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BUSINESS BUILDERS
Minnesota Manage your bans cash flow mostin non-compete a few simple agreements steps by Leonard Craig Veurink Segal
TIPS 1.
Minnesota passed a new law banning non-competition TIPS agreements as of July 1, 2023. 2. Several agreements not 1. covered Set a realistic in thegoal newfor law when include you nondisclosure want to break even. agreements, This will help agreements you to focus your designed efforts toand protect trade provide secrets a numerical or confidential benchmark information, for projectingnonsolicitation your cash flow in the agreements near future or agreements 2. restricting Put cash flow thebefore ability profits. to use client It or might contact seemlists. counterintuitive, but 3. Narrow if you aren’t exceptions organizing to your the cash new flow,law you’ll include run into allowing problems that non-competition a profitable quarter agreements, might not be ifable reasonable to fix in length and 3. geographic Secure credit area, ahead as part of time. of a Most sale smallofbusiness a business owners or if should agreed upon secureinasanticipation much creditofasbusiness possible. dissolution. This is the best way to be prepared 4. Non-competition for the unexpectedagreements also under the 4. are Consider usingscrutiny a payrollatservice. federal level. Business owners Having the professionals take care should keep payroll an eye taxes out for of collecting saves changes. them an enormous amount of time, 5. Consider, helps streamline instead, their cash flow 5. nonsolicitation Schedule your payments. agreements Don’t and agreements go delinquentrestricting but do divide former your payments into categories suchoras employees from using client “must pay,” “important to pay” and contact lists. Do so narrowly, “flexible payment terms.” This however, so they don’t violatecan the help keep sufficient new Minnesota law.cash on hand.
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Small businesses are usually founded by entrepreneurs who have a unique vision and a passion that drives them to work late hours, take chances and believe in what they’re doing. But, just as Thomas Edison once said that genius is 1 percent inspiration and 99 percent perspiration, successfully runOn ningMay a small 24, business 2023,requires Gov. Tim rolling Walz up your signed sleeves legislation and putting intoinlaw signifiprohibiting cant time onemployers more mundane, from day-toentering day matters. into non-competition agreements You can bewith driven, both impassioned employeesand and haveindependent a great idea tocontractors. fill a niche orThis serve new customers law took in new effect ways, on but Julyif1,you 2023, and don’tapplies attend to to agreements the details ofentered the business,on youorcan create yourself a heap into after thatfor date. ofAproblems. non-competition provision in violation Here, we’ll of the looknew at one lawof is the void most and important unenforceable, of these business according details: to Minnesota managing cash statute flow.181.988. Especially If part for of startups, knowing aearly larger agreement, thehow factmuch the noncash is coming in and going compete is void would not out, render and remainder accurately forecasting sales and the of the agreement expenses, is key to maintaining your void. In addition to other remedies, company’s health. a court may award reasonable No matter where you are in your attorneys’ fees to an employee who business, keep these things top ofthe is enforcing their rights under new mind:law. As defined in the new law, covenants not toyou compete are 1. Know when will break agreements that prevent an even employee (including Every small businessindependent owner keeps at contractors), after termination of the front of their mind the question:
UPSIZE NOVEMBER • DECEMBER 2023 2022
“When do I start to turn a profit?” Rather than wonder, set a realistic goal for when you want to break even. This will help you to focus your efforts and provide a numerical benchmark for projecting your cash flow in the near future. the employment relationship, from: 2. Put cash-flow management (i) working for another employer before profits forThis a period time, (ii) working mightof seem counterintuitive, in a specified geographical area, or since profits are how you survive. (iii) working for another employer However, if you aren’t organizing your in a similar capacity to the work the cash flow, you’ll run into problems employee did for the employer that that a profitable quarter might not be is party to the agreement. able to fix. Keep things organized and Under the statute, several well managed so you can be ready for agreements are not considered whatever success comes your way. covenants not to compete. These include: a nondisclosure agreement, 3. Secure credit ahead of time anToo agreement designed to often, small business protect owners trade wait until secrets theyor need confidential it to secure credit. information, This can causea anonsolicitation lot of unnecessary agreement, stress, or worse. an agreement Talk to experienced restricting the business ability owners to useinclient your area or contact and lists and ahead an agreement to solicit industry of time tonot know how customers of the employer. much revenue you’ll need up front. There are two narrow Take a realistic look at theexceptions situation to the prohibition on non-compete and plan. You might have sufficient agreements, to the cash reservesaccording or a rich uncle who is statute: (1) In the sale of a business, only a call away, but most small businon-competition are ness owners shouldagreements secure as much allowed long asThis theyisare credit as as possible. thefor best way atoreasonable length of time and be prepared for the unexpected.
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