Select Page
2

Objection Handling

Every prospect you speak to has sales objections, or reasons they’re hesitant to buy your product. Why are sales objections unavoidable?

Because if the buyer didn’t have reservations about your solution’s price, value, relevance to their situation, or their purchasing ability, they would have already bought it.

 

What is objection handling?

Objection handling is when a prospect presents a concern about the product/service a salesperson is selling, and the salesperson responds in a way that alleviates those concerns and allows the deal to move forward. Objections are generally around price, product fit, competitors, and good old-fashioned brush offs.

Objection handling means responding to the buyer in a way that changes their mind or alleviate their concerns.

Some salespeople argue with their prospects or try to pressure them into backing down — but this isn’t true objection handling. Prospects typically end up more convinced than ever of their position; worse, salespeople lose the trust and rapport they’ve built up.

Instead of telling your prospect they’re wrong, help them come to a different conclusion of their own accord. And if you can’t persuade them, that’s a good sign they’re a poor fit.

Read

Determine the Legalities and Finances

Each business structure is different, not only in how they are set up and operate, but there are also implications for liability of the owner(s), taxation, and the process for selling or closing the business.

Now let’s look more in depth at the legalities, management, liabilities, and finances for each business structure.

Sole Proprietorship

Define Sole Proprietorship

How does it work?

It’s the simplest business structure to form and maintain, requiring little to no paperwork or approvals to begin. In a sole proprietorship, you control the entire business. You can manage it or hire managers.

What’s your financial liability?

In a sole proprietorship, you receive the profits and are liable for any debts of the business. So, if you have unpaid company debts, a creditor could go after your assets, which could also include your personal assets if business assets do not fulfill the debt. This is called UNLIMITED LIABILITY.

You can sell a sole proprietorship as a business or close its doors and sell its assets. The business ends upon the death of the owner and may need to end if the owner develops a permanent disability or has a prolonged absence.

How do you raise capital?

The ability of a sole proprietorship to raise capital is limited. You cannot sell shares of the business. Generally, sole proprietors use business and personal assets as collateral for any loans or lines of credit.

Partnership

How does it work?

All partnerships are controlled through an agreement. This type of business structure has flexibility but there are key considerations that must be met in operating and financing a partnership. Although no written document is required to form a partnership, for all partners’ sake, a partnership agreement should be written. If they have no other agreement, the law assumes that partners share control equally. This document should spell out matters such as division of profits, outlining the roles of the partners, how to resolve disagreements, and dissolution of the partnership.

What’s your financial liability?

Partnerships have a fairly simple tax structure. Income and loss earned by the partnership passes through to the partners, and they report it on their respective tax returns. The partners then pay taxes on their share of the profits, or apply the loss against their income to reduce their income taxes payable. The partnership itself does not complete a separate tax return, since from CRA’s perspective, the owners and the business are one and the same.

Using a general partnership to form your business means that all liabilities are personal and unlimited. Therefore, each partner is personally liable for the actions of any other partner so you will need to consider this financial risk. Creditors will usually seek to collect from the partner with the most accessible assets. If you are that partner, seeking reimbursement from the partners who did not pay can be a long and sometimes futile process. A good solution to minimize exposure to risk is to purchase commercial general liability. This helps to mitigate risk, but does not eliminate it. This will be covered in the Risk Management section.

In a limited partnership, only the general partner is held personally liable for the business debts. The limited partner’s liability is usually limited to the amount of investment.

Since any form of partnership is a voluntary arrangement, you or a partner can end it at any time. Partners can simply say they no longer wish to be a partner. The death of a partner also automatically ends a partnership. Therefore, a partnership agreement should include provisions for dissolution. The agreement also covers the payment for, or performance of partnership obligations, division of assets, continued use of the name and ownership of intellectual property (intangible assets such as: inventions, new technologies, new brands, original software, novel designs, unique processes, and more).

NOTE: The use of a Limited Liability Partnership (LLC) provides more liability protection for each general partner (applies to overlapping professional environments such as accountants, doctors or lawyers offices or firms where clients may sue a partner for wrongful acts).

How do you raise capital?

A general partnership is primarily dependent upon the individual assets of the partners to raise additional capital. Lenders will look for a fully collateralized loan to be personally guaranteed by the partners.

If the partners decide to add investors then the business must be converted to a limited partnership. Limited, or silent, partners contribute financially but not in the day-to-day operations. This creates a new business with new sources of capital. However, since limited partners are investors whose liability is limited to their investment, it is unlikely that they would be willing to personally guarantee a loan.

Corporation

A Corporation is a distinct tax entity that operates a business for shareholders whose ownership percentage is determined by how many shares they hold. These shareholders receive a dividend on each of their shares. The decision-making for this group of corporate shareholders is managed by elected Directors and appointed Officers and increases accountability. The law requires corporations to operate separately from their shareholders and to annually file all governmentally required reports and taxes.

Corporate Structure: Board of Directors

As suggested by its name, the board of directors “directs” the corporation’s affairs and business path. The board of directors also has ultimate legal responsibility for the actions of the corporation and its subsidiaries, officers, employees, and agents. A small corporation might have one director (who may also serve as the sole officer and shareholder), while a large corporation may have 10 or more people serving on its board of directors. For voting purposes, a corporation with more than one director should keep an odd number (3, 5, 7, etc.) of directors on its board.

Corporate Structure: Corporate Officers

The corporation’s officers oversee the business’s daily operations, and in their different roles they are given legal authority to act on the corporation’s behalf in almost all lawful business-related activities.

Chief Executive Officer (CEO) or President: The CEO has ultimate responsibility for the corporation’s activities, and signs off on contracts and other legally-binding action on behalf of the corporation. The CEO reports to the corporation’s board of directors.

Corporate Structure: Shareholders

A corporation’s shareholders have an ownership interest in the company by having money invested in the corporation. A “share” is an apportioned ownership interest in the corporation, and the value of a single share can range from less than a 1 percent interest in the corporation, to 100 percent. When a corporation is first formed, its original owners are usually its first shareholders, and in smaller corporations these initial investors may remain the sole shareholders throughout the corporation’s existence. A smaller corporation’s few shareholders may consist of those involved in day-to-day business operations (as owners, managers or employees). Remember that in smaller corporations, one person may also serve as the business’s sole director, officer, and shareholder.

How does it work?

An advantage of corporations is that they insulate you from liability. If the corporation operates according to laws and regulations, creditors only have access to the corporate assets for business debts. Your personal assets are not at risk (there are exceptions such as putting your house up as collateral). The law requires corporations to operate separately from the shareholders and to file all governmentally required reports and taxes. There can always be legal loopholes, and it is advisable to still get good commercial general liability coverage, even if incorporated.

What’s your financial liability?

Corporations are the most popular form of business structure in Canada because of the increased liability protection a corporation provides over a sole proprietorship. If the corporation operates according to laws and regulations, creditors only have access to the corporate assets for business debts. As a shareholder, your personal assets are not usually at risk. An exception to this would be if you apply to the corporation for a loan and use your personal assets as collateral.

Sometimes a corporation with one or two shareholders keeps inadequate records and fails to keep separate records of corporate and personal assets and liabilities. Failing to operate the business as a corporation separate from the owners results in a loss of insulation from liability. If a creditor can show that your business has not been properly operated as a corporation, the creditor can then reach both your corporate and personal assets.

Corporate insulation from liability does not shield you from liability for your own negligence causing harm to another. You may be liable along with the corporation. Nor does it prevent the shareholders, directors and officers from being sued. Even if you are individually determined not to be legally liable, defending the action filed against you can cost thousands of dollars. For these reasons, it is advisable to obtain commercial general liability insurance coverage.

How do you raise capital?

Incorporating a business carries many advantages. One of the most significant advantages is tremendous financial flexibility in raising capital by issuing a variety of securities, such as shares, bonds and debentures to raise funds. A corporation has the potential to provide you the capital structure you need to accomplish your financial goals.

Any corporation that splits shares 50/50 risks the shareholders’ security and creates uncertainty in their corporate decision-making and ability to raise capital. After all, what happens if shareholders do not agree and cannot make a decisive vote on proposed bylaws? The structure in a corporation can hamper the flexibility of a corporation to make changes however this can be resolved through well-crafted articles of incorporation that set out the rules and regulations for the business. Again, it is strongly recommended that you use the services of an accountant and lawyer help you setup your corporation. Having more than a 51% ownership percentage of the shares ensures that you can make any changes you want to direct your corporation.

Businesses can be incorporated either federally or provincially. Please note that a federally incorporated company will still need to obtain additional extra-provincial registrations in each Province in which it operates. If your company is incorporated provincially but you decide to operate it in multiple provinces at a later date, you must obtain an extra-provincial licence from every other Province in which you wish to carry on business.

Tip: If you’re doing business as a corporation, use the guides available through the Government of Canada website to determine what is the best type of corporation for you and to ensure you maintain your corporate status and receive the most tax benefits. Use the services of an accountant and lawyer to help you.

Case Study

– How to Choose the Right Business Structure For You.

As you saw in Sarah’s background, she has the ability to manage her business model and knows when she will need the help of an accountant and/or lawyer.

Often, the decision to incorporate is when the business is generating at least $50,000 in profits (as proposed to revenue).

Business Plan Activity

Legal Form of Business

This activity will form part of your Business Description (From BP Guide) where you will summarize the business and its offerings, the business history, and the legal structure of the business (sole proprietorship, partnership, or corporation).

 

Tip: There are reflective questions are set up for you in your Notes Tool (see below). Take time to really reflect on which business structure is best for you.Your Notes will save to your account where you can download or view them at any time.

More Information

Business Structure Handouts – Download PDF file

1) “Steps to Incorporating a Company in BC” (the instructions for Name Approval Request apply to all business structures, and are included on pages 4-6 of this handout),

2) “Maintaining Your BC Company”

Read from handout, “The Best Business Structure for your Client” summaries regarding: 1) Limited Partnership, 2J Limited Liability Partnership.

Read summary descriptions of C3 companies from handout, “Community Contribution Companies”.