Recently, I attended an awards dinner hosted by the Santa Barbara based Spirit of Entrepreneurship Foundation. I do not think I have ever come across a more aptly named organization. A 501(c)3, they host the awards dinner as a fundraising event to provide scholarships to high-school and college student entrepreneurs. It was an inspiring evening. In my line of work, I am used to meeting people who have tremendous grit and big dreams, but to have so many in one room was a real treat.
Launching a business takes a lot of time, so it very rewarding to see it recognized in the local paper. Even in this internet age, many people get their news with good, old-fashioned paper and ink. I can’t tel you how many compliments and calls I got after this announcement ran in the Star. If you haven’t seen it, read the article here!
Remodeling my new office has reminded me of a lesson in business. Most notably the cost of new carpet. I tried to cost out all my tenant improvements, and for the most part my budget came out on target. But my carpet estimate was terrible. Why?
It wasn’t because of the price of my new carpet. My estimate was off because I forgot about the cost of the carpet already there. It turns out that the most expensive part of new carpet is actually the removal and disposal of the old carpet.
I should have seen that coming. Not because I remodel commercial spaces on a regular basis. I don’t. But I do help clients again and again who are refreshing their business by expanding distribution channels, adding new partners, new equipment, or new products. The most difficult part of these projects is rarely the exciting new enterprise. It’s rewriting the existing terms and conditions or partnership agreement. Changing filing statuses. Dissolving the old company. Settling matters with the partner who wishes to cash out. In short, the demolition of the old corporate structure often costs more than the replacement.
It can be frustrating to spend money on something that’s no longer needed. But sometimes that’s simply where most of the hard work is hidden. You have to remove the old carpet before you can reap the benefits of the new one.
With 2016 rapidly nearing its end, December is a perfect time to reflect on the year that has been and plan for the year to come. As a business owner myself, here are a few ideas I will live by in 2017.
Don’t fear change. Change is inevitable and unstoppable. You can attempt to hold back the ocean, but you will be swallowed up. Or you can ride the ocean. That’s called surfing, and it is up to you which strategy you will pursue in 2017.
Control what you can, prepare for what you can’t. Focus energy on what you can control. If you are a farmer, you can’t control weather. But you can control wind frost protection and crop insurance. If you are part of a family owned business, you can’t control your family members (even though we wish we all could sometimes); but you can plan for orderly succession of your company or estate. Lastly, you can never control the litigiousness of others, but you can limit your exposure and liability.
Strive for excellence where it matters, but know when OK is OK. I never saw a company fail because they picked the wrong font for their business cards. But many businesses expend a tremendous amount of energy on decisions that won’t really matter in the long run. How to know when it matters? If it will kill the business if you get it wrong, then it definitely matters. Be a perfectionist when it counts. Most issues are open to some level of compromise.
Fear failure, but not mistakes. Every successful business, individual or organization has made mistakes in the past and will make more in the future. That’s part of life. Learn what you can, try not to repeat them, and be adaptable.
On the surface,these suggestions might not sound like legal advice, but many of the legal problems I see stem from choices my clients have made. Consider in advance how you will respond to some of these issues, and you will lay the foundation for a prosperous 2017 and beyond.
“You keep using that word. I do not think it means what you think it means.”
Perhaps you do. But do others?
Terms of art and professional jargon play a valuable role in many fields. They help professionals speak to one another with efficiency and precision. But arcane language can often be confusing to those people who are outside of the circle. That can include many people who have a stake in a transaction.
When drafting business documents, terms of art should always be used sparingly. When included, they must be defined clearly. That might make the documents longer and wordier, but the meaning of the documents will be much more apparent to others who might read them in the future. Would an agreement full of technical jargon make sense to less technical investors or business partners? In the event of litigation, would the intent of the parties be clear to a judge or arbitrator? How about a jury? Could a lack of clarity be used against you?
Take the time to spell it out. You never know who will need to understand it 5, 10, or 20 years from now.