Too often business owners are too busy running the business to pay attention to the documents which govern the business and could decide its future in the event of sudden unanticipated change. Taking a few moments to review a company’s governing documents may seem like a distraction from the business at hand, however, doing so could be the difference between a business which survives and thrives, and one which fails.
It is reality in today’s world that we are all busy. As a result, most businesses focus on satisfying their customers, identifying changes in the market so they can stay ahead, and making sure there is profit at the end of the day. As a result, too often business owners spend too little time reviewing and analyzing the structure of their business.
Just as the markets in which businesses function quickly change, businesses change themselves. Accordingly, the Operating Agreement for limited liability companies, or By-Laws for corporations, can quickly become outdated. Updating these documents, however, often gets pushed to the back burner or forgotten all together.
Failure to update business organizational documents as regularly as businesses plans, can lead to devastating consequences.
The provisions of an entity’s governing documents which apply upon the death or incapacity of a member are often designed for a company that no longer exists. Accordingly, they may impose impractical or devastating obligations on the business, or leave a deceased or incapacitated member of the business with far less than anyone ever expected.
Similarly, a change in marital status of a business owner or partner can have a drastic impact on the business if the business’ organizational documents do not properly address the possibility. Too often business owners do not take the time to be sure their organizational documents for their business reflect its current condition. A failure to do so can result in unanticipated financial burdens, significant litigation costs, or the admission of a new partner the owners do not anticipate.
A brief annual review of your organizational documents to be sure the provisions still fit the business’ goals, intentions and condition can avoid this result. The discipline to stop and be sure you are paying as much attention to the structure of your own business, as you are to your business’ performance, can be the difference between a business that survives and one that does not. Those businesses which make sure that the cobbler’s son has shoes, are in the best position to survive and thrive through sudden unanticipated change.
Mark represents businesses and individuals in all aspects of complex civil litigation, land development, and construction. In his commercial litigation practice, he leverages his extensive experience in litigation, mediation, and arbitration to identify the vehicle which will most efficiently and effectively achieve his clients’ goals. He emphasizes construction defect, commercial and business dissolution litigation while maintaining a boutique practice recovering compensation for the victims of elder and sex abuse.