By: Douglas C. Alexander, Business & Taxation Lawyer
Do you ever feel like you just can’t keep up with the pace of things happening around you? In today’s business world, with record low unemployment and business humming along at a pretty fast clip, it can be tough to stay ahead of all that demands our time. Your mailbox may be relatively sparsely filled (does anybody use real mail anymore?), but the reason is that your email inbox is overflowing, and your voicemail inbox may be so full that it can’t accept any more messages. You move through the day putting one fire out and then jumping to the next. The matter that gets your greatest attention is the blaze that is burning the hottest.
In an environment like this, it is easy to feel busy, but ultimately to be completely inefficient in what you do. As the owner of a business, you have to focus on what really matters, filter out the rest, and delegate as much as you can. On our end, we have seen the impact of this frenetic business pace, as it not only affects us personally but impacts our clients as well. From a legal perspective, we see matters fall through the cracks because clients are too busy putting out the hottest fire and ignoring long-term issues that will affect them in the future. We can always fix it tomorrow, right? What kind of things do we see, you ask? Here are just a few obvious examples:
- Lease Issues – Most folks sign a lease, put it in the drawer and forget about it until sometime in the future. This is dangerous. Your lease may include a renewal option that must be exercised within a very limited window and will be lost if not so exercised. We have seen clients forced into difficult positions because of failing to timely exercise a renewal option. Other things to look for include rent escalation, maintaining insurance coverages, and requiring proper compliance by both landlord and tenant alike. Most recently, we have seen leases that are out of date, improperly drafted, or that don’t have adequate renewal options or assignability rights adversely affect business sales. You need to periodically review your leases so you are not caught by surprise at an inopportune time.
- Buy-Sell Agreements – When was the last time you looked at yours? For LLCs, this includes looking at your Operating Agreement. Have you considered whether your insurance coverages are still adequate? Has ownership of your business changed? Are the buyout terms still relevant given more recent circumstances in your business? Are the restrictions on transferability of ownership interests still adequate? Is the valuation methodology current and fair? Again, most such agreements get negotiated, signed and then put away until something triggers them. These are living, breathing documents that need to be periodically re-evaluated and considered so that they remain fresh, relevant and workable. We have seen clients fail to do this, only to find that upon a triggering event the terms no longer work as they expected. Dust yours off and take a look. You may be surprised by what you read!
- Entity Maintenance – Keeping your entity documents managed, up to date, and in compliance with legal requirements is something that easily gets pushed to the bottom of the “to do” list when you are rushing just to stay afloat. If you are audited and then have to “catch-up” on your corporate minutes before the auditor shows up, you will not be the first to have been pushed into that uncomfortable position. These tasks are not immediately meaningful and thus feel unimportant. However, they are easily delegated and can become very important if ignored.
- Estate Plan – None of us plan on when we will die or become disabled, but we need to prepare for it nevertheless. As our lives change, whether it be with kids growing up, the sale of our businesses, marriages, divorces, the addition of grandchildren to the family, or something else, our estate plans need to be adjusted too. To die without a current plan is to leave with our wishes unfulfilled. Take the time to be sure that your loved ones are taken care of the way you want, rather than the way you may have wanted many years ago, or—in the absence of any plan—the way the State wants.
- Business Transitions – We all work hard, but one day each of us will wake up and say, “I am tired and want to be done!” That is a great day if we have planned for it, prepared our successors for it, and if we are personally prepared for that life change. Properly planned, a business transition can be a smooth exit for the owner, and a smooth shift to a new owner and management, without the business, even skipping a beat. If there is no plan, or if you wait until you just don’t want to work anymore—or worse yet, you cannot work—then you have put what you built at risk. Business transition planning is a process, not something that is easily checked off a list. It is not a single document. Of all the things we do as business owners, this may be one of the most important, and yet one of the most frequently ignored. Our employees and customers are counting on the transition going smoothly, and most of us as owners are too because we hope to continue to see the financial rewards of what we have built. Again, this is easy to push down the priority list, but I would say it is perhaps even more important than much of the day to day work we do. The time of your exit will come before you know it. Sit down and ask yourself whether your business and your people are properly set up to make a transition when the time comes.
The bottom line is that this list goes on and on. The old adage that most of us spend our time “working in the business, rather than working on the business” is true. We become trapped by the increasing demands on our time and get pushed into doing less important but “urgent” tasks rather than sitting back and evaluating what the most important thing is that we can do for our business each day. Consider taking some time each morning before your day gets crazy and decide what really important things you will do today to make your business and your future better and brighter. We are here to help, and you can delegate some of these things to us to help you with. Rely on the team you have built both inside and outside of your business to stay ahead of things rather than falling behind. With proper planning, YOU CAN KEEP UP AND EVEN GET AHEAD! Good luck!
Douglas Alexander is a partner in the Business Law & Taxation practice group. The information in this article is not intended to provide legal advice. For a professional consultation, please contact Douglas Alexander at Saalfeld Griggs PC. 503.399.1070. firstname.lastname@example.org © 2018 Saalfeld Griggs PC