Matthew Kenney

Small Business | Workplace Law

Create Energy & Exit a Rut

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The Niagara River flows normally for miles like many rivers. However, as the water approaches Niagara Falls it proceeds though a series of rapids; gains speed and the soars majestically off Niagara Falls to the basin below. From there the water continues its normal flow to the St. Lawrence River and its mist, on sunny days, produces beautiful rainbows.

Business is much like the water spilling over Niagara Falls. To experience the rush of exhilaration; see rainbows and experience tranquility in the future we should be willing to endure the turbulence that creates energy.

The result of this process at Niagara Falls is a natural wonder that attracts millions of visitors annually. The results for those who create energy within careers and companies is no less powerful. Think about it: All the great innovations that have advanced humankind were created by people with energy enough to put thoughts into action.

How to Create Energy

Have you ever noticed how an office, warehouse or restaurant etc. feels different when it’s busy? What you’re feeling is energy. Kinetic energy is created through motion. As you put ideas into motion, you are creating energy. Take action and you’ll create energy every time. Create energy and you’ll move forward and reach goals faster. 

Anyone can create energy as the only prerequisite is a willingness to take action. Start small by focusing on topics within your span of control and you’ll feel the energy generating. Start with something simple, but start. You’ll feel better and your career/business will move forward.

Of course, it’s difficult to generate enthusiasm when a business has been forced to shut-down, or a career has been negatively affected by COVID-19. But what choice do we have? The river has changed. Society has changed. Our economy will recover, but things will be different going forward…..and that’s OK. Let’s change with the circumstances. If we evolve, learn, and grow during this difficult time–perhaps we’ll be more prosperous when we next step into the river of commerce.

(c) Copyright 2020. All Rights Reserved.

The CARES ACT & Your Small Business

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If your small business has been negatively impacted by COVID-19, the CARES Act may provide you with some relief. The law dramatically reduces the regulatory process required to receive a Small Business Administration 7(a) Loan.

The CARES Act provides the Paycheck Protection Program. Under the law, qualifying business may receive a loan in the amount of 2.5 times their average monthly payroll, up to $10 million. A significant portion of the loan is forgivable if the funds are used to provide payroll for either full or part-time employees.

Effectively, the US government will provide a grant in the amount of 8-weeks of a company’s payroll (including benefits) for the period between February 15, 2020 and June 30, 2020.

Loan proceeds can be used for other qualifying reasons, such as rent; utility payments and loan interest payments. An important aspect of the CARES Act: It is available to sole proprietors, independent contractors and non-profit organizations.

The law also modifies the Economic Injury Disaster Loan (EIDL) program. Because Florida has been declared a disaster area, small business owners can apply for loans up to $200,000 without providing a personal guarantee. Larger, long-term EIDL loans, up to $2 Million, have an interest rate of 3.75%.

Loans made under the CARES Act are non-recourse, meaning borrowers will not be subject to personal liability should their business default. Application fees are waived, and interest shall not exceed 4%.

If you have any questions about how the CARES Act can help your business navigate these difficult times, please contact call Matthew Kenney at 407-693-2050.

Coronavirus and Contracts: Must You Perform?

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The COVID-19 pandemic has negatively affected the global supply chain. Orders are going unfilled, which means contracts terms are not being met. Does it constitute a breach-of-contract when a supplier cannot fulfill its obligations?

The answer is: It depends.

Having a signed contract is one thing. Enforcing it is another. Under Florida law, there are instances where courts will excuse a party from contract performance. Two such instances: Where it is impossible to perform; and when it is impractical to perform.

However, courts will generally not excuse a party from performing when a disruptive event is anticipated at the time of contract formation. Stated differently, a court might require a party to perform if a risk — including a pandemic and resulting national emergency — was anticipated by the parties when they entered the contract.

The question before many business owners and their legal counsel: Is COVID-19 a risk that was reasonably anticipated by the parties?

Many written contracts will have a Force Majeure (meaning “Superior Force” ) clause, which excuses a party from performance if there is an unforeseen and uncontrollable event the parties could not have contemplated during the formation of their contract. There is no doubt COVID-19’s impact on one’s business is uncontrollable. The question in a breach-of-contract lawsuit, however, might be: Was it unforeseeable?

The phrase Force Majeure is generally used in contracts as synonymous with an “Act of God”. Contract performance prevented by hurricanes, floods and tornadoes would fall easily into this category. But what of COVID-19? Was this terrible event really unforeseeable?

Although COVID-19 feels like a sucker punch to our economy, futurists have warned of the risks of potential epidemics and pandemics (just like COVID-19) for years. Bill Gates gave a TED Talk on the subject in 2015, for example. Since 2000, the world has seen outbreaks of SARS, Swine Flu, Avian Flu, MERS etc. A reasonable person could argue parties should have addressed future epidemics and pandemics in their contract terms, given the notice we’ve been given by experts about our susceptibility to such events.

The point: Do not assume the effects of COVID-19 will absolve your company from contractual liability, even if performance is impossible or impracticable. A judge might ask: “If other companies and entrepreneurs specifically addressed the issues of national emergency, epidemic, or pandemic in their contracts….why didn’t you?”

Florida courts will likely evaluate your Force Majeure clause based on its clear, unambiguous language. It’s possible Florida courts will view non-performance related to COVID-19 as unforeseeable and uncontrollable events, freeing a party from performance. It is equally possible they will not. Therefore, the best approach going forward is to ensure your contract languages addresses epidemics and pandemics in clear, unambiguous terms.

A Serving of Goodwill

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Service providers, imagine you go to a car dealership. You see a new Cadillac and ask to take a test drive. The dealer says “Sure, that will be $29”. The dealer’s logic: He has a valuable asset. What if you drive the car; and use his resources (including his valuable time) but do not buy? The dealer is just being prudent, after all.

Would you pay $29 for a test ride?

Probably, not. Most people would not because marketing requires goodwill on both sides. That is, if you are a legitimate prospective customer (who can afford a Cadillac and is willing to buy) you expect the dealer to extend the courtesy of a test drive.

Now, let’s apply this idea to the marketing of services. Services are different in that once knowledge is shared it cannot, unlike the keys to a Cadillac, be returned. Therefore, if an entrepreneur shared her knowledge with a prospect, and the customer doesn’t buy the service, in the seller’s mind she has lost value (and the buyer has gained something for free).

To avoid this scenario, service providers often ask prospects to pay (often at a discounted rate) for an initial discussion. Do you see the problem? The seller is assuming the buyer will find value in the knowledge; and then apply it for his/her benefit. However, it is entirely possible the prospective buyer will not see and/or appreciate the value in what is being offered.

The point: A service is not like a tangible product, therefore, should not be marketed like one.

For example, visit a quality college and you’ll find employees will eagerly share knowledge with you. Admissions staff, students and faculty will chat with you to explain the school’s culture and offerings, and how they could help you satisfy your personal and professional goals. The emphasis is not on making the sale. The emphasis is on building a mutually rewarding relationship. Would developing this relationship be made more difficult if admissions officers charged $49 for campus tours? After all, only a small percentage of those who visit a college will enroll. Are colleges being exploited? Hardly.

Here is the lesson for self-employed service providers: Don’t operate in fear of being exploited. Yes, your knowledge is an asset. Share it and you’ll build goodwill, and build relationships. Common sense and goodwill complement each other nicely. If you’re concerned about being exploited, it means you have not narrowed your prospect list well enough.

Stated differently, you don’t want exploiters as customers anyway. Narrow your prospects well and work on the assumption a mutually beneficial relationship will blossom. If a few people take your knowledge without reciprocation, so be it. The vast majority of people will be just like you: Honest, ethical, and interested.

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