Putting together a business can be really exciting, making it difficult for people to get into the mindset of focusing on the potential hazards and seeking out the potential pitfalls. However, identifying these challenges in the beginning is being proactive. The honeymoon period of starting a new business will carry you along for a while, but if you do not slow down, take a deep breath, and look at the things that could go wrong, it could end in disaster.
One thing to consider is the epitaph or the headstone for your relationship with the business; it will end someday, and it’s definitely going to end for you. The reality is, even if your business lasts forever, you cannot work forever. Whether you are bought out, the business fails, you pass on, or you give away your shares for some reason, it is going to end, and planning your exit now will save you money and emotional capital later.
Another thing to remember is to always keep up with your corporate formalities. Part of those corporate formalities is your annual minutes. If written correctly, annual minutes can work to protect the corporate veil. You can use that formal process or annual meetings, to ensure you still have your eye on the same prize and through that meeting, you can establish the separation of the corporation and its human entities. A common mistake business owners make is making you and the corporation one and the same. Do not lend your own money to the company without a formalized agreement. Without the agreement it shows the business’s money is treated like your own bank account and vice versa.
If you choose to go into business with a partner, it is vitally important to formalize the relationship you have with anyone in your business. This is such an important piece of dispute avoidance. Oral agreements can, in fact, be binding contracts. However, when disputes arise they become he said/she said contracts. As a business owner, it is your duty to keep your eyes on the horizon for all potential dangers, know what dangers to look out for, and plan for most contingencies. This means trusting your business sense, following standard operating procedures (SOP), and rather than always avoiding potential conflicts, engaging when necessary.
If it becomes necessary to bring in additional members of a legal team, do so. Do your research, try to create a good working relationship with your attorney, and do not forget to negotiate. You are in business, after all. Do not assume that going to battle will mean total war. Work with an eye towards early resolution. Attempt to use alternative dispute resolution. Work with your attorney to make creative exists to end the conflict. Above all, do not loose control of your case.
The bottom line is that you are in business, and disputes are a cost of doing business. Make your disputes infrequent. Make your battles decisive and short. If you can achieve these two things, your bottom line and your peace of mind will both improve dramatically.
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