Since we are approaching the end of 2022, and embarking on a new year, it is a great time to reflect on the previous year and make some goals for moving forward. This is the perfect opportunity to review the health of your business. Take this opportunity to consider your business-related New Year’s resolutions. Or rather, your commitments to get a few more things in order.
As a small business owner, you have a lot going on. You tend to wear a million different hats, and you bear the weight of the success of the business. Running a business can be hard, especially with so many different rules and regulations, people to manage, customers to please, bills to pay, and the list goes on. It can be difficult to keep up with all of the demands while trying to grow your business and do what you set out to do in the first place. Maybe you are an entrepreneur and had an amazing idea that you knew would fill a niche in the market. Or maybe you are a specialist, like a dentist, and really just want to practice dentistry, but have since realized how much of your work revolves around being a business owner and manager.
Despite the stress of it, you can also recognize how great it is to have autonomy. The power to make changes is in your grasp. The power to innovate, to create, to solve problems, and to set things in order is in your hands. When you see a need, you have the ability to take action. In that spirit, here are some suggestions for some areas that might need your attention
Business Entity Requirements or Updates
Whether you are an LLC, partnership, or corporation, state and federal laws will have certain annual requirements for you to complete. For example, if your company is a corporation, have you held your annual corporate shareholder meeting? Knowing and complying with these requirements are important to ensure that you maintain your limited-liability status. Otherwise, creditors may be able to persuade a judge, based on the failure to perform business-related requirements, that your company is just a façade. When this happens, it is called “piercing the veil,” and creditors will be able to go after your own personal assets (home and personal bank accounts). Don’t let this happen, ensure you understand what is expected and get your business prepared. If you have an office manager that you delegate this too, check in to make sure everything is in order.
This is also a great time to review your business’s legal documents, such as a corporation’s bylaws and shareholders’ agreement, or an LLC’s operating agreement. Do the terms reflect your current expectations and relationships? The point is to ensure that the documents accurately reflect the current business practices. If they don’t, take the time to change them. They are not set in stone, and with a written amendment or consent signed by all owners, they can be changed. This is a great time to set that in order if need be.
Update Your Will
This might seem like a strange thing to suggest, but it has huge implications for a business owner. As a business owner, your estate planning is really important to incorporate in the whole business plan. Have you specified how you want your business divided up if you pass away? Taking care of this might seem like a hassle at the moment, a distraction from the many other pressing concerns, but setting your estate in order will make a huge difference for your decedents and your business. So, take a look at your will. How long has it been since you looked at it and updated it? The new year is a great time to do so.
Business Succession Plan
Related to your will is the overall succession plan for your business. Planning for the future is the responsible thing to do for those who will be left after you have “shuffled off this mortal coil.” This is especially important for a family business. Planning in advance alleviates a lot of questions and possible contentions, and it keeps everybody on the same page. Even if you figure that you have a lot of time yet, it is not unheard of for a business owner to pass away unexpectedly without a plan for their business, resulting in family disagreements and contentions. For some families, it can cause disruptions and divisions that can last for generations. So, creating a succession plan is an important New Year’s Resolution, or updating one as needed if you already have one.
Active Contracts
It is quite likely that there are contracts that your business has entered into with clients or customers or perhaps other third parties. These can be anything from a regular water delivery service, to a bid and contract you have just landed for an upcoming project. The beginning of the year is a good time to gather all of these active contracts and review them. Maintain a file folder for all active contracts, with expired contracts removed from this file to stay organized.
When you enter into a new, active contract, you can name it by the party’s name with the contract’s expiration date. That way, you can go to that file folder and know exactly where you are with the contract. If you need to retrieve all of your active contracts, such as when applying for a business loan, it is easy to retrieve them because they are all in one file. Or perhaps you have your own system. The point is to keep them organized and to review them periodically.
A New Year’s Resolution should be to review these contracts for their substance. The contract’s terms may need to be amended to more accurately reflect the way that you are operating. If this is the case, you will want to make an effort to renegotiate the terms and conditions of the contract to ensure that you are abiding by the written agreement.
Documentation System
Do you have a system for documenting the various aspects of running your business? Do you have systems and processes that you and your employees follow to make sure that important information is meticulously documented, filed, and then disposed of according to a document retention plan? Organized and systematic documentation practices can be a business owner’s best friend if a lawsuit happens. When you need that information, you will be so glad that it was documented and filed in an organized way. And truly, with technology today, there are so many resources for setting up a documentation system. If this is something, you could improve on, make it a priority action item that would be a great reminder to work on with your team.
Employee Handbook
Finally, this is a great time to review and update your employee handbook and other company policies. This should be an annual process during a normal time. It is especially important if your business has undergone growth or significant changes. The close of 2022 is an ideal time to make sure that the procedures in your handbooks accurately reflect how things are being done.
Happy New Year!
Hopefully, these suggestions help spark thoughts about some action items that you will address as part of your 2023 business New Year’s action items. We are all hoping that 2023 will be an amazing year. Beyond that, we hope that you embrace your amazing opportunity in owning and running your own small business. We hope you feel the excitement of having the autonomy and power to innovate, solve problems, and strive for excellence. Assess where you might be able to shore things up and set your house in order for the new year. As always, we are here to help.
