Planning: A Legal Check Up for Your Businessby Michelle Bomberger | November 2, 2009
Planning is always a critical part of starting a business. As the business grows, though, many find that the daily operational demands and “firefighting” take over. Even when time is set aside for planning, the time is often encroached upon by other work that seems more pressing. Business owners realize the importance of the plan yet so easily find ourselves sidetracked. Is this because the planning for business growth is difficult or because there are no right answers, so it’s easier to avoid the questions altogether? In some cases, the matters that need to be addressed are front and center in the business, staring us right in the face. Yet often, we ignore them, hoping we won’t have to invest the time and money to put things in order. Choosing not to face these questions, though, won’t cause them to go away. Instead, we must take a deep breath and baby steps into addressing the key areas that keep our businesses from growing into the vision of its potential.
For our business clients, we find the ideal time to plan is at the time of their annual meeting, often in connection with the business’ annual license renewal or at year end. We reach out to our clients each year with key questions in our “Annual Check Up,” helping them to think through critical changes in their businesses. The Check Up covers the following important business planning matters for the upcoming year:
1. What are the goals of the business?
2. What changes has the business seen in the past 12 months and what changes are anticipated in the next 12 months?
3. Does the business require a change in business structure due to changes in ownership, risk tolerance or tax assessments?
4. Has the business held the required annual meetings of members/shareholders and board members?
5. Do the business owners have a Shareholders’ Agreement or Operating Agreement that governs any changes in business ownership (i.e. death, disability, voluntary departure)?
6. Has the company’s valuation changed so that the buy/sell provisions must be funded by insurance or some other fund?
7. Does the company require additional funding through loans, capital from owners, or third-party investors?
8. Has the company evaluated its business relationships and created written contracts for key relationships?
9. Are employees and contractors under contracts that protect the company’s intellectual property?
10. Does the company have an employment manual for employees?
11. Has the company moved into any new products and services that may create additional liability or require additional intellectual property protection?
12. If the company does business online or participates in social media, is the company protected from online activities?
13. Has the business changed where it operates its business?
14. Has the business acquired or sold significant business assets?
15. Does the business conduct regular searches of its tradename(s) and trademark(s) to identify infringement?
16. Has the business met with each member of its core business advisory team in the past 6 months?
These questions will enable you to consider some of the key areas of potential exposure in your business and provide an opportunity to button down important areas that will facilitate growth and value. Each question points you to a critical function of the business. In answering these questions, you can gauge where your business might require an overhaul or simply some fine tuning to move forward.
For business owners seeking to accelerate their growth next year, now’s the time to dive in and prepare your business for success!