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Tips for Startups and Common Pitfalls to Avoid


With the exhilaration of starting your own business comes the responsibility of dealing with what could seem like an endless array of employment issues. This post explores three areas that often create challenges for entrepreneurs and tips on avoiding common mistakes.

1. Record-Keeping. State and federal laws require employers to keep accurate records of employees’ work hours, compensation and other basic information to ensure compliance. Failure to do so could subject your organization to both civil and criminal penalties. Here are a couple tips to avoid record-keeping issues.

Develop a standard “personnel file” for each employee. The personnel file should include job applications, changes in employee status, employment agreements, and acknowledgment forms for receiving employer documents, such as employee handbooks and confidentiality/non-disclosure agreements.

Institute a time clock. Time clocks help ensure that employers are not paying employees for time that has not been worked. This is especially important for startups that must watch every penny to make sure their fledging company is able to make it off the ground.

2. Employee Hiring. A common mistake startups make is hiring too few or too many employees. Hiring too few employees can result in low employee morale and attrition. On the other hand, having too many employees on staff could have the costly effect of paying unnecessary wages and benefits, which of course, affects the bottom line. Here are three suggestions to help make sure you strike the right balance when determining how many employees you need.

Know your industry. As the old saying goes, “By others’ faults the wise correct their own.”  That is to say, use other businesses in your industry as a benchmark when making personnel decisions for your startup. 

Be aware of minimum wage and overtime requirements. Whether your startup will be subject to federal and state minimum wage and overtime requirements can depend on the volume of your business and the type of business you are operating. Because startups do not generally have a professional HR staff or a general counsel to consult, as an owner, it is imperative that you have a thorough working knowledge of wage and hour laws, which can be complicated and vary from state to state.

Consider independent contractors. Hiring independent contractors as opposed to employees can be an ideal way of reducing overhead costs and dealing with early uncertainty regarding profit and demand for the goods and/or services that you will be selling. Of course, misclassifying employees as independent contractors can have significant financial consequences, so be sure to consult an employment attorney when making these classifications.

3. Employee Handbook. A written set of personnel policies covering such matters as employee classification, pay/benefits, harassment, and employee leave is always a good idea, whether you’re hiring your first employee or your 50th. An employee handbook is an important tool that helps clarify expectations between employers and their employees.

Make sure your handbook is thorough and complete. Retaining competent labor & employment counsel to ensure that your employee handbook includes all required and/or necessary information will save you time and money in the long run.

Include notices and disclaimers. Certain laws require notice to employees, and handbooks are the easiest way to provide these notices. Handbooks should clearly state, however, that they are not contracts or guarantees of employment.

Gabe McGaha is an associate attorney at Fisher Phillips. Have questions about a legal or labor and employment matter and how it may affect your business? Contact Gabe at

Posted: 7/5/2017 2:45:08 PM | with 0 comments
Filed under: FisherPhillips, SmallBusiness

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Your business may be small, but that doesn't mean that your impact can't be huge! The Greater Memphis Chamber's Small Business Council serves to encourage, support, recognize and be a resource to small- and medium-sized businesses in the Memphis area. Here, our talented panel of contributors will present big ideas that could make a huge difference to your small business. And don't be afraid to ask questions ... no matter how small.

Sales & Small Business Ownership
Voss W. Graham is CEO and Senior Business Advisor for InnerActive Consulting Group Inc. He is known by his clients as "a knowledgeable partner who helps our team achieve business growth." He provides practical experience as a small business owner for over 29 years, yet is often engaged with Fortune 500 companies in the development of their people and business strategies.

Public Relations
Several professionals and strategists from the local Obsidian Public Relations firm provide excellent advice on everything from research to media relations to event planning. They believe that all companies, no matter how big or small the company or its budget, should have a public relations plan driving how they manage their relationships with key stakeholders. Public relations is an integral part of doing business the right way.

Human Resources
Joel Myers is a career Human Resources professional, with over 40 years in the field including 26 years in consulting.

Small Business Advice
Tom Pease is a small business owner of an office equipment dealership called e/Doc Systems, Inc. He has also owned a full-line Kawasaki dealership as well as a document shop. He used 30+ years of experience in owning a business to author two books, including: Going Out of Business by Design: Why 70% of Small Businesses Fail and Small Business Survival 101. He also has published 85 columns in The Memphis Daily News as the Small Business Advisor.

Marketing & Public Relations
Lori Turner-Wilson is CEO and Founder of RedRover Company, a sales development, marketing and PR consulting firm. Lori works with companies large and small, from start-ups to mature organizations, to help them improve the productivity of their sales force and the return on their marketing investment. Lori writes a weekly syndicated column for the Daily News, Memphis News, Nashville Ledger, and Desoto Times, among others, titled “Guerrilla Sales & Marketing,” for which she won a 2011 Summit International Award and 2012 International Communicator Award.

Design and Digital Strategy
Founded in 1999, inferno provides brand development, advertising, public relations, design and digital marketing services to clients across a broad spectrum of industries. Headquartered in Memphis with a satellite office in Kalamazoo, Michigan, the award-winning firm produces results-driven work by passionately combining strategic thinking, creativity and culture to ensure the success of its clients. For more information, visit

Labor & Employment Law
Fisher Phillips attorneys are ready to help you take a stand: in court, with employees and unions, or with competitors. Fisher Phillips has the experience and resolve to back you up. That's why some of the savviest employers come to the firm to handle their toughest labor and employment cases. The firm has 350 attorneys in 32 offices, including Memphis. For more information, visit

Since its founding in 2005, Paragon Bank has maintained a solid focus on the community and customer service. For more than 10 years, Paragon has delivered innovative products and financial expertise, convenience, and a deep understanding of what both businesses and individuals need from a ban, in order to provide solutions that make a difference. In the areas of business or personal banking, lending options or wealth management, Paragon delivers cutting edge technology, an experienced team and the most service-oriented staff of any community bank.