How to resign and run your business full time

Congratulations! You’ve decided to make a full-time commitment to your business.

Before you give your notice and burn bridges your work enemies, remember that your network and relationships are especially important to you as an entrepreneur who is just starting out.

Leave smart.


Testing the waters—To resign or not to resign?

If you are going to be a full-time entrepreneur, you have to make sure you’re financially and legally in the clear

The golden rule before quitting your job is to make sure you have 3-6 months worth of your fixed-income saved up before leaving. If your finances are not in check, you should reconsider resigning.

It is not unusual to start your own business journey while being employed. If you want to keep your “day job” while starting a business, please ensure you’re not violating your employment contract. If in doubt, seek legal counsel and/or inform your current employer about your new venture. 

If your new venture violates any employment contracts, STOP!  You do not want to start your business with a cloud of litigation hovering over you. Click To Tweet

Employers and courts take contractual agreements seriously, so do not call your employer’s bluff.

For example, there was a case in Nigeria where an employee entered into a service contract where he was not to engage in a business similar to the employer’s business within a certain geographical area for one year.

Less than 3 weeks after he started work, he breached the contract by resigning and joining a rival company in the same area. The Nigerian Supreme Court held that contracts that prevent employees from engaging in a similar business as the employer are enforceable as long as the contracts are “reasonable with reference to the interest of the parties concerned and of the public” (Leventis Motors Ltd. v. Andreas Koumoulis (1973) 1 All NLR (Part 2) 144 at 146).


Diving in – Your resignation

Before you resign, review all your employment contracts, if applicable. The contract usually details the resignation procedure, how your resignation must be presented, and the necessary resignation notice period – 2 weeks, 1 month, etc.

It is important that you follow the rules sis! You do not want to expose yourself to unnecessary legal liability by ignoring those words in black and white.  

Secondly, check if you signed a non-compete agreement with your current employer. Will your new venture involve the use of your employer’s proprietary information?

If you did sign one, make sure that the scope of your new venture does not fall within the scope of services your employer offers, and that your new venture will not apply your employer’s proprietary information.

Finally, are you planning to start the new venture with a coworker?

"If starting a new business with a coworker – review all your contracts and your employer’s employment policies carefully! There may be a little something there about poaching…" Click To Tweet

Ensure that you and your co-worker’s departure will not result in a breach of your contract or your employer’s policies. Also, ensure that your potential business partner is not subject to any non-compete agreements and will not be using any proprietary information in the new venture. 

Keep your start-up team in legal tip-top shape.


It is important to dedicate time to thinking through your resignation. There is no point in rushing to the finish line without laying the right foundation.


Got a question? Send a message or voice note to +2349078653509 on Whatsapp anywhere in Africa for our new video advice series – #AskASis.

Contributing Editor: Diana Odero

Facebook Live with Sneha Shah: How to do business in Africa without fearing the risks.(Oct 13)

Want to do business in Africa successfully? Learn how to break down barriers and prove your worth. On Friday, October 13th, Sneha Shah – Managing Director of Africa for  Thomson Reuters shared with us how the African business landscape is currently positioned for female entrepreneurs, and how you can take advantage of it.

Sneha has initiated partnerships with leading international market development, and works in close collaboration with public and private sector organizations in each country, to tackle the opportunities and challenges around financial and capital markets development. Learn from @snehasshah how to do business in Africa without fearing risks Click To Tweet Register below to get a FREE downloadable guide with Sneha’s top 10 tips on how to do business in Africa without fearing the risks.

Some of the topics we’ll cover

  • Are there businesses that are easier to establish in Africa than others? Find out.
  • How young start-ups in Africa are changing the game.
  • Challenges and opportunities business owners should expect when operating in Africa.
  • How the African business landscape is currently positioned for female entrepreneurs.
  • Leveraging millennials for African growth.
  • What Africa can learn from other emerging economies.
  • Innovate or disrupt – how to prepare your company for the future.

Watch the video:

Posted by She Leads Africa on Friday, October 13, 2017

Sign up for the e-book here:

About Sneha

Sneha Shah joined Thomson Reuters in 2001 in New York and has held several global leadership roles across the financial and media business units in operations, product development, and technology. She was appointed Managing Director of Africa for Thomson Reuters in April 2015, and leads all of the financial, risk, tax and legal businesses across the region, providing data, automation and digitization solutions to financial institutions, governments, and corporates. She is responsible for driving the profitable and sustainable growth for Thomson Reuters in Africa in a manner that contributes positively to the region’s economic development. Born in Kenya and having worked in many African countries, Sneha is particularly passionate about initiatives that help empower Africa’s success.  Sneha is a member of the Board of the US Chamber of Commerce, US-Africa Business Center. She is also a member of the Young Presidents Organization (YPO) and the African Leadership Network (ALN) and has been actively involved in several initiatives of the World Economic Forum (WEF) on Africa, including the Partnering Against Corruption Initiative (PACI) (current), and the Global Agenda Council on Governance (2014 to 2016).

Prior to joining Thomson Reuters, Sneha was a commodities trader for Cargill in South Africa and traded money markets and foreign exchange at CFC Bank in Kenya. She holds a BA (Hons) degree in Politics with International Studies from the University of Warwick in the UK.

How to land a legal job: The dream cover letter for the future attorney

Don’t expect anything if you don’t work for it Click To Tweet

It seems obvious but a lot of the time we wish for things and then wait around for them to happen to us. This as opposed to grabbing opportunities and making things happen for ourselves. Particularly when it comes to seeking employment in the legal profession, competition is unavoidable.

You need to differentiate yourself and be proactive in getting yourself that job of your dreams. Your first shot to get through those doors is just two pieces of paper, your CV, and your cover letter.

What is it for?

There is a common misconception that the cover letter is redundant and the magic is in the CV. However, if we analyse the objectives of these two documents, it becomes clear that the CV is a list of information. Important information, yes, but not necessarily relaying your personality and charisma.

The cover letter should be just that, your emotive selling point and the document that can push you over the edge when the employer is stuck with a pool full of like-minded CVs. It, therefore, has the power to be a critical document in your pursuit of employment. You can take your list of achievements and translate them into relevant skills that your prospective employer is looking for.

The CV has important information but not it doesn't relay your personality & charisma Click To Tweet

The law degree will see everyone in much of the same position in terms of subjects. So the extracurricular activities and interest areas will be what makes you stand out – it is important to highlight this and make it clear in your cover letter.

What should I include?

The contents of the cover letter are dependent on what you are applying for. So before you jump into writing, take a few steps back and spend some time engaging with the requirements of the position you are applying for.

Is it a position at a big corporate law firm? Then your cover letter should focus on your ability to work long hours and maintain attention to detail; your ability to translate constructive criticism to a change in your work product and motivated attitude (to name a few).

If it is a position at a human rights non-government organization, then the cover letter will be completely different to the aforementioned. Mention motivated attitude again but now link it to previous experience highlighting your passion for the cause; determination to work regardless of the barriers and interest in following court decisions in this area and the trends you have seen.

Don’t make your cover letter another list of skills in a different order. Take that vacation work experience and make it work for you! Highlight how you learnt the value of networking and even though it was a long work day, you are excited at the prospect of challenging yourself and learning more.

Don’t make your cover letter another list of skills in a different order Click To Tweet

Should someone else read through it?

It can be nerve-wracking once you have poured your heart into this document to then expose yourself to a third party prior to sending it on to your prospective employer. However, there is a lot of value in getting insight as to whether you have sufficiently sold yourself for the position you are applying for.

It is important for a third party to read your cover letter together with your CV to assess whether there are any achievements or skills that you have missed out on including or whether something else could be more relevant to include.

Am I going to use this again?

I think it is helpful to start off with a generic cover letter that covers some of the transferable skills that will be relevant regardless of the position. Then working off this, tweak the original to suit the specific position.

Of course this means that your base cover letter needs to be cracker, and by cracker I mean a strong reflection of some of your core skills that differentiate you from the masses. Then for each new position you are applying for, go through the same process of analyzing the position and your suitability to it and amend your base cover letter accordingly.

Selling yourself is never a bad thing

You are amazing, you just need your prospective employer to see that Click To Tweet

You are amazing, you just need your prospective employer to see that. The benefit in taking the time to reflect on the position and your ability to fulfil the position can result in you realizing that perhaps you are not suited to being a corporate law associate because you don’t like working long hours and you have not really had an interest in corporate law given your previous experience.

Through spending more time and effort on the cover letter process, hopefully you manage to match yourself to position that will fulfil you and to which you are happily suited – it shouldn’t be a strain to sell yourself for a position.

All you need to know about trademarks

What do Apple, Google and Microsoft have in common? They are some of the biggest brands globally. As a start-up, you’re probably interested in how to protect your brand…or if you should even be bothered.

Trademarks can take on different forms and if you’re thinking ain’t nobody got time to register trademarks, think again. We’ve broken down what trademarks mean and how you can protect your brand in the infographic below. We’ve also busted common myths about trademarks and brands.

trademark 101 1

Trademark 101 2

 

Copyright: Preserving your creative work in a social era

The last segment (here) was to follow with a detailed discussion on the non-disclosure agreement. However, conversations with some entrepreneur friends this week warranted a discussion about copyright protections. During the discussion, it was quite evident that some entrepreneurs believe the notion of copyright is all but a fictional concept in frontier markets like Nigeria, especially in a social era where creative works are easily available to the public through social media sites.

The comments during the conversation included, “no one cares about copyright, if my work is stolen, life goes on,” “but what courts in Nigeria have the time to resolve copyright cases when it has more interesting election cases pending before it?” and“I barely have enough time to run my business let alone go through the tedious copyright registration process.”

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During the colourful conversation, entrepreneurs seemed to agree that copyright protection is alive and well in Western countries. However in frontier markets, copyright protection has been tucked deep into the judicial mountains, making enforcement merely a fantasy. The comments of these highly talented entrepreneurs were littered with elements of ambiguity about enforcement procedures, and most importantly, what constitutes copyrightable work.

1. Copyrightable work—Distinguishing the leaves in the forest

Copyright protects creative and original expressions such as images, music, and texts. In some jurisdictions, copyright protects particular expressions of ideas and not the general idea itself. For example, the U.S. Copyright statute dictates that “[in] no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work” (17 U.S.C. Section 102(b)).

Similarly, the Nigerian Copyright Commission noted that a “work is ‘created’ when it is ‘fixed’ in a tangible medium.” Thus, in some jurisdictions, copyright protection does not reach beyond the protection of the specific form of idea.

To illustrate, if you and a friend both decide to independently create a painting of Mount Kilimanjaro, your two paintings could qualify as copyrightable work if you both expressed your work in your original forms. To this end, it is not the idea of painting the mountain that is protected; rather, the original form or the painters’ expression of the mountain is what is protected by copyright.

Simply put, copyrightable work is analogous to the leaves in a forest; each leaf appears in a form that is distinguishable from the other despite having similar characteristics with other leaves.

Image result for beyonce pay me gifs

The second point raised during the conversation was the lack of time to register their work. The good news is that in some jurisdictions, this is not an issue because protection is automatic once one’s work is released into the public domain. In such instances, registration becomes a mere formality and helps put the general public on notice.

Registration also has the added benefit of making enforcement and seeking judicial remedies easier. Thus, depending on one’s jurisdiction, registration of one’s work may not be a prerequisite to benefiting from copyright protection. Nonetheless, formal registration is highly recommended.

2. Copyright protection is well and alive, even in African countries!

Recent developments this month reminded me that copyright protection is alive and well, even in African countries! Last week, The Nation newspaper reported that “[a] Federal High Court in Abuja, on Friday, February 12, dismissed the preliminary objections filed by former winner of the Face of Africa pageant, Oluchi Onweagba, who was contesting a copyright suit filed against her”.

The Nation noted that Chudi Charles, an executive officer of International Pageant and Films, filed the infringement suit seeking N780 billion in damages on grounds that the defendants used West Africa’s Next Top Model, his registered brand, without his consent. Indeed, the dismissal of the preliminary objections does not necessarily predict the court’s ruling on the matter.

Nonetheless, judicial decisions over the past few years signaled the judiciary’s commitment to enforcement. For example, in November 2015, a federal high court sitting in Lagos awarded an artist, Dr. Sunday Adeniyi Adeye a/k/a King Sunny Ade, damages in the amount of N500 million for copyright infringement.

In 1997, King Sunny Ade filed suit against African Song on grounds of using his master tapes to produce duplicates of his work for public sale without his consent and any remuneration. Several years later, the court ordered the defendants to pay damages. (Sunday Adeniyi Adeye vs. African Song FHC/L/CS/196/97).

Similarly, in Angella Katatumba v. The Anti-Corruption Coalition of Uganda (ACCU) (H.C.C.S No. 307 of 2011), a Ugandan high court ordered the Anti-Corruption Coalition of Uganda (“ACCU”) to pay damages in the amount of UShs. 25 million to Katatumba, an artist, on grounds that ACCU incorporated Katatumba’s song into an advertisement jingle without her consent.

Likewise, in Nonny Gathoni Njenga & anor v. Catherine Masitsa & 2 ors Civil Case No. 490 of 2013, a Kenyan high court ordered the defendants, Masitsa et al., from reproducing, translating, or adapting the plaintiffs’ literary work, “Wedding Show with Gathoni” into the defendants’ TV Show “Samantha’s Bridal Show.”

Despite the fact that “Samatha’s Bridal Show” was running prior to “Wedding Show with Gathoni,” the court’s ruling was made on grounds that the defendants “changed their old running order [of their TV show, Samantha’s Bridal Show] and copied the plaintiffs.” Thus, although copyright cases may not make headlines very often, this does not necessarily mean that enforcement has been erased from the judicial fabric.

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3. Practical tips

  • As an entrepreneur, you should register your original expression with your copyright registration office.
  • Use copyright notices, e.g. ©, on your copyrightable work. Such notices not only puts the public on notice but aids in preventing an forger from making an innocent infringement defense—a defense whereby the forger claims that they were not aware their act constituted copyright infringement.
  • If you are using photos, music, or other third-party material for your new venture, seek appropriate consent. You do not want to be subjected to a copyright lawsuit that could potentially cost your business millions.
  • If your employees or contractors’ scope of work involves providing you with their original expression of an idea, ensure that you have their written consent to use their work and, if appropriate, seek the rights to any such copyrightable work.

To summarize, copyright remains an enforceable doctrine in African countries. Indeed, embarking on the enforcement process will require a heightened dose of patience. You have worked hard to create your work; protect it judiciously! If you would like insights on a particular topic, write to us! We are listening.

The fork in the road: Choosing the right business structure

Once you have decided to start your new venture, it is imperative that you choose the right business structure for your company.

Do research to find out if you should register as a sole trader, a limited liability company, or a partnership. Don’t rush to the Corporate Affairs Commission to register an LLC because your friend did and their business is profitable.

If in doubt, this piece will help you to make the right choice.

Sole proprietorship (“the lone walker”)

 A sole proprietorship is owned and managed by one individual—the owner. The owner is liable for the business’s financial obligations. For example, in some jurisdictions, as a sole proprietor, your business profits and losses are included in your personal tax returns.

Consequently, if your new venture experiences losses, such losses may offset your income from your “day job.”

The drawback of this structure is that you’re liable for your new venture’s liabilities. Which means is your personal assets (houses, cars, jewelry etc.) are on the line if you fail to repay a debt or run into financial trouble.  

If you love working alone and do not mind being personally liable for your business, this may be a good option for you.

But note that raising funds for your business as a sole trader will be difficult.Banks and institutional investors tend to shy away because of the risk of losing their investments if your business goes south.

Partnership

A partnership is appropriate if your new venture is owned by two or more individuals. Partnerships are named differently in different jurisdictions and vary in structure,  which dictates you and your partner(s) liability.

For example, under a general partnership, you and your partner(s) are responsible for the financial liability and daily operations of the venture. 

On the other hand, a limited partnership constitutes a general partner and a limited partner. A general partner owns and assumes the liability of the partnership, whereas the limited partner is the investor (the limited partner only provides the money!). The limited partner does not participate in the daily operations of the new venture and is not liable for the new venture’s debt.

Generally, a partnerships have a better chance of raising funds from banks and institutional investors than sole proprietorships.

More on partnerships

Thoroughly review the different partnership structures in your jurisdiction and determine what works best for venture, then if necessary negotiate with your business partner(s) and sign a contract. Even if your partner is your best friend.

Have these questions at the back of your mind when drafting the contract:

  • What is your business continuity plan if your partner leaves or dies?
  • What role will each partner play?
  • Do you want only one partner taking decisions on behalf of the company (e.g. taking out loans)?
  • How will you resolve conflicts between partners? (Stay away from litigation!)

There is no better time to agree on the terms of the partnership than during the early stages when everyone is excited about the venture. Sign the agreement during the honeymoon phase as it will be extremely challenging to agree on anything during the divorce phase.

Corporation

Like partnerships, corporations vary from one jurisdiction to another. Nonetheless, corporations are generally separate entities from their owners, and personal assets not at risk. However, there are some exceptions where a court could pierce the corporate veil and make make owners liable.

As with partnerships, banks and institutional investors are more likely to consider issuing loans or making investments. Corporations also have the benefit of raising funds by issuing stocks.

Limited Liability Company

A limited liability company has one or more partners (depending on the jurisdiction) and combines elements from partnerships and corporations. For example, all partners in a limited liability company can all participate in the daily operations of the business, but partners are not personally liable for the venture’s debt. What’s more, LLCs can raise funds from institutional investors and get bank loans.

Nonetheless, this veil of protection against liability is lifted if you personally guarantee the venture’s debt. 

You want to keep a clean slate? Here’s how to do that…

Once you have chosen a business structure, it is imperative that you register it with the relevant regulatory authorities. 

Contrary to popular belief, the Lagos Internal Revenue Services can track your Lagos-based business if your business fails to make relevant tax payments. 

Moreover, you do not want to give potential investors the impression of one who evades regulatory processes.  

Some practical steps to registering your business

1. Choose a name for the business.

2. Check with the Corporate Affairs Commission that the name is still available. In some jurisdictions, this search can be conducted online.

3. If it’s available, register the name or reserve the name (some jurisdictions allows for name reservations for 30 days).

4. After the name is confirmed, draft your legal documents e.g. Partnership Agreements, Memorandum & Articles of Association, etc. The Memorandum & Articles of Association should enumerate the purpose of the new venture, the name of the partners and their percentage ownership, the office address etc.

5. Register your company with the relevant tax authority and get a tax identification number.

6. If applicable, apply for a business permit/license.

In sum, the business structure you choose determines the extent to which you will be personally liable for your business debt, your tax liability, your responsibilities as a business owner as well as the required regulatory filings.

This is one of the most important early stage decisions you will make as a business owner so think through it carefully and decide what works for you!

In the next segment, we will discuss legal considerations when raising funds for your new business.

Have a question to ask? Write to us! We are listening.

Follow this series with Part 1 of Efe’s Legal Corner on The Best Way To Resign Your Job To Start Your Business

5 legal issues startups should think about within 6 months

Developing a new idea, creating a website and customers are all the exciting things about building a startup but dealing legal issues will never be on a founder’s top ten list. Unfortunately, a strong legal foundation is necessary in order to build a growth company and not taking care of these important issues can keep you from getting investment or expanding down the line.

Here are five things all founders should pay attention to within the first six months of starting their business to ensure it’s off to the right start.

Co-founders

Key Takeaway: Be sure to draft a founders’ agreement early on and without emotion.

Kermit typewriter

Allocation of company ownership is important. It is also vital to address what happens if one founder departs. It is not uncommon for pre-incorporation founders to fall off the map before the startup becomes profitable. Deadbeat co-founders may also show up to claim profits if the startup takes off. You therefore need a clear strategy on how to handle this.

Founders should also clarify what their duties are to current and former employers. If the idea for a startup was developed or worked on while an entrepreneur was employed by another business, there may be specific legal issues to consider.

Lawyers

Key Takeaway: Retain appropriate legal counsel as soon as possible or utilize open sourced legal documents for the early stages.

Scandal - its handled

Focusing on legal issues early is key, and is especially helpful for new entrepreneurs. However, do not give your lawyers equity and do not use your investors’ lawyers. Also, remember that violation of privacy, securities or tax laws can lead to criminal liability so it is imperative that startups have proper policies in place and carefully adhere to them.

Don’t have the funds to hire a full time lawyer? Check out the Founder Institute’s open source agreements that can serve as a good start for standard legal agreements.

Intellectual Property

Key Takeaway: Founders should implement an intellectual property strategy to monitor the use and disclosure of their intellectual property.

The Boy Is Mine

Protect your startup’s name. It could be one of the company’s most valuable assets. Many startups operate under the mistaken assumption that a corporate name reservation is the only thing they need to protect their business name. Remember that you also have to register the name globally as a trademark.

One of the most common pitfalls that entrepreneurs fall into is the exposure of their intellectual property by communicating confidential information to various people without non-disclosure agreements and other safeguards, or the use of inadequate non-disclosure agreements. Non-disclosure agreements should be drafted with the particular circumstances of the disclosure in mind and ought not to be treated as a basic boiler-plate document.

Consultants/Employees

Key Takeaway: Draft formal agreements for all consultants and employees so the terms of service and confidentiality requirements are clear.

Beyonce bossy

It is vital to enter into a written consulting agreement with such contractors. Intellectual property developed by an independent contractor will typically belong to the independent contractor in the absence of a clause in a contract to the contrary.

It is also important to familiarise yourself with the employee laws of the city, state or country in which you setup. The most common employment law violations are misclassifying an employee as an independent contractor and/or failing to pay an employee appropriately.

Licensing and Incorporation

Key Takeaway: Know what the important license conditions are for your city and country and ensure that they are are not being violated in the course of your business.

Greys Anatomy - License To Kill

Set up a corporation or LLC for everything but a short-term business whose existence will be numbered in months rather than in years. Only raise funds from “accredited investors” and do not pay commissions for fundraising unless it is to a registered broker-dealer.

Additionally, in most countries, running any kind of business requires several licenses, some of which might be simple tax registrations or trade licenses. Failure to comply with licensing norms leads to fines, costly legal suits and even business shutdown.