quickly realised the majority of his employees were no longer focused on providing customers with a positive experience. This led him to shut down 7,100 stores one day to retrain all baristas on making an espresso. This bold move not only sharpened his employees’ technical skills, but also quickly brought Starbucks’ ultimate vision back into focus.
As an entrepreneur, you should be well aware of just how powerful a mentor can be to personal and professional growth. As a leader, if you want your employees to be as effective as possible, you need to do more than just give them orders.
Along with giving them the resources they need to do their job well, you also need to be able to help them move forward in their own careers.
This can be as simple as offering them training in skills they are interested in, giving them more responsibilities, or spending more one-on-one time with them. Leaders should be able to do more than just lead from the front; they have to be able to provide support from behind as well.
By adopting a coaching mentality, you can be assured of your employees’ loyalty to you and your vision. Plus, helping your employees achieve their full potential means they’re more likely be an asset to you and your business.
It should go without saying that being innovative and adaptive is key for entrepreneurs. But, instead of only using their knack for problem-solving on market opportunities, leaders are also focused on providing solutions for problems within the company.
A large part of running a growing company is learning how to deal with internal problems like employee disputes, disorganisation, or a lack of motivation. Employees will always look to the leader to solve these issues.
When no clear-cut solutions are present, leaders need to be able to think outside the box. One surefire way to quickly lose both the respect and trust of your employees is to outsource the solution to someone else or avoid responsibility by blaming others.
Last-minute changes and mishaps happen in any business, so it’s up to the leader to adapt quickly and show everyone else the right way to handle these situations.
If entrepreneurs who have the passion and innovation to start their own businesses can develop these five skills of great leaders, they will be most effective in leading those businessess into growth and a bright future.
Read next: What Kind Of Leader Are You?
This article was originally posted here on Entrepreneur.com.
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