The year-end is coming up and planning for 2018 should be underway at most companies. If you haven’t started yet, or if you have, I think one quick story might be instructive about why it’s a good idea to include your general counsel in the process.
STORY:
I was at a client’s office a while back and we were discussing their strategic plans and past performance. They were very excited about both their growth and profits.
I was concerned with the numbers because their profit percentage was so much higher than most other companies I know in the industry and/or, frankly, most industries.
After drilling down a bit, guess what we found? The company had over $150k in expenses on the balance sheet as a loan, but not listed as expenses on the P&L? It took just a few minutes of inquiry by a lawyer to determine there was an issue. The main clue: the company had no cash, but significant profits.
How big of a deal was this? Well, the owners were planning to increase their bank lines of credit and grow at a greater rate next year by adding locations and possibly bringing on new investors. What a disaster that would have been…securities and bank fraud for starters and maybe even bankruptcy for dessert.
So, what did we do about it? First, we reviewed the company’s entire operating system along with the financial records to determine how this happened and to fix it. Thankfully the real issue turned out to be human error, not something more sinister. The chart of accounts was incorrectly established when the company opened.
You may be asking, why is the general counsel doing such a review? Because the legal consequences of the mistakes found are unquantifiable and we are the experts at effective, legal business operations and producing correct results.
The result is that we are fixing this and positioning the company for profitable growth.
Are you growing profitably? Is there a hole in your financial or human capital management that needs to be addressed? A quick review and operational audit by a business lawyer could help determine if a problem exists.
Our firm has the expertise, skill and–the real key–unique experience of running companies as a C Level Executive that makes a difference when advising clients on: (i) structuring operations for efficiency and legal protection (which means more value); (ii) administration (not just overhead but value added elements); and (iii) sales/marketing (proper incentive based compensation causing the behavior that drives results!); plus many more of the literally infinite number of issues that occur while growing a business.
