Health has been and continues to be an important topic in our everyday lives. Your physical health. Your financial health. Your mental health. But what about the health of your business, specifically the legal health of your business? For a business owner, this is also an important topic and one that should not be overlooked.
To determine how legally healthy your business is, the business will need to undergo a “checkup.” Similar to an annual physical examination with a physician, a business checkup is a thorough examination of the business that evaluates its legal risks, exposures, and liabilities. The aim of this assessment is to identify any areas of risk before they evolve into something stressful and unmanageable and to identify potential areas of growth. Annual “checkups” can provide an owner with a snapshot of exactly what is going on, what the owner is doing well, and where some areas of improvement lie. This can minimize the risk of business interruption and allow the owner to focus on growing instead of constantly fighting fires.
To start this assessment, all aspects of the business need to be evaluated. This includes reviewing and assessing the business’s corporate documents, employee documents, contacts, financial records, corporate assets, any active or pending litigation, and any ownership estate plans. These seven categories provide a comprehensive review of the crucial elements of the business. A complete assessment can give insight into some of the following questions:
- Are your ownership rights clearly documented?
- Do you have an employee handbook that clearly outlines the expectations, policies, and procedures of the business?
- If you have multiple corporations/LLCs, should they be placed under one main holding corporation/LLC?
- Have your standard contracts been reviewed to ensure they are enforceable and contain the necessary terms to protect your business?
Each category plays its own significant role in making up a current blueprint of your business to provide awareness of a business’s overall state. With this information, a business owner can strategically minimize areas of risk and focus on maximizing the company’s value in a controlled manner. Working alongside a business attorney through this assessment will give an owner a more complete view of the business. A business attorney will be able to look at the assessment through a business and legal perspective while potentially identifying blind spots that an owner may have overlooked. From there, a business attorney will be able to assist in putting together a plan to help the business address specific items of immediate concern while also looking forward toward items that will need to be addressed in the future.
For example, a completed assessment could also reveal that the business lacks a contingency plan. This is important because emergency business plans should be developed to account for the sudden absence of leadership. Without continuity of leadership, the business is exposed to serious risks. This exposure could result in a threat to the business’s profits, employee morale, and the implementation of unprepared succession leadership. However, by investing in a business checkup, the business will be made aware of this missing critical item and have the time to actively correct the course. Knowledge is power. We cannot plan for uncertainty, but we can take steps to manage that uncertainty. It is important to understand where potential issues lie within the business to avoid spending countless hours of time remediating avoidable issues. The more you know about your business, the more empowered you are to make strategic decisions about the future of your business, and the more likely you are to avoid potential issues.
This blog article is for informational purposes only. It does not create an attorney-client relationship and is not intended to be regarded as legal advice.