There are countless reasons that could cause a company to fail. It’s impossible to know them all or to be prepared for every instance. But the majority of “big” mistakes that result in a company failing are not only predictable, but common. If businesses can be aware of the common causes behind failing businesses they can do a lot to prevent themselves from falling into the same pit.
Common “Big” Mistakes Businesses Make:
- Mistake #1: Failure to discuss selecting or changing the form of a business entity with an attorney.
- Mistake #2: Failure to generate an appropriate document outlining the relationship between owners in writing.
- Mistake #3: Failure to generate and/or regularly maintain an effective business plan that includes an accurate description of the business.
- Mistake #4: Failure to memorialize agreements with key executives; particularly when operations depend upon their involvement.
- Mistake #5: Failure to put appropriate and necessary employment manuals and policies in place that characterize and document employment relationships with every employee.
- Mistake #6: For corporations, failure to hold regular Board of Directors’ meetings and annual Shareholder meetings.
- Mistake #7: Failure to maintain books and records in a proper and organized manner.
- Mistake #8: For corporations, failure to properly issue shares for legal consideration and the failure to accurately identify valid exemptions from security registration requirements.
- Mistake #9: Failure to dissolve the business when the company is no longer in business.
- Mistake #10: Failure to establish what constitutes as a working relationship with an experienced business attorney.
In order to avoid an unnecessarily high risk of litigation work with an experienced business lawyer to draft/review agreements, generate appropriate documentation of contracts, maintain corporate formalities, etc. Get in touch with the southern California business lawyers at The Law Office of Retz & Aldover LLP today. We encourage our clients to address legal issues quickly and efficiently to avoid additional legal problems. It’s the best way to avoid costly litigation.