Your 2016 small business resolutions

Start smart. Run strong. Finish with success. It’s never too late to button up your small business and, unlike your fitness goals, small business resolutions can be achieved by the end of January!

Here’s our list of essentials for any small business. Resolve to make it happen:

1. Have an updated owner’s agreement. Regardless of the form of your business (corporation, partnership, LLC, etc.) every business should have a written agreement among the owners spelling out basics of their arrangement. There are always three items that should be covered in any such agreement: 1. money, 2. management, and 3. exit. So many business owners put this off until it’s too late and the cost consequences are usually orders of magnitude greater than completing the task proactively. Other owners rely on outdated documents that no longer reflect the business’s circumstances or don’t address ownership issues that are now present.
2. Develop an employee/contractor handbook. A number of businesses operating with independent contractors may ignore the concept of an employee handbook believing it’s irrelevant. Ignoring the IRS reclassification risk (for another post), businesses with compensated, non-owner workers should have a written policy addressing the basic issues within a sound employee handbook: worker status, compensation, performance expectations, disciplinary procedures, hiring/firing/termination processes, competition and confidentiality restrictions, and other specifics based on the work context. Even great employers with generous and patient attitudes towards their employees and contract workers can fall into costly employment law traps without hard evidence to back them up.
3. Hone your moneymaker. This sounds a lot like your classic fitness resolution right? Your company’s money maker is the contract that you use with your revenue generating relationships. Typically we are talking about sales and service agreements you have with customers and clients. For some businesses though this might be a licensing agreement. Or it might be your franchise agreement. Or maybe you make your money on the supply side and have important agreements with manufacturing or materials sourcing. In any event, is your written arrangement as good as it can be? A lot of businesses leave value on the table in two ways: First, at the time of signing the ‘deal’ isn’t as good as it could be. Think pricing. Are you competitive without sacrificing reasonable margin? Think promises. Are you overly committing company resources? Second, even companies with well honed sales/service agreements or supply contracts lose value because they fail to ‘work’ the contract to its fullest during its term. Think payment. Are you too patient in bringing in receivables because your agreement has no payment teeth? Think performance. Are you receiving complete performance on the supply side? Are you getting nickle and dimed by buyers who want red carpet treatment at bargain rates?
4. Check your insurance coverage. Yes, a shout out to colleagues in the insurance business. In many cases, good insurance coverage is your most practical way to minimize exposure and reduce costs. You should regularly confirm that your current policies properly cover the activities your business involves. We can help explain policy language if you don’t feel your agent is answering all your questions.

Get these four items in shape and your business will be stronger and more successful in 2016.