  Legal Best Practices
Hold That Bottom Line
The Big Ten of Business
By Neil R. Covert and H. Michelle Yang
Published: November 2007
Are you a business owner?
Like many in the Greater Tampa Bay Area, you probably
have a list of concerns about the health, wealth, and
sustainability of your business. As the principal or
owner, you are in a unique position of control, and in
turn, a far more vulnerable role – both financially and
legally – than any other individual within the company.
Without a clear, focused plan to manage what bumps in
the road may appear in the future, you could find
yourself in deep regret, or worse, financial ruin.
Planning ahead is essential to protecting the success of
the business you have worked so hard to build.
Putting off until Tomorrow, What Should be Done Today
Although it may be obvious that planning is critical,
you would be surprised how frequently business owners
avoid this process. Lack of knowledge or awareness is
rarely the problem. Procrastination, on the other hand,
is a familiar culprit. As the owner of a growing
enterprise, your time is valuable and your attention is
focused on the pressing issues of today – be they
employment-related matters, solidifying partnerships,
growing your customer base, and so on. You are not
alone. While many business owners excel in certain
aspects of their businesses, so too do they share in
common weaknesses and mistakes.
Top Ten Mistakes Business Owners Make
Business owners are decisive people. They need to be to
survive in today’s highly competitive, fast-paced, and
even volatile, marketplace. Knowing what mistakes are
most often made may provide the specificity you, as a
business owner, need to close in and target these areas
to better prepare for the future.
Mistake #1: No Succession Planning.
What will happen to the business when you, the business
owner, are no longer around? This can be devastating for
“founder-dependent” businesses, and becomes an issue
upon either your disability or death. Will your business
end up in the hands of those you want?
Mistake #2: Failure to Protect Intellectual Property.
Do you have legal protections in place to guard your
intellectual property, which is vitally important to the
value of your business? If you own a professional
services company, your services and processes would not
be as effective in creating market advantage if revealed
to your direct competitors. By not protecting that
value, you may be limiting your business’s full
potential.
Mistake #3: Failure to Do Asset Protection
What happens when the business owner does not have asset
protection? Do you keep your corporate minute book
up-to-date to ensure your corporate shield is sound?
Failing to do so means you could be sacrificing a whole
lot more than just the business itself should you ever
be sued.
Mistake #4: Failure to Do Financial Planning
What happens when you do not have a financial plan? Your
business may be your most valuable asset, but it is not
the only asset requiring financial attention.
Strategizing a plan that integrates all of your assets
will enhance the overall level of protection available
to you.
Mistake #5: Failure to Do Estate Planning
What happens when you do not have an estate plan?
Businesses are unique assets requiring unique treatment.
Simple wills or trusts will not provide the
sophisticated and comprehensive planning you need to
ensure both you and your family are provided for.
Mistake #6: Complaining to Children and Key Employees
about the Business
What is the harm? Many of you may do this without
realizing the detriments of sharing personal gripes or
issues with those who you may want to take over the
business in the future.
Mistake #7: Not Using the Advisory Team as Advisors
What happens when you do not use the collective
expertise of your advisory team? This may include your
attorney, CPA, financial advisors, partners and
executives, and others. Several experienced heads
working together are better than one.
Mistake #8: Not Grooming and Keeping Key Employees
What happens when you do not retain your best employees?
Your business cannot thrive without the help of your
employees. It is important to have a growth plan to
ensure you retain the best talent among your employee
pool.
Mistake #9: Not Having an Exit Strategy
What happens when you want to sell your business? Have
you thought about when and how you would want to sell
your business? Without an understanding of the value of
your business and a taxation strategy in place, exiting
the business may become a very complicated matter. You
want to be able to do it well.
Mistake #10: Not Having a Strategic Plan
What happens when you do not take the time to recharge
and think strategically about the future path and growth
of your business? The important thing here is to be
proactive rather than reactive. Procrastination may give
you an easy out, but you are only delaying what is
fundamental. Take the time to work on your business, not
in your business.
The Time is Now
Knowing what areas many business owners fail in, you may
have recognized one, two, or all ten mistakes of your
own. Take stock of how well you have planned (if at all)
in each of the above areas in your own business. The key
is to take initiative and do something about it NOW!
For more information about our firm, visit
www.covertlaw.com or contact us at (727) 449-8200.
To discuss our feature Your CorporateCounsel Advantage
program and how it may help protect you and your
business, please contact Neil Covert at
ncovert@covertlaw.com or H. Michelle Yang at
myang@covertlaw.com.
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