On behalf of Kadish & Anthony Law Group posted in Closely Held Businesses on Thursday, June 30, 2016.
Unlike large companies that manufacture products, small Arizona manufacturing companies do not always have the financial resources available to adequately deal with unforeseen issues. This means that closely held businesses need to make additional preparations in order to provide for periodic obstacles that could potentially be costly. It might not be possible to prepare for every eventuality, but being aware of some of the more common issues could help.
For example, issues with suppliers happen more often than business owners would like. Strikes, shipment delays and payments issues are just some of the pitfalls that could become calamities without proper planning. The frustrating fact is that these issues are often out of the business owner’s control.
Investors could also wreak havoc on a newly started business by withdrawing, withholding or simply not providing promised capital. Confidence is a necessary part of starting a new business, but that needs to be tempered with caution. The business needs to have some predetermined contingency plans in case of a financial setback. The way to maintain, or regain, that control is to be prepared and realistic about potential obstacles.
Protecting the rights of the company should be a priority during any business formation activities. As part of that process, all closely held businesses need to have a business plan that guides the forward momentum of the company for at least five years. During the drafting of this plan, contingencies can be put in place for when these obstacles arise. At a minimum, this could include making plans for the careful wording of proposed contracts in order to protect the new Arizona company’s interests.
Source: Fortune, “Small Business Startup Tips for Success”, Liz Dickinson, June 25, 2016