Business Mistakes to Avoid: Being Reactive Instead of Proactive

So many business owners fall victim to this mistake and get too busy or they think they can put off addressing legal and administrative issues until they arise. Don’t wait for issues to arise before addressing them. These issues are just as important as the service you are providing or the product you are selling, if not more. Approaching these issues from a proactive position rather than a reactionary one can minimize a lot of your risk and save you a ton of time, money and heartache.

So, what should you be doing?

1. Make and Keep Proper Records

Make corporate records, keep them organized and all in one place. This includes things like your start-up documents, partnership agreements, business licenses, resolutions, and finalized contracts. Okay, so I know we discussed making proper records and preserving a writing earlier. It is such an important thing to do for your business that we had to include it twice. Remember earlier, when I said that memory is unreliable. You cannot accurately recall the conversation you had during a meeting that took place three years ago. It’s just not possible. So take the time and make the record, but again, let’s be careful with this one. Making the record is only the first step. You have to organize it.

Don’t let your records start piling up in the corner of your office. Things start out simple, but they don’t stay simple. It’s easy to let basic tasks like organizing the records build up until you’ve got stacks of paper teetering in hazardous piles. Let things slide for too long, and the stacks will fall. You don’t want to be in the middle of a legal battle sorting through 30 different versions of the same contract wondering “which version did we execute again?” The sooner you start making records and putting your paperwork in order the easier it will be to keep up with it in the future. Develop this habit as soon as possible. Having a solid legal record is a highly cost-effective way to protect yourself from future headaches, and it’s not hard once you get in the habit. Don’t wait for a conflict to arise before you start.

2. Have Clearly Defined HR Policies And Follow Them

So many small businesses think because they don’t have many employees, they don’t need to worry about employment related issues, have an employee handbook, or enter into an employment agreement and it’s not true. There are a whole host of employment-related laws that are so much more complex than meets the eye. Unfortunately, in misguided effort to minimize expenses, many employers ignore employment related issues altogether. In doing so, these employers jeopardize their ability to address the potential issues in the most strategic and cost-effective manner.

Properly drafted employee handbooks and employment contracts serve as the foundation for the employment relationship. Setting aside time to develop and communicate employment policies can help manage employees and identify potentially disruptive issues before valuable time and resources are wasted. One of the most frequent ways I see this issue arise when business owners hire friends or family members. And don’t misunderstand, there is nothing wrong with hiring a friend or family member in the right circumstance. The problem comes when they ignore or neglect to implement HR policies because their employees are friends and family.


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