(Published in the Piedmont Business Journal column “Parting Shots”, Winter 2014)
I hope that the readers of the Piedmont Business Journal had a good 2013 and can look forward to an even better 2014. Before sailing off into the new year, this is a good time to reflect and review. We can all improve. For example, did you have any problems or complaints from clients or customers? Did any employees leave in an unhappy fashion?
Years ago, my brother and I built a sail boat in an Indonesian fishing village. Before taking it out on a journey around the island of Java, we embarked on a number of “shake out” cruises to test the rigging and how various mechanics would hold up in uncertain conditions. So before sailing off into 2014, ask yourself, did any warning lights on your dashboard come on or flicker during 2013? Even if such incidents did not occur, it is good to look back to see what can be improved.
Like a boat, a business should not leave the harbor until its internal structure is secure. That includes having the appropriate entity, clear agreements between principals and investors, a solid employment system and strategy, and a sound management team with clear lines of responsibility. If there were any close calls or warning signs during 2013 and you’re still on your feet, consider yourself fortunate but do not tempt fate.
In addition to self refection and review, it is a good idea to seek experienced professional assistance to conduct an audit of your legal foundation and practices for you may not be fully aware of the all of the issues your business faces. Additionally, your own passion for your business may impair your ability to be fully objective. Well-run companies use audits to improve performance and assure compliance with the many local, state, federal, and international laws and regulations. Non-compliance, lack of proper business documentation, unclear contracts, uneven employment practices and weak intellectual property protection can cause sudden and significant losses. By uncovering problems earlier, you can save legal and other expenses – and you, your board, and your shareholders (or members) will rest easier. The goal of an audit is to eliminate possible problems and improve practices in many areas, such as procurement, contracts and intellectual property.
A successful audit will generate solutions that improve your business, in addition to searching for non-compliance. The audit will generate best practice recommendations which will allow you to seize opportunities and prevent liability. This enables you to focus on the bottom line and important business goals. Not only can future legal problems and costs be avoided, audits can also reveal unknown business opportunities in various areas such as capital allocation, expansion, and more effective business structures. The goal of an audit is to change things for the better and to make your journey more successful. I wish you all success as you sail into oceans of prosperity in 2014.