When doctors talk to me about annual checkups, I play dumb and am like, “Oh yea that, I will do that soon.”
Then 5 years go by, and all of a sudden, I have high cholesterol, a thyroid problem, and all sorts of other things you are not at all interested in hearing about. “But I never had any of this before!” I exclaim in utter disbelief. “I am young and invincible!” But my doctor reminds me that might not totally be the case. “Well, you are 5 years older.” Um excuse me? That is so rude! And here is the kicker: “You know,” she says, “this could have been preventable.” Ugh! Don’t give me that! Preventable? “Well,” I said accusatorily, “Why didn’t you prevent it? YOU are the doctor!” But my doctor is smart (she is a doctor) and doesn’t fall for my clever attempt at projection. “I can’t do anything if you don’t come in for check-ups. I can remind you, and we practically begged you to come in just about every six months, but you are an adult.” Ugh. An adult! I hate that word.
So, what does an annual checkup for a business even mean?
Well, just like an annual medical checkup, it really goes the same for you and your small business. Your small business is a legally separate “person” that you need to care for and help prosper. What you do not want to do is wait until something goes wrong to hire a business lawyer. You want to go in for your annual checkup so you and your lawyer can discuss your business as a whole, what things you could be doing to better protect it, and what things you are already doing awesomely to protect it. Because in far too many scenarios I have been like that doctor and the business owner has been like me. I am lucky that my issues were “just” high cholesterol and thyroid problems, as I know it could have been worse. And I have seen business owners come to me with regrettable, but fixable, issues and I have others where the issues have become so bad we have ended up in years of litigation.
What could be so bad to end up in years of litigation?
Well, the business must have been complicated and the players egregious, right? Not necessarily. Something as simple as not having an updated shareholders agreement, not having an operating agreement, or forgetting to remove an officer or director from a secretary of state filing whom you got rid of long ago can all result in some pretty sticky situations.
In a recent case that lasted almost ten years (yes, ten), a business owner’s widow had the company her husband owned half of for almost thirty years taken out right from under her from the business owner’s surviving partner.
The paperwork surrounding the company was so fragmented and outdated that it became a literal “he said she said.” In the end, my client prevailed, but her legal fees were such that her victory was more bitter than sweet. That was a difficult case for me, because the other side was awful, the widow was sweet, and the paperwork was poor. In other words, it all could have been prevented.
Give your business a check-up. I assure you, it won’t hurt too much if you stay on top of it!