Last Friday, May 1st, Oklahoma began to re-open its economy, and that process of re-opening is continuing to unfold. This past week, Governor Stitt stated that Oklahoma is well on its way to continue opening its economy and enter Phase 2 of that process beginning next Friday, May 15th. In this season of uncertainty and constant economic change, it is more vital than ever to prepare your small business not only to re-open, but to thrive in the future. It is time to futureproof your small business. In this week's Freedom Friday blog, I am going to share four key areas in which it is vital to futureproof your small business.
The first key area that is vital to futureproofing your small business is your contracts. Each time you sign a contract, you enter into a legally binding agreement on behalf of your small business. Unfortunately, contracts may have unfavorable terms, or may not be legally enforceable. A prospective client once asked me to draft a lease against a defunct entity. I refused to do so because it would not be enforceable. Now is the time to review your contracts to ensure that all your transactions and contracts for your small business are proper documents and in writing. In addition, your small business should have a written contract in place with every vendor, and this is a particularly good time to review all your vendor contracts. This is also a good time to review any contracts for which you are required to make payments on them. If you have any questions on how to interpret your contracts, it is best to consult with an attorney who can review your contracts and answer your questions about them.
The second key area that is vital to futureproofing your small business is your finances. This is a broad area that requires a lot of attention in order to futureproof your small business. There are three different aspects of finances which you should be futureproofing during this time. The first aspect of your finances which is important to futureproof are your small business's receivables and/or collection issues. Receivables are monies that are owed to your small business. This is the time to make sure your clients or other third parties are current on making their payments, and to make sure receivables on open accounts are not turning into collection issues. If you do have issues with receivables and/or collection items, it is best to consult with an attorney who can discuss with you what solutions might be available. The second aspect of your finances which is important to futureproof are your small business's debts. This is an important time to identify all your business debts that are owed by your small business and make it a priority to pay those debts and avoid collection activity or litigation filed against your small business. If you are having trouble paying any debts or obligation, then you should consider finding an attorney who can help you establish a repayment plan with your small business's creditors. The third aspect of your finances which is important to futureproof your finances is budgeting and handling future cash flow issues. Now is the time to sit down and look at the rest of the year's finances and consider if you need financial assistance or other strategies to protect your finances for the future.
3. Succession Planning
The third key area that is vital to futureproofing your small business is succession planning for your business. In order to futureproof your small business, you need to have a business succession plan. What will happen to your small business if something happens to you as the owner? There are three (3) components to a solid business succession plan. The first component of a solid business succession plan is to have buy-sell provisions in your operating agreement or bylaws. This is especially important if you have more than one owner of your small business, but it is also important if you are the sole owner of your small business. These provisions will document what will happen with your small business if something happens to you, or if something happens to one of your co-owners. The buy-sell provisions should specifically address what will happen with your small business in the event of your incapacity, death, or other occurrences. There are different options, but it is best to consult with an attorney to review those options with you in preparing or revising your small business's operating agreement or bylaws. The second component of a solid business succession plan is to have key man and essential employee policies. If you have hired employees for your small business, it is important to have a policies and procedures manual, or employee handbook, for your small business. As a part of your manual or handbook, your small business should have a “key man” or “essential employee” policy, which would identify a “key man” or “essential employee” in your small business, and describe next steps if something happened to him or her. Again, there are different options, but it is wise to consult with an attorney to review those options with you in preparing or revising your manual or handbook. The third component to a solid business success plan is to consider purchasing a key man insurance policy. If you are the sole owner of your company, you should consult with an insurance agent to see if this would be a good decision for you. You should also consider purchasing coverage for managers or supervisors in your small business.
4. Emergency Preparedness
The fourth key area that is vital to futureproofing your small business is emergency preparedness. In order to futureproof your small business, you need to be prepared for an emergency, and that requires having an emergency plan for your small business. This plan would allow you to continue business operations in the event of an emergency. Such an emergency could include a global pandemic like the coronavirus, and also natural disasters, man-made disasters, and utility failures. There are several steps to creating an emergency plan for your small business. First, you will need to assess potential risks to your small business. Then, you will need to identify alternatives for your communications and operations. You will also need to identify critical business functions and create a plan to maintain business operations. If you have employees then you should obtain buy-in from your employees. Finally, your emergency plan should be put in writing and become part of on-going training for your employees and staff.
During the month of May, Liberty Legal Solutions, LLC is offering a special strategy session for small business owners in Oklahoma. This strategy session will be 40-45 minutes and will be held either via telephone or via Zoom. The cost of the strategy session is $129. If you are interested in scheduling a strategy session during the month of May, please e-mail me at [email protected] to book your appointment.
For more information regarding Liberty Legal Solutions, please check out our website at http://www.libertylegalok.com