Don't Bet the Business

As the year winds down, we start to see a host of suggestions, or outright directions, on how to make the coming year better than the last.  I have never placed much stock in those missives.  Change, in my view, comes from within. 

Rarely does something that is forced affect a lasting difference, much less result in an improved circumstance. That said, as I considered another flip of the calendar, I decided to at least partially break my own rule and to offer what I will call a few suggestions that just might make for a better business new year.

Resolution #1:  Update your corporate minute book. For many businesses, particularly closely held ones, the corporate formalities tend to get relegated to the “we’ll get to it” pile. In the new year you might consider updating your corporate minutes. Hold the meetings that the operating agreement or by-laws require. Make the disclosures to the members or shareholders. Document the company resolutions put into effect last year.  Review, update and memorialize your policies. Lawsuits have been decided based on what company put in writing – or failed to write down.

Resolution #2:  Review your contracts. For reasons lost on me, people often will sign a contract and never look at it again. This is unfortunate.  Contracts spell out how a business relationship is to function, including the parties’ respective rights and obligations. What frequently happens is that the business conducted in real time diverges from what was planned and intended. Periodically reviewing your contracts can help to ensure that your transactions or relationships work as planned; such reviews also can help to avoid problems before they turn into a source of conflict and added expense.

Resolution #3:  Review your employment policies and procedures. This one is closely related to # 2 above, but instead of looking outside, you want to turn your attention within your business or organization. Labor and employment law are extraordinarily complex. Few organizations do it flawlessly. Even if you are one of the few, laws, regulations and even court decisions can change how things should be handled. An annual review of your employee rules, policies and procedures simply makes common sense.

Resolution #4:  Review your insurance. I am a litigator. This means that if you are speaking to me something went very wrong. I cannot tell you how often my clients, or prospective clients, wait until after a lawsuit is filed to consider the scope of their insurance coverage. Understanding your insurance coverage – what is covered, what is not and what is needed to preserve coverage – will not necessarily avoid future problems or disputes, but it will help with planning and, at least to some extent, provide some peace of mind.

Resolution #5:  Review your banking and credit relationships. This may also fall into the “if it’s not broke don’t fix it” category, but it also might be more aptly listed among the things “you don’t know that you don’t know.” Banks are businesses that need to make money from their relationships with you. This means that banks will compete for your business. Understanding that you are the customer is a first step. Understanding the specifics of your account agreements, and any credit or loan obligations, is an important second. This is not just about cost. An annual review can help to ensure that you are maximizing the benefits of your banking relationship as well ensuring that you are fulfilling your obligations to your bank or lender. Try  to avoid problems before they turn into a reason to talk to me.

Resolution #6:  Review your annual tax assessment. This one seems obvious, but it bears repeating. If you own property, the government expects you to pay taxes based on the value of the property. It is the government that decides what your property’s taxable worth is and, therefore, how much tax you owe and must pay. It simply makes sense then to consider what the government’s value opinion is, and whether that opinion should be challenged.

These suggested resolutions are by no means intended to be exhaustive. They are topics that tend to come in doing what I do. They also are part of what I would call prudent management. However, my suggestions are just that, merely suggestions. But if they help in some small way, I have satisfied one of my own personal new year’s resolutions.