Category: Business

Why You Should Consider A Business Apprentice

Why You Should Consider A Business Apprentice

Have you ever reached a stage in your life or career when you thought it would be nice to take a young person under your wing? Maybe you were, or are, proud enough of your craft that you want to share it with someone else or have some wisdom and knowledge you want to pass down to the next generation. Internships are an option, but students are growing frustrated with the unpaid variety (which are sometimes illegal).

There are still jobs, however, that require learning not taught in schools, so they still need some sort of position that doubles as a learning experience. In this case, apprenticeships are excellent opportunities. They are paid, so young workers are drawn to them, but they also do not have the same expectations as regular employees. Apprenticeships offer benefits to both you and students, so here are a few reasons to consider hiring one (or more).

Recruit Fresh Talent

Young people are full of new ideas and perspectives, but not every older member of the workforce gives them the chance to share. When you hire young talent, you have more opportunity to prevent your business from becoming stagnant and increase your diversity. Listen to their ideas: do they think of solutions that have not occurred to you? Do they broaden your horizons across the board, including elements such as payment methods and tools like eChecks? It’s possible that their passion for the job may even renew your own and liven up your office.

Several industries are also coping with significant skills gaps. Instead of searching far and wide for someone who meets specific criteria for a job description, you can bring apprentices in at the bottom and train them to work up the ladder. Teach them the skills your workforce is missing (along with what you wish you knew at their ages). If you want, you can customize this training to your business’s particular needs, but you can also set your apprentices for life with the knowledge they will carry with them throughout their careers.

When you train apprentices, you are the first source they will look to when applying for staff positions. Why not hire them? Not only will it save you time from further searching, but you are also already well acquainted with their personalities and performances. “Home-grown” employees are also familiar with how your business operates, so they fit in smoothly with the culture and processes.

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Help Apprentices Grow

Learning on the job is necessary and constant, but it can be stressful. Having a mentor to turn to that will not judge them is an invaluable resource for young workers (and they will be more productive employees). Washington State founded the Aerospace Joint Apprenticeship Committee, which trains aspiring engineers and technicians to meet rising industry demand. One apprentice said:

“Within my first year of the program, my path in the industry became more defined than ever… Over the course of the year, I learned more about math than I ever did throughout high school and my instructor designated an entire quarter to shop procedures—both made job planning at work much smoother. The AJAC program has kept me interested in this trade. I plan on becoming a tool and tie maker, a ship foreman, or a teacher. My career has become more of a hobby to me than work.”

Apprenticeships are your chance to encourage rising talent and foster interest in your industry. You are not merely training young workers how to become effective employees; you are teaching them how to approach the concept of work itself. When students feel well prepared to advance in your business or field, they do so with confidence and insight for innovation.

It’s Good for Business

The Economics & Statistics Administration conducted a study to see how apprenticeship programs benefit businesses financially. A company named Dartmouth-Hitchcock in New Hampshire found that apprenticeships were necessary for expanding and reorganizing how it provided medical services. $7,000 per apprentice in increased revenue (from appointment bookings) and a $48,000 per student reduction in overtime costs offset the per apprentice program cost of $59,700. The program almost paid for itself within one year and reduced staff turnover and burnout.

What should you look for in an apprentice?

When hiring an apprentice, you are looking for potential, not pre-existing knowledge. A national Careers Service adviser, Julie Taylor, notes that “employers are commonly looking for similar traits and characteristics in apprentices, regardless of the job role, including punctuality, reliability and having a real interest in the job, coupled with a willingness to learn.”

You are becoming a mentor, not hiring for a position and setting the poor soul free. Mentorship requires time and effort, so take care to look for young people that will be receptive to constructive criticism and have positive work ethics.

An apprenticeship may or may not be your hiree’s first taste of work, but you are in an opportune position to shape their education and influence your industry. Will you consider hiring an apprentice?

Startup Law 101 Series – Where Should I Incorporate My Startup Business?

Startup Law 101 Series - Where Should I Incorporate My Startup Business?

The Issue for Founders

Founders of startup businesses need to decide whether to incorporate in Delaware or in the state in which they will be conducting business. In spite of the commonly held lawyer view to the contrary, I believe founders should think long and hard before choosing Delaware since it often is not the best choice for a typical early-stage startup company.

Many Startup Business Lawyers Routinely Recommend Delaware

During the high-tech bubble in the late 1990s and early 2000s, the idea of ​​a quick path to an initial public offering became so entrenched that startups began skipping the step of incorporating in their own states and moved directly to a delaware incorporation to speed up the process of going public. The bubble burst but this practice did not.

So what do we have? The impetus that drove lawyers to use Delaware routinely for startups was to shorten the path to IPO. After Sarbanes-Oxley and certain public accounting rules changes, very few startups any longer go the IPO route. Yet the Delaware filing pattern persists.

Let us consider the advantages of a Delaware incorporation versus the disadvantages to see if it makes sense for startups to file routinely in Delaware as many lawyers urge them to do.

Why VCs Favor Delaware

Delaware law affords substantial advantages and is an ideal state of domicile for public companies and late-stage startups that are about to go public . Delaware has a well-developed and reasonably consistent body of corporate law with which most business lawyers are familiar. It offers various advantages that help shield an entrenched management – such as the ability to dispense with cumulative voting for directors and the ability to stagger the election of directors. Owing to these advantages, Delaware is favored by venture capital investors who typically do control their portfolio companies and who prefer to make that control as complete as possible. Public company managements like Delaware for this reason as well.

Delaware law also typically gives preferred stock investors with voting control of a corporation the unilateral power to merge that entity into another, or otherwise have it get acquired, without need for approval of the founders or other early-stage participants who typically own most of the common stock. This type of transaction can “wipe out” the value of the common stock because it can be structured so that only those who hold a liquidation preference (ie, the preferred stockholders) get any economic value out of it while the remaining shareholders may get little or nothing. In Delaware, unlike other states such as California, those who stand to get nothing out of such deals often have no voice in stopping them. Thus, there is good reason why preferred stock investors (ie, VCs) will tend to favor Delaware corporations. It gives them enormous leverage over the remaining shareholders in the event the VCs decide to “take out” the company.

Here is a real-world illustration of how this can work. A few years back, when the tech bubble burst, I was working side by side with lawyers from a prestigious Silicon Valley startup venture firm on some joint client matters. During a lengthy phase, I could never get hold of the senior associate from the big firm who was working with me – he was doing an endless stream of “mergers” for weeks on end. Why, as everything around us was coming crashing down, would there be a rash of mergers? Not because these were success cases. They were not. What was happening was a systematic shedding of portfolio companies by the VC firms with quickie mergers as the vehicle. The dreams of many founders fell fast and fell hard in those short weeks.

Thus, the startup world as dominated by VCs had evolved. Before the high-tech bubble, the typical approach was for startups to incorporate in their home states and only reincorporate in Delaware when they reached a mature stage at which the advantages of Delaware law made a substantive difference to them – that is, on the eve of IPO. In the post-bubble era, the VC preference is universally for Delaware, even from inception.

Founder Concerns About VC Expectations

So where does this leave founders who need to decide where to incorporate their startup?

Founders need to understand how all this works and then make the decision that is best for them without regard to what they believe VCs will think.

Sometimes founders want to incorporate in Delaware precisely because they believe that the venture capitalists who will be funding the company later will insist on it. A few venture capitalists do, but most do not, and many startups will never seek venture capital funding in any event.

In over two decades of representing tech startups, at no point have I seen a VC firm refuse to fund a quality startup in which it was otherwise interested simply because it was not incorporated in Delaware. In other words, during the early funding stages of a startup, most VCs are no more consciously focused on the downstream factors of what happens during a merger than are the founders. They may be told by their lawyers of the key factors but they then need to decide whether to invest in a company that is incorporated somewhere besides Delaware. In all the cases I have seen, they have chosen to invest without regard to the Delaware factor and, indeed, have further chosen to keep the company incorporated in its home state thereafter unless and until it reached a stage where it would want to go IPO. Based on this experience, I would say that the fear factor among founders about VC expectations on this point is almost universally either misplaced or at least much overstated.

Factors Affecting a Founder’s Decision Whether to Choose Delaware

For the typical California-based early-stage startup, Delaware normally does not offer any practical advantages over a California incorporation (to pick as an example the local jurisdiction of Silicon Valley). Perhaps the only near-term advantages are (1) that Delaware allows for a single-member board of directors, regardless of the number of shareholders in the company, where a state like California requires that the number of directors match the number of shareholders up to three, and (2) quicker and more reliable filing of documents in connection with funding events.

The first of these can facilitate easier corporate governance in an early-stage startup, especially a startup controlled by one predominant founder.

The second can avoid sometimes embarrassing delays when fundings are set to close.

Apart from these areas, however, a Delaware domicile normally just adds administrative burdens for an early-stage startup based in a state like California. These burdens include the difference in the way franchise taxes are handled and the need to qualify as a foreign corporation in the local state. There are also downstream risks to founders in connection with losing the value of their interests in mergers without having a voice in the process (discussed above). In general, then, a Delaware domicile imposes more administrative hassle upon an early-stage company than would a local domicile and may create substantive risks down the road for the founding team. The burdens can be dealt with, but the question is whether they are worth the meager advantages, if any, afforded by a Delaware domicile in the early stage.

The major advantage to incorporating in your local state is simplicity. In an early-stage startup, keeping matters simple is important. It saves expenses and does not divert company resources toward issues that can be avoided.

Use Caution in Choosing Delaware

The point is not to avoid Delaware but rather to consider the issues in light of your company’s goals and not simply choose Delaware reflexively. At that point, check with a good lawyer and make your best call, whether it be Delaware or not. Just remember: if you choose to go simple and stay at home, and this proves in retrospect not to be your best choice, you can always reincorporate in Delaware later.