New Year's Resolutions for Your Small Business
By Lane V. Erickson, Idaho Business Attorney
With the New Year comes New Year’s resolutions. Most people are familiar with the process of creating resolutions for themselves. They may want to lose weight, or they may want to increase their savings. Alternatively, they may want to reduce their debt, or they may want to work towards the personal relationships they have in their lives. I am in favor of New Year’s resolutions because I believe it gives a person the ability to learn and to grow.
In a similar vein, small business owners should also consider creating New Year’s resolutions for their business. If a resolution can help a person individually, it can also help them with their business.
In reality, a resolution is nothing more than a goal. Small business owners should always be setting new goals for themselves depending on the operation of their business and the business environment as a whole. Without specific goals it is hard for a business to improve.
As Idaho’s premier business law attorneys, our team at the Racine Olson works with each client to help them with all of their business needs. Our team of skilled and experienced attorneys have assisted business clients for more than 70 years. Because of our experience, we understand the desire business owners have to expand and grow their successes and reduce their mistakes. Our team of experienced and knowledgeable attorneys includes partners Lane Erickson, TJ Budge, and Nate Palmer and of counsel attorney Dave Bagley. Our team consistently receives the highest ratings possible from clients, judges we appear in front of, and others. These ratings can be reviewed online at Justia, Martindale-Hubbell, and AVVO.
Creating a New Year’s resolution for your business is a very personal thing. However, there are a few things that you should consider as resolutions for your small business that will help you move forward successfully.Decide if You Should use an LLC
The first thing you should decide is whether you should turn your small business into an LLC. The acronym LLC means you are talking about a limited liability company. To put it simply, a limited liability company or an LLC is a business structure that is used in every state in the United States. It is designed to create a company where the owners are not personally liable for the company’s debts or liabilities.
LLCs have only been around for about 30 years. They were created to be used almost specifically for small businesses. The reason for this was that a regular corporation was perfect for a large business but did not fit well for a small business. On the other hand, a partnership did not offer all the protections that a business owner should have available to them and that are provided by a corporation. As a result, an LLC is a hybrid between both a corporation and a partnership.
This article is not designed to talk about all the benefits that an LLC can provide to a small business owner. We have other articles on our website that explain this in detail. For purposes of this article, if you are a small business owner, you should seriously consider setting up an LLC for your small business. It is the single best way to continue to operate your business without too much complexity while at the same time providing specific protections for you and any other owners of the small business.Clean Up Your Accounts Receivable
The next thing you should consider as a resolution for your small business is to clean up your accounts receivable. Your accounts receivable is a reflection of money that is owed to your business for the services or products you have sold or provided to your clients or customers.
Any business that allows its clients or customers to pay on terms is going to have an accounts receivable as part of their financial operation. If you are a small business operation, sometimes it is difficult to stay on top of the accounts receivable and yet still move your business forward. Because of this, in some businesses, accounts receivable begin to grow. This is a bad thing.
Like most things, accounts receivable are specifically related to time. The longer amount of time that goes by without collecting on an account means the less likely it is that you will collect on that account. Because of this, one of the single best resolutions that you can make is to pick a certain date where you will become more proactive with newly created accounts receivable. The reason for this is that you are much more likely to collect on an early account receivable than on one that is old.
However, this does not mean that we want to give up on the old accounts. Rather, there are many ways that you can collect on these accounts as well. You could personally negotiate with the individual who owes on the account. Alternatively, you could offer a discount on the balance if the customer will make a lump sum payment.
Additionally, you could take a current customer who has an accounts receivable and put them on a COD account which requires them to pay cash for any additional orders they make. You can let this customer know that until the accounts receivable is resolved they will remain on the COD payment structure.
Finally, you could also turn your accounts receivable over to a collection agency or Law Firm who will move forward with the collection process of the past due accounts. Most business owners consider this to be the atomic bomb of collection activities they can choose from. However, it does prove to be effective in collecting at least a portion of the past due accounts receivable.
Whatever action you take, the goal here would simply be to reduce your accounts receivable and make sure that they do not continue to grow. You are not in the business of lending money. Rather, you are in the business of whatever your business is. The goal of that business is to service your customers and allow you to make money at the same time. By reducing your accounts receivable, you are accomplishing both of these specific goals.Review all Your Business Contracts
Finally, with the New Year it is always a good time to review any contracts you have in your business. These would include any contracts you have with employees, independent contractors such as salesmen, as well as suppliers, persons who you are leasing buildings or property from or to, and any other type or kind of written contract.
Some contracts have clauses in them that allow the contract to renew automatically unless one of the parties States in writing that they do not want the contract to renew. You may have a contract that you want to end, but it will require you to be proactive to do that. Reviewing your contracts at the beginning of each year allows you to know if this type of clause exists.
You may also need to renegotiate the terms for the price structure of the contract you have. Maybe the cost of production or the services you provide have gone up over the year. In this instance, you may need to increase the amount you will be charging to your clients or customers. This also should be reflected in your written contracts.
These are just a few examples of the types of resolutions you could and should be making for your small business. Keep in mind, that we do not expect you to be an expert about how to structure the legal side of your small business. We can help you with this function. We have assisted numerous clients in the creation and operation of their small business, and we are confident that we can help you too!Enlist an Idaho Business Attorney to Help You
Our team of Idaho business lawyers can help you with any of your business structure or operation needs. Whether you are seeking to create a new business or review a current business, we are available to discuss your options and answer your questions at an initial free 30-minute consultation. Call us toll free at 877.232.6101 or 208.232.6101 for a free consultation. You can also email us directly at firstname.lastname@example.org or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho business problems.