The new year brings significant opportunities for businesses. For many, it’s time to reset and look forward, examining the company goals and seeing what steps can be taken to meet and exceed their annual goals in 2025. For others, it is a time for reflection, a look back at the previous year to see what went right and what went wrong and how to change course, if needed.
From a legal standpoint, there are certain things the new year brings a great opportunity to review. Hopefully, everything on this list is already checked off, but if you’re looking for a New Year’s Resolution for your business, here are five ideas that can be completed fairly quickly.
- Review your business structure and make sure you have the right documents for that structure.
- Check to make sure your contracts are truly being fulfilled.
- Resolve any outstanding disputes.
- Complete performance reviews for employees and contractors.
- Develop or finish your exit plan.
The attorneys at The Orlando Law Group can help you meet these resolutions quickly. Just like the resolution so many people make to join a gym, the first step is reaching out. We are here to help.
Resolution No. 1: Review your business structure and make sure you have the right documents for that structure
Companies often ebb and flow. They evolve. They change how they are operated and revise their missions and goals.
Too often, however, the company’s original business structure stays the same.
There are so many different types of business structures, from a Limited Liability Company to a B Corporation and so much more. Maybe it is time to create an ESOP or move from a partnership to a sole owner.
The important thing is to talk with your lawyer and accountant to ensure your company is structured in a manner that provides you the most financial benefits, along with the most legal protections.
Every company is different, making it difficult to say all the reasons why companies are structured in specific ways. That’s why it is a good time to dig in and review your company’s goals.
But here are a few questions you can ask:
- If you were to get sued, how damaging would it be to the owners of the business personally?
- How many employees will you add over the next few years?
- Are you looking for investment this year or did you start bringing on investors in the past year?
- What are the goals of each of the partners over the next few years?
- Are there expansion plans for your business to add new locations?
- What are your exit plans? (See resolution No. 5.)
- How have tax laws changed since you started the company?
- Are you thinking about starting a new line of business with a new product or service?
- How extensive is your use of 1099 contracted workers?
- Are you thinking about offering your goods and services in a different state?
The answers to these questions all impact on how your business is legally structured.
During this review, you might find the current structure is the right structure for your business. However, if you’ve been in business for a while, it would be time to review all of the documents for your business.
After all, laws and regulations change. There may be new requirements you are unaware of. There may be new paperwork required from state, local and federal governments. All of this can impact your business and, if you have outdated documents, you could be subject to fines and penalties.
It is a fairly simple step to review your structure and your company’s documents, but not doing so can have significant financial repercussions in the future.
Resolution No. 2: Check to make sure your contracts are truly being fulfilled
When you enter into a contract with a vendor or a supplier, there is always a set of terms, including the services being provided. This is the outline of how the relationship works.
Over time, it is common for those responsibilities to slip or change. Maybe billing is a bit different than what was outlined. Maybe a new service or product was added to the list, or maybe something has proven to not be productive.
None of that necessarily means that the vendor or supplier is doing a bad job or not fulfilling the terms of the contract. In many cases, changes to the terms are agreed by both parties.
However, the contract needs to reflect the current state of the relationship to prevent any sort of legal issues down the road in case the relationship starts turning for the worse.
If there have been changes to the relationship, it is a good time to rework any contracts that need to be changed to accurately reflect what is being provided and any other aspects of the contract.
Of course, if a supplier’s or vendor’s work has not been to your satisfaction, a review of your contracts could be a good opportunity to work with the company to improve their performance – or end the relationship. (See Resolution No. 4)
Just make sure to follow the terms of the contract to end the relationship in a way to avoid any legal issues. The attorneys at The Orlando Law Group can assist with that.
Resolution No. 3: Try to resolve any outstanding disputes
Having a dispute with a customer, a vendor, a supplier or anyone else can be costly. Legal fees add up, but what happens if state regulators become involved? How much business will you lose when a dispute is taken to social media? How much productivity will you lose while focusing on a dispute?
It is much better to resolve disputes as quickly as possible and do everything you can to prevent disputes from happening.
Unfortunately, that cannot be 100 percent possible, so use the new year as a way to try to make a fresh start.
Of course, that doesn’t mean you capitulate to the other side of the dispute or that you compromise your morals or integrity. What it means is that now is a good time to see if there is a compromise or a way to satisfactorily resolve ongoing disputes.
Every dispute is different and there simply may not be an option to bring about a resolution, but your business will be healthier and more productive if you can find a way to end any dispute.
Resolution No. 4: Complete performance reviews for employees and contractors
Every large corporation has a formal process for employee reviews. There’s a reason for that. Holding performance reviews can help prevent disagreements and can help employees grow.
For many small businesses, where the owner and the employees work closely together, performance reviews can often be an afterthought. After all, the thought is that since the employee/owner relationship is close, the employee would share them immediately.
Also, if the employee hasn’t said anything and is overperforming, it is human nature to think that everything is OK and that a formal performance review will only cause issues.
Unfortunately, most employees will not willingly share their feelings of being disgruntled or unfulfilled. That leads to a surprise when the employee decides to take another job paying them just a little bit more, costing the business productivity to train a new employee.
Similarly, many businesses don’t have performance reviews for their contracted workers. After all, they are bound by the terms of a contract, you should have less control over the contractor’s overall performance and the termination of a contract shouldn’t have as big of an effect on the business.
In both cases, it is always better to have a performance review to find out if there are any issues, what can be changed in the relationship to make it better and to learn the goals of the contractor or employee.
According to Harvard Business Review, here are a few things to consider when approaching the annual performance reviews for employees and contractors.
- Convey your positive intent
- Describe specifically what you have observed
- State the impact of the behavior or action
- Ask the other person to respond
- Put regular follow-ups on the schedule
By ensuring you have completed these reviews as the calendar turns, your business should be more productive throughout the next year.
Resolution No. 5: Develop or finish your exit plan
As a business owner, it is not easy to think about life after the business. Sure, you can dream about sitting on a beach with a cocktail during retirement, but for many business owners, their company is part of their personality and certainly a major part of their lives.
Of course, the end might not be retirement. It may be that your goal is to sell the company and start another one with the proceeds. Serial entrepreneurs do this all the time.
It may be that you want the legacy of the company to move forward, but you would like someone else to run the day-to-day operations and you might see that for the company to scale, you’ll need a much different ownership structure.
You also might think about the day when your children will run the business, and you can see them build on your foundation.
The stark reality is that it is very difficult to maintain a business after the original owner leaves or dies. Forbes wrote about a study that showed “sales dipped by 60%, on average, four years after a business owners’ death, and employment at the firms was down 17%. The survival rate of firms where the owner died two years afterward was 20% lower than at similar firms where the owner was living. At the same time the likelihood of bankruptcy rose at firms where the owner passed away.”
That doesn’t need to happen to your business if you ensure your exit plan is complete.
In your exit plan, you’ll need to think about your life goals. You’ll need to think about who will replace you. You’ll need to think about what the company would need to move forward without you. You’ll need to think about your estate plan and how your family would be compensated if you were to suddenly die.
Those are just a few of the questions you will need to ask.
Then you’ll need to set up your exit plan into a formal document and process. There are many, many ways to give your business the best opportunity for success after you leave.
The attorneys at The Orlando Law Group can help you with exit plans and all types of issues in Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout Central Florida.
If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation to discuss your case. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.
Last Updated on December 13, 2024 by The Orlando Law Group
