New Year's Resolutions

The New Year is always a time for reflecting about the past and looking to make changes in the future concerning problems that came up in the last year. Although many people make personal New Year’s resolutions, it’s also a good idea to make some resolutions for your business so that it will have the best year of its existence!

Here are 10 New Year’s resolutions that will make this year the most successful year you’ve ever had.

1. Written contracts

All businesses need contracts. If your company has more than one owner, you need a shareholder agreement or operating agreement. If you are hiring employees, you need a job application and possibly an employment agreement. You may also want your employees to sign non-solicitation of customer contracts. And you need a contract that will detail what services you are providing, how and when you will get paid and what happens if something goes wrong. Whatever type of contract you need or receive, you should have your lawyer review it to make sure that you are properly protected.

2. Unclear rules for employees

There are few things more expensive than a problem employee. Many times issues will come about because employees did not know what you expected from them. By having rules regarding attendance, behavior, use of computers, time off from work, drugs and alcohol, and discrimination and sexual harassment, you can head off problems with employees who will create morale problems and even expose you to a lawsuit.

3. Not hiring an experienced business attorney

Lawyers specialize. This is a good thing. You want an attorney who has seen your type of problems before and can offer vital assistance in every part of your business from basic contracts to office leases to copyrights and trademarks. It’s not a good idea to have your brother-in-law, the divorce lawyer, negotiate your vendor contracts or advise you on whether to terminate a disruptive employee.

4. Ignorance of the law

The fact that you did not know that a law or regulation existed or applied to you when you violated that law or regulation will not be a defense to a lawsuit or enforcement action. Laws do not carve out an exception if you are a small company. They tend to apply to all businesses, regardless of size. So, you are bound by and presumed to know about all laws and regulations that affect you. Make sure you either read up on all the laws and regulations that pertain to your business or consult with an attorney who knows the laws and can advise you so that you will not be inadvertently in violation of the laws that affect your business.

5. No shareholder/partnership agreement

If you are not the sole owner of your business, you need a shareholder/operating/partnership agreement. These are like pre-nuptial agreements for businesses. The document should set forth who will contribute what to the business (i.e., assets, labor), how existing members can get out and new members get in, what happens if one person dies, and how profits and losses should be allocated among the shareholders/members/partners. By writing down these potentials concerns, problems are anticipated and dealt with. This is not a do-it-yourself task. An experienced business attorney should draft this agreement for you.

6. Ignoring intellectual property issues

What is intellectual property? It involves copyrights, trademarks and patents. Have you ever copied something you saw on the Internet and integrated it into your advertising materials without permission? Do you use software on multiple computers without buying multiple licenses? Intellectual property laws place restrictions on the public and violations of those laws have economic consequences. Do not just hope that you never get caught. It will be an expensive lesson.

7. Getting involved in litigation

Litigation is not cheap. It costs you money to hire lawyers to prosecute or defend a lawsuit and it costs you time that you spend focusing on the lawsuit instead of on your business. Stay out of litigation if you can, and if you can’t, listen if your lawyer suggests settling the case.

8. Employee or independent contractor

It can cost you so much money that it will put you out of business if you misclassify an employee as an independent contractor. Consult with your accountant and attorney to ascertain whether you meet the state and federal tests for independent contractor.

9. Extending credit to the wrong persons

No one wants to work for free. If you do not specify how and when you get paid for services, you may never get paid. Some customers should always pay you up front; some customers will pay you if you send them a bill after you have performed your services. Know which customer is which. If they are willing to pay cash up front, take it. If you are operating a net branch, keep tabs on the company you are working with. Mortgage companies are going out of business every day. If you are not getting paid quickly, find out why and make sure you get your commissions before they close their doors.


10. Not having insurance to cover business risks

Businesses incur risks every day – that a visitor to your business premises will get slip and get injured, that your office will burn down and all your records will be totally destroyed, that one of your employees will do or say something that will land you in legal difficulties. There are all types of business insurance to cover these risks. Learn which ones your business needs and purchase the coverage. It may save your business.

If 10 resolutions take too much time or money, pick 4 or 5 to concentrate on right now. Take a look in 6 months to see whether the ones you picked are working for you and pick another 4 or 5 to focus on for the second half of the year.