You probably know Ryan Serhant and Josh Team pretty well, but how about the firm’s female leaders who are helping to drive it to success?
Category: Operations
6 Lessons Entrepreneurs Can Learn From Italy
Inspiration and ideas for being a better entrepreneur can come from everywhere, not just the business world. I moved to the south of Italy (Calabria) last year, and I’ve picked up a few lessons that I’m now applying to how I do business. Maybe they’ll help you, too.
1. Connecting people is good karma
We’ve all heard the adage “It’s not what you know, it’s who you know,” and nowhere is that more true than in Italy. It never fails…I mention to a friend that I need a dry cleaner/apartment/driving school, and inevitably, that friend knows someone who can help.
They aren’t doing it for gain. It’s just how they’re wired.
Years ago I went to a networking event and watched a woman machine-gun her business card into the hand of every dumbfounded attendee. I’m willing to bet that she didn’t get much in the way of business from this endeavor.
However, when you connect people in a thoughtful way like the Italians do, you’re building a bond with the person you helped. They trust you. And they’re more likely to return the favor and send business your way.
2. You can’t rush things
In Italy, we say piano, piano. Slowly, slowly. While it can be nervewracking when this applies to getting your wifi set up (over a matter of a week, not hours), it is also beautiful when you let things unfold in their own sweet time.
Recently I met a business owner who was interested in my writing services. As eager as I was to work with him, I knew better than to schedule a meeting to get things moving. It may not happen this week, or even this year, but the seed has been planted, and I have no doubt that a meeting and maybe even a contract will happen. In the meantime, I’ll connect with him on a personal level to build that relationship.
3. There’s always a way
“Signora, è impossibile.” It’s impossible to [insert activity here], Italians tell me. And yet, they always find a way to make it happen.
As a business owner, you may come up against what feels like a brick wall, with no solution to a problem in sight. But if you step away from the problem (I often go for a walk to clear my head) and look at it from a different angle, you’re more likely to find a way through that wall.
It can also help to talk out the problem with a friend. I have an American friend who also lives in Calabria, and we often talk about business problems. Getting a different perspective or seeing our businesses from the outside is usually enough to get us over the hurdle.
4. All work and no play…
There’s a concept in Italy called la dolce far niente. The sweetness of doing nothing. It’s not just the stuff of movies. It’s how they live, and it’s something Americans could really benefit from.
It’s even more apparent to me now that I’m living in Italy that Americans are working themselves to death. They eat lunch at their desk while powering through another task, and they make themselves available to clients on the weekends and after hours.
Italians, however, place life first. I can’t tell you how many times I’ve visited a shop during operating hours only to see a sign saying “back soon.” Here, “soon” is a highly variable period of time, and the shop owner might stop to greet a friend at a bar and chat for half an hour before returning to work. Customers aren’t put out. They get it.
And come midday, everything shuts down, at least in smaller towns. That’s because the business owners are at home having a leisurely lunch with their families and taking a nap. They’ll reopen around four and stay open until eight.
As a result, you don’t see nearly as many stressed-out Italians as you do Americans.
5. Your story matters
Italians are fiercely proud of their culture and heritage. And I love learning about how the local dialect connects to the French language, the origin of a type of pasta, or the history of a small religious festival.
In your business, the story of who you are and why you do what you do matters to your clients. It’s what bonds you. As a spiritual coach, my story of how I ended up on my journey to living authentically (which, for me meant moving to Italy) is what piques people’s interest and spurs them to want to work with me.
6. You don’t need to operate in a bubble
Where I live in Italy—in the toe of the boot—was at one time ancient Greece. There are Greek, Roman, and Byzantine ruins everywhere. And the language and culture have been influenced over the centuries thanks to being ruled at one point or another by the Spanish, French, and many other conquerors. What this does is make for a beautiful melting pot of language, culture, and food.
For years, I didn’t want any outside influence in my business. I thought I could figure it all out on my own. But we’re all better for letting a little light in from the outside.
Read business books. Go to conferences. Talk to other entrepreneurs. Note what others are doing, even if it’s in a different industry. You’ll collect bits and bobs that you can patchwork together to create your own unique imprint for your business.
Italy has shifted how I run my business, and how I live my life. More than anything else, I understand that there is more than one way to succeed.
There Are Huge Benefits to Diversifying Your Business—Here’s How to Achieve Them
By Alexander Bachmann
As both an entrepreneur and an investor, one of the most common questions I get is, “Why put the effort into looking for new lines of business when you have something that’s already working and has the potential to be developed further?” To this, I bring up a metaphor, “Can you sit in an ordinary chair with just one leg?”
The answer is that you could if you were great at balancing, and some people might enjoy that challenge. However, what happens if that leg breaks? Now imagine that each leg on the chair is a business unit you’re pursuing—even if one or two legs break, you can still stay seated, even though it’s a bit of a balancing act.
The simple truth is that business ventures often die for one reason or another. There are some foreseeable, avoidable reasons, like poor market fit or lack of capital. But other things, such as currency devaluations or a global pandemic, can’t be anticipated.
Diversification is a way to mitigate these potential risks and losses, but you must do it carefully. Otherwise, you’ll run the risk of failing because your focus is too divided.
There are many other potential benefits of diversification, and here are a few tips for making the most of it.
Leverage new markets to stimulate growth
Every entrepreneur is chasing growth, but they don’t always have a concrete idea of what that means. It’s important to remember that a business can only achieve so much vertical growth before it either plateaus, combusts, or becomes a monopoly. In all three cases, this type of growth ultimately will lead nowhere.
For example, if a company is incredibly successful, it can become a monopoly in its space, like Google, Amazon, and Meta. These mega companies can no longer utilize their tried-and-true strategies for growth. They start losing traction over time, as we saw with Facebook. To remedy this, Meta acquired Instagram in a “horizontal growth” move that allowed the company to capture a new audience and bring back some users that had abandoned the platform.
Too many founders are focused on providing investors with 30 to 40% year-over-year vertical growth numbers—and this is not sustainable. Instead, once a business has a well-established management team and things are running smoothly, owners should start looking for new markets to achieve cross-vertical growth.
Treat new lines of business like investment projects
Another familiar problem companies can run into when trying to diversify is not knowing when to give up on a project that isn’t yielding results. Devoting resources to R&D and expansion is important, but knowing when to stop pursuing an idea is equally important. For my businesses, I treat every new idea like an investment project. It needs to have actionable hypotheses, a dedicated amount of investor capital (i.e., budget allocation), and a defined runway.
As an example, since September 2021, I have had a team working on trying to turn an existing business feature into its own line of business. Unfortunately, I recently had to close the project because it was not feasible to bring the product to market, despite the year and a half spent looking for ways to make it work. The risk was no longer worth the investment, so it was time to move on.
There is no precise formula for a business to follow when it comes to determining how long to infuse cash into a diversification project, but founders must set a timetable and budget and stick to it, even in the face of losses.
Look for synergistic business opportunities
There are two basic types of diversification: synergistic and experimental. With the first, your company looks to related verticals for expansion and security. The Facebook to Instagram pipeline is one such example, and Disney’s National Geographic and Marvel acquisitions are another. However, there are also experimental lines of business, such as Google’s attempt to branch into the social messaging space with Google Hangouts.
Both modes of diversification have merit, but new businesses should focus more on horizontal integrations than large jumps to a new space. Finding niches within your current company’s industry is a great way to make the most out of R&D investments while also pursuing horizontal growth for additional security.
The automobile industry is well-known for this. Many manufacturers will start with a core set of car models and eventually expand into related markets, like trucks or SUVs, or even make the leap into aircraft manufacturing, as we’ve seen with Honda.
Remember that focus trumps diversification
Founders are notorious for spreading themselves too thin. They are visionaries and creatives, so they always have new ideas they’re excited to test. However, the mark of a truly great entrepreneur is someone who can direct their focus on the venture in front of them without becoming distracted by other projects.
Business owners must realize there is a difference between intentional diversification and experimenting simply because they have a promising new idea. One of the best strategies for developing new lines of business is to surround yourself with intelligent, competent people who can help you determine whether an idea is worth investing resources into or not, and then delegating to them when it’s time to pursue the new project.
Diversifying is the key to mitigating the risks of keeping a company running, and it’s also an excellent way to expand your organization’s reach through related projects, making it more sustainable in the long term.
FAQs on diversification and growing a business
What are 3 reasons why businesses adopt a diversification strategy?
Diversification can help with long-term growth, risk mitigation, and the overall sustainability of your business model.
What is an example of a diversified business?
Popular examples are Apple and Disney. Both expanded their original offerings into related and unrelated verticals to become the industry giants they are today. Apple grew from PCs to music to mobile devices and beyond, and Disney grew from an animation studio into real estate, merchandise, and global entertainment.
What makes a company diversified?
A diversified company operates in several different segments that are often unrelated, usually through the acquisition of an already operational business or through entry into a new market.
About the Author
Post by: Alexander Bachmann
Alexander Bachmann is the founder and CEO of Mitgo, a global tech company focused on delivering innovative solutions and promoting entrepreneurship. Previously, he had founded Admitad as an affiliate network, which is now recognized as one of largest affiliate platforms for advertisers and publishers. Alexander has been in the martech space for over 20 years and has extensive expertise in martech, fintech, smart shopping, and IT-driven startup incubation sectors.
Company: Mitgo
Website: www.mitgo.com
Connect with me on
Linkedin.
13 Best Practices for Negotiating Client Contracts and Terms
Negotiating contracts and terms with clients is a critical aspect of any business engagement. Whether you’re a freelancer, a small-business owner, or work for a large corporation, understanding and implementing effective negotiation strategies is crucial for achieving mutually beneficial outcomes.
To employ the best practices in contract negotiation—as well as safeguard your interests, foster productive client relationships, and ensure the smooth execution of projects—consider the following advice from members of the Young Entrepreneur Council.
When negotiating contracts and terms with a client, what’s one best practice to keep in mind? Why?
1. Maintain open communication
One best practice to keep in mind when negotiating contracts and terms with a client is to maintain open communication throughout the negotiation process. Be transparent about expectations, ask questions when necessary, and be willing to compromise when appropriate. By working together to find mutually beneficial solutions, both parties can feel satisfied with the final outcome. —Eddie Lou, CodaPet
2. Discuss boundaries upfront
Establish preset terms and guidelines. Let the other party know upfront what your dos and don’ts are, along with the rationale for each item. This sets the tone for the rest of the conversation since you are upfront with your non-negotiables. It’s not about making concessions at later stages, but being very transparent about what you need at the beginning. Then, you can start actual negotiations. —Firas Kittaneh, Amerisleep Mattress
3. Prepare to compromise
One of the most important things to remember is to communicate clearly and be prepared to compromise when necessary. This will ensure that both parties understand the terms of the agreement and are comfortable with its outcome. Furthermore, it will create an atmosphere of trust and respect, making it easier for both parties to reach an amicable agreement. —Kristin Kimberly Marquet, Marquet Media, LLC
4. Think about scalability
Keep scalability in mind. For example, ask yourself: Will the terms of the contract accommodate rapid growth? Is it written to allow for contract modifications if the scope expands? When trying to move a deal forward, don’t forget to think about the big picture. —Jack Perkins, CFO Hub
5. Stay mindful of your resources
When negotiating contracts and terms with a client, one thing to keep in mind is that you shouldn’t overpromise. It’s important that you carefully assess your current resources, evaluate them against the client’s requirements, and communicate clearly. This will make it possible for the parties to set clear expectations from the get-go and help them avoid unforeseen conflicts in the future. —Stephanie Wells, Formidable Forms
6. Approach negotiation with goodwill
What I’ve found helpful is to approach the negotiation as a problem-solving exercise, rather than a combative discussion. I don’t want to “win” the negotiation and get my terms only. Rather, I try to find common ground with the other party and find solutions that work for everyone involved. This leads to better outcomes and good relationships with clients in the long run. —Syed Balkhi, WPBeginner
7. Look for the client’s top priorities
Try to put yourself in the client’s shoes and understand what’s most important to them. They won’t always tell you their top priorities or red lines upfront, so it’s helpful to ask. This can help break the ice and speed up negotiations as well. If you’d rather not discuss the client’s motivations for any reason, use past experience to make an educated guess about their priorities. —Andrew Schrage, Money Crashers Personal Finance
8. Strive for clarity and specificity
One essential best practice when negotiating contracts is to ensure clarity and specificity in the terms and conditions. Clearly define the scope of work, deliverables, timelines, payment terms, and any contingencies. This helps to mitigate potential misunderstandings or disputes in the future. —Jared Weitz, United Capital Source Inc.
9. Seek out an advisor if needed
Recognize when to ask for help and seek the advice of an advisor. Negotiations can be challenging and stressful, especially when significant stakes are involved. An advisor brings specialized expertise and a fresh perspective to the negotiation table. They can review the agreement objectively, navigate complexities, and help you negotiate fair and favorable terms. —Ismael Wrixen, FE International
10. Separate your emotions from negotiations
It can be very difficult not to have an emotional connection to your work and to feel that the contract portion is representative of your worth. Before entering into negotiations, be clear about the boundaries of what you will and will not accept, and remind yourself that your worth and your work are different things. —Matthew Capala, Alphametic
11. Focus on the clauses that matter
There are usually only a few clauses that really matter in a contract—focus on these like a hawk. These are typically deliverables, termination clauses, payment clauses, conflict resolution, and work/IP ownership, depending on the contract. These are the clauses where you should spend most of your energy perfecting. —Andy Karuza, NachoNacho
12. Identify all potential risks
If you hope to come to an agreement when working through a contract with a client, make sure you identify potential risks. You don’t want to jump into a contract without a plan if something goes wrong. Understanding the worst-case scenario and what you will do about it can give both parties peace of mind, which just might seal the deal. —John Turner, SeedProd LLC
13. Avoid accepting a bad deal just to close
Be prepared to not make the deal. If you enter negotiations with the mindset that you must close the deal, you’re likely to accept unfavorable terms. It’s best to have alternatives in mind, whether you’re hiring someone, buying or selling something, or negotiating the price of something. You don’t have to be stubborn, but don’t accept bad terms just to make the deal. —Kalin Kassabov, ProTexting
How Small Businesses Can Survive—And Grow—in an Era of Economic Instability
By Ben Richmond
Making the decision to start a small business is no easy feat, but it’s incredibly inspiring that so many people try; in fact, on average,
4.4 million people across the U.S. open a business. And while not all of them succeed, there are a few keys to success that vastly improve their chances.
First and foremost, having the right mindset and a clear path forward are important—these improve prospective business owners’ chances of leading a career and life of fulfillment, both personally and professionally, and are key for staying grounded during challenging periods.
Indeed, as with any important life journey, owners can expect some speed bumps along the way. From securing financing in the beginning stages to hiring and retaining talent, there is much to master to help ensure a business achieves longevity and sustained growth.
Running a company: What it takes to get from passion to reality
When times get tough, as they certainly will throughout any entrepreneur’s journey, it’s important to remember the reason behind starting the business in the first place. To gain deeper insight into this topic, we recently conducted a study of 1,000 business owners across North America.
The survey revealed that the majority of entrepreneurs decided to open their small business to fulfill a long-time passion, showing the strong emotional connection between an owner and their company. It’s unsurprising that most small business owners will fight with all they have to keep their dream alive—especially during times of economic volatility like we’ve experienced in the past few years. From skyrocketing inflation to consumer spending habits turned upside down, entrepreneurs have faced many business challenges.
In alignment with this mindset, small business owners often reach into their own pockets to fund their business venture, or lean into external loans. According to the study, the number one way individuals capitalize their business is through personal savings (68%), and the second-most-common avenue is business loans (31%).
Both of these strategies carry a great deal of risk. Naturally, using your own money to start a business can put your financial future on the line. Borrowing, meanwhile, exposes you to the impact of higher interest rates and other challenges. One of the key problems today is a credit crunch. Following the collapse of several banks earlier this year, many financial institutions have tightened lending standards, and this isn’t lost on entrepreneurs. A May 2023 survey of small business owners by
Goldman Sachs showed that 77% of them are concerned about their ability to access capital.
More selective lending standards by banks unveil the fact that a true credit crunch is upon us. Right now, it is harder than it has been for years for small businesses to obtain loans. For those aforementioned small business owners who aren’t willing to forfeit their passion or businesses, they must have the financial stamina to succeed through a potential recession and tighter credit markets.
How small business owners can safeguard their companies
Given the fact that so many owners have sunk their own (or a bank’s) money into their company, at a time when the economy is slowing and credit is tightening, it is essential that an entrepreneur has a clear view into their business’s finances from top to bottom. Being able to see the financial picture from a holistic perspective, assess every factor, and make accurate predictions is one of the best ways to safeguard a business.
Here are tips for improving your approach to small business finances:
1. Ensure your receivables are up to date
Given the current state of the economy, it’s likely you have customers, distributors or partners who are tight on cash. Ensuring you are receiving payments on time can help to stabilize your balance sheet. As such, it’s a good idea to keep track of the status of all your receivables to ensure no information is lost, overlooked, or unorganized.
2. Conduct cash flow forecasting
A simple but often overlooked task, cash flow forecasting can help you make informed decisions about cash moving in and out in order to cut spending before it’s too late, and manage debt repayment timelines and terms. Having a business snapshot or live visual graphic that represents how your company is tracking through revenue, average pay times and expenses will allow you to identify trends and be better positioned to foresee future problems. You can then act quickly to reduce risk: accelerate accounts receivable, cut costs, seek outside financing, etc.
Having a forward-thinking approach and mindset is one of the ways to stay ahead of trouble, as well as having an actionable plan to stay on track to meet your goals.
3. Implement efficient inventory management practices
Utilizing technology can help your company perform effective inventory management. Automated processes will enable you to more accurately track incoming and outgoing goods, such as data collection on inventory and profit reports. There are a significant number of inventory management apps available for specific or advanced use cases.
Implementing efficient inventory management practices allows you to optimize your stock to avoid overstocking or understocking items. By having an inventory forecasting plan in place, small businesses can allocate their resources more efficiently and reduce unnecessary expenses, which contributes to improved financial stability.
Preparation is the key to business survival and success
In a world of countless unknowns, being prepared is the best path to success. If we have learned anything in the past three years, we know that expecting the unexpected is the new normal. And while small business owners have historically been on the frontlines of facing economic challenges, the volatile credit market makes this era even more harrowing.
By fully understanding a company’s financial picture, small business owners will have a better chance of being able to obtain capital when needed. Because, at the end of the day, entrepreneurs are superheroes, ready to fight new challenges and external pressures.
FAQs about small business survival during difficult times
How do I prepare my small business for a recession?
To prepare, business owners should prioritize having the right mindset and a clear path forward to encapsulate a holistic perspective of their business’s finances during a time when the economy is slowing and credit is tightening.
What are 3 things small businesses can do to survive during hard times?
Small businesses can survive during economic challenges by having a clear view into their business’s finances from top to bottom. This can be done by conducting cash flow forecasting, ensuring receivables are up-to-date, and understanding their inventory supply with the help of technology and outside partners.
About the Author
Post by: Ben Richmond
Ben Richmond is a chartered accountant and U.S. country manager at Xero, where he is responsible for driving Xero’s growth in the region. Ben has been recognized by CPA Practice Advisor as a “20 Under 40 Influencer” and was named Accounting Today’s “Top 100 Most Influential People in Accounting.”
Company: Xero
Website:
www.xero.com
Connect with me on
LinkedIn.
How to Listen to Your Intuition in Business—And Why You Should
When you make a business decision, do you rely on your head or your gut? Are you strictly a by-the-numbers business owner, or do you “have a feeling” about something and act on it?
Kim Woods does both. She’s a master astrologer and a business strategist. She has numerous certifications as a master-level intuitive and an MBA. Woods has helped hundreds of entrepreneurs and Fortune 500 executives achieve personal, professional, and financial success.
I talked to Woods about what she foresees for business in 2023 and how you can tap into your intuitive powers to grow your business.
Listening to your intuition in business
Rieva Lesonsky: When did you learn you had this special power?
Kim Woods: I discovered the power of my intuition when my son, Nick, was born with significant health issues. Until then, I’d built a successful career based on someone else’s definition of success and ultimately lost myself. The crisis with my son forced me to find myself again.
Relying on my intuition and marrying ancient wisdom with Western methods, I [refused to] accept the doctor’s plan to work around the issues. I [followed] my strategies for eight years until I saw the complete transformation and realized I’d never turn my back on my intuition again.
Lesonsky: When did you start your own business? Did you always combine being an intuitive with business consulting?
Woods: I got my MBA during my corporate career because I reasoned that I never wanted to have to explain why I didn’t have it. Isn’t that ridiculous? The universe is wily, however. Babson College is ranked #1 in entrepreneurship in the country, so I took as many classes as I could. These classroom conversations prompted me to consider opening my own business, and I’m hooked—entrepreneurship is my jam!
I started this business after I outgrew my traditional business strategy firm. I attempted to incorporate intuition with my business then, but my clients would say, “We like your business expertise, but keep the woo at home.”
Of course, I didn’t because you can’t possibly separate yourself from your natural gifts. However, I did respect their wishes and kept my intuition quiet. But it was my secret weapon for teaching unteachable leaders, gaining consensus for a particular vision, and keeping employees engaged.
This business was born to put my intuition forward. It’s my promise to myself. Prospective clients must say yes to me walking into the stars the minute they’re born and channeling the voice of their soul. It’s non-negotiable. When clients want my 25-plus years of C-suite business strategy expertise, they also get the oracle and healing faculties.
Lesonsky: What’s in store for small business owners this year?
Woods: The theme of the year is POWER.
Globally, social and environmental justice will come to the fore with power structures undergoing scrutiny. Everything has been brought to the surface in the last few years—the rights of minorities and women, massive weather events, and the pandemic introducing a flashpoint for healthcare versus sick care. The stars stir up what’s wrong with the power structures and support innovative solutions [at a] grassroots, organic, and local [level].
This decade represents the turning from traditional, institutional, top-down power structures to consensus, humanitarian, and service-oriented value-based influence. Being equitable, inclusive, and sustainable is essential for every business.
Growth in the medical, scientific, and technological sectors will continue. Media businesses, both digital and traditional, and the arts, will get a boost in the next few years. In addition, non-traditional healing methods and mystical methods will become part of the mainstream.
Personally, the stars will ask you to step into your power and authority. You know you’re in your power when you make sound decisions and stick to them, remain solid no matter what’s happening around you, and have the confidence to ask for and accept support.
You know you’re out of your power when you second-guess yourself, consistently put others’ needs before your own, and find yourself lacking when you compare yourself to others.
I typically choose movies to describe the year’s energy. Last year, the film was Twister, with the goal of staying in the eye of the storm with all the chaos going on around you. This year, it’s Jerry Maguire. Yes, “Show me the money!” Yet it only happens when you stand in your authenticity, live your true purpose, and allow your full potential.
Lesonsky: Any particular bad times or good times you can pinpoint?
Woods: March, May, and July are complicated months that won’t be great for big events, travel, or launching new initiatives. Keep March simple and be flexible about changing your plans. Be wary of overextending yourself in May, and don’t make new offerings in the first few weeks. July reaches a crescendo of explosive energy, so keep [an eye on] your travel plans.
January, February, and June will be excellent for launching, connecting, and selling. The forward momentum increases each week through January and February. Things seem to come together easily.
Remember that the energy is massive this year, pushing toward growth, which can be exhausting for people who need lots of downtime. So healthy habits and sound business practices are a must.
Lesonsky: What advice do you have for small business owners about listening to their gut?
Woods: Your instinct is your doorway into intuition. It’s the initial knock that gives you your initial yes or no reaction. The key is determining how your body communicates instinctively with you.
For many, their instinctive feelings arise in the belly or neck, but for others, their bodies respond differently. The key is to figure out how your instinct responds to a yes or no question. For example, your body may change temperature, make you shudder, give you goosebumps, or even cause a soft flutter on your arms or legs.
Once you determine how your body instinctively gives you nudges, you’ll be able to rely on your instincts as a first response to fully communicate with your intuition.
Lesonsky: Are people afraid to listen to their inner voices? If so, how do you get over that?
Woods: People hesitate to listen to their inner voices because it takes a leap of faith to believe. And you’ve probably systematically shut your intuition down so often that it’s gone quiet.
Your intuition begins as a whisper, inkling, or nudge and often doesn’t make sense, while your mind talks to you in complete sentences and rationalizes itself at every turn. It’s easier to believe your thoughts than the nudges that may or may not make sense.
Lesonsky: How should small business owners get started following their intuition?
Woods: You can get over being afraid by practicing following your instincts. Once you get that initial reaction, listen to it. Then, take the opportunity to rely on your intuition for small things, like taking an umbrella, following certain traffic routes, and finding a parking space. Then you can use your intuition for bigger decisions, like hiring a particular person or making an offer to a specific client.
The CPRA Compliance Checklist Every Business Should Follow in 2023
By Adil Advani
If you run a business, it’s essential to be aware of and comply with all relevant regulations. One such regulation is the California Privacy Rights Act (
CPRA) which was approved by California voters in November 2020 and went into effect on January 1, 2023. The CPRA builds on the California Consumer Privacy Act (CCPA), which became law in 2018, and provides additional rights for California consumers regarding the collection of their personal information and how it is collected, used, and shared by businesses.
Understanding the CPRA
The CPRA applies to companies that do business in California and meet certain criteria, including having gross annual revenues over $25 million, collecting personal information from more than 100,000 consumers or households, or deriving 50% or more of their annual revenues from selling consumers’ personal information.
Personal information is defined as any information that relates to, or could reasonably be linked to, a particular consumer or household. This includes names, addresses, email addresses, IP addresses, and more sensitive information like biometric data and personal financial information.
Some of the fundamental rights that the CPRA gives to California consumers include:
- The right to know what personal information a business has collected about them
- The right to request that a business delete the consumer’s personal information
- The right to opt-out of the sale of their personal information
- The right to opt-out of automated conclusions, such as profiling for targeted behavioral advertising
- The right to know how automated decision technologies work and their likely outcomes
- The right to correction in the event the personal information is incorrect
- The right to limit the use of a consumer’s sensitive personal information
- The right to data portability where an organization share data with other entities
- The right to notify minors if the business intends to sell or share their personal data
Ensuring your business is compliant
1. Make a plan
It’s essential to have a plan in place for how your business will handle requests from California consumers, including who will be responsible for responding to them and how long it will take to respond. The CPRA mandates that these requests must be addressed within ten days and processed within 45 days.
2. Review and update your privacy policies and notices
The CPRA requires businesses to provide clear and conspicuous notice to consumers about their rights under the law, as well as information about the personal information the business collects and how it is used. This means taking a close look at the personal information that your business collects, how it is collected, and how it is used and shared. You should also review any contracts or agreements with third parties involving the collection, use, or sharing of personal information. Ensure your privacy policies and notices are up-to-date and compliant with the requirements of the CPRA.
3. Designate a data controller
Designate a contact person or team to handle CPRA-related requests from consumers. This could be a privacy officer or a
customer service team with the necessary training and resources to handle these requests.
4. Train staff
Train your employees on the CPRA and its requirements. This will help ensure that everyone in your organization is aware of the new law and knows how to handle CPRA-related requests from consumers.
5. Introduce privacy and security measures
Implement procedures for verifying the identity of consumers who make CPRA-related requests. This is important to protect the privacy of consumers and prevent fraud. Additionally, keep thorough records of all CPRA-related requests and how they were handled. This will help you demonstrate compliance with the law and provide evidence in the event of a dispute or investigation.
Consequences for non-compliance
Keep in mind that there can be financial consequences if a business is not complying with CPRA’s requirements. The severity of the offenses determines the penalties for violations, where each infraction carries a $2,000 fine, negligence-based errors are subject to a $2,500 fine per offense, and intentional disregard of the law carries a $7,500 fine per offense.