Okay.  I can hear all of you service providers smiling!  One of the biggest challenges for the consultant is getting the client to follow the advice being given.  For instance, a client brings in a CPA to review the accounting records.  The accountant reviews the bookkeeping and financial statements and finds that the transactions haven’t been properly recorded.

Listen.  Do You Want to Know The Answer?

The client who has no accounting training and no one in the company trained in accounting says “Yes, they are.  I spoke to so-and-so three years ago and his sister is an accountant and he says that she says that’s the way to do it.  You don’t know what you are talking about.”

And here’s another.  The attorney, who has been serving as corporate counsel for four years, has advised the company and its leadership team not to issue any contracts, agreements, or offers of employment without having them reviewed.  She subsequently receives a call saying the company has terminated the VP of Sales, who has been with the company three years and one month.  She receives the employment contract, which was written and executed by the CEO of a technology start-up company but which her office never saw prior to this.  It grants the VP 5000 shares of company stock on the first day of employment with the company.  It also guarantees him three years of employment at $300,000 per year plus expenses, including a fully furnished apartment in the town where the company is headquartered for the 3 years, plus $600 a month for living expenses, plus reimbursement of all normal business travel expenses, and annually a grant of an additional 5000 shares of company stock on the anniversary date of his employment, plus 5000 additional shares each year he has satisfactory job performance.  The VP Sales has been paid only $150,000 each year of his employment.  He has outstanding expense reports totaling more than $60,000.  He has not been receiving the $600 per month living expense payment, and the shares have not been issued as indicated in the agreement.  No performance reviews have been performed at any time for any one in the entire company for the past four years.  The VP alleges he was terminated because he is divorcing the CEO’s daughter, whom he married two years ago.

A frequent refrain I hear is “Why does my lawyer need to see this or be involved?”  Or “What kind of tax implications could it have?  I just want the other owners to surrender they stock to me.”  Or even better “It’s my company. I should be able to do what I want with the (grant) money.”

Experts Promise to…

Whether we like it or not.  Whether we want to admit it or not.  The legal, tax, accounting, and government compliance issues are in every aspect of our business.  We can’t avoid them.  Yes, we can ignore them for a little while.  We can play ostrich and stick our heads in the sand, but that just leaves our you-know-what’s up in the air.  Exposed as a target for someone to paint a really big target on or pin a sign on that says “Kick Me!”  And then we end up kicking ourselves for not paying attention to them and costing time, money, and increasing the overall risk to our businesses.

Be Preventative and Wise with Dollars and Sense

It is never the things we expect to go wrong that catch us unaware.  It is the relationship that we see through rose colored glasses…the belief in happily ever after…the eternal optimism…that catches us unaware and unprepared.  It is great to be optimistic.  It is wonderful to have a relationship full of trust.  But it is also wise to be prepared for what may happen if things change.  It is an unfortunate reality that relationships become dysfunctional.  That people exit our lives voluntarily and involuntarily.  There are divorces.  There are deaths.  There are disagreements on how businesses should grow and directions which should be taken.  All of these things and many others lead to situations that have to be resolved.  If things aren’t in writing and defined in advance, the situation can get messy – fast!  Things get ugly – faster!  So it is good to have positive relationships, but it is even better to invest in preparing for the “what if”.  What if we disagree, or decide to go a different direction, or something happens to one of us.  Build in a pre-nup for your business, define the decision making roles and the accountability, know who will contribute the funding and guarantee the bills, know who is going to put in the sweat-equity and what is expected in return.  And get the lawyers and business advisors involved to attend to the details.  Oh, and LISTEN to them.  It is worth it, even if nothing ever goes wrong.

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