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Guidelines to prevent misperceptions

On Behalf of | Nov 13, 2015 | Business Formation & Planning |


When creating a new business, you and your partners may have a narrow focus. All of your efforts center on building the business, and because of that focus, there may be few disagreements.

If that effort is successful, you can congratulate yourselves for a job well done. But not all of your work may be complete. During your startup phase, you may have gone with a style of working together that served you well. You may have accepted a great deal of informality in your decision-making process because the elimination of bureaucratic niceties permitted the quick and decisive actions needed to bring your project to fruition.


However, once your business is operating, you may find you have need of those niceties. In formal articles of incorporation or in an operating agreement of a limited liability company, you should have formal rules and procedures for laying out the duties of your principle managers.

It should also contain a clear decision-making process and a means of dealing with differences of opinion. Within a small or family-owned business, it is essential that expectations are clearly set and those rights and responsibilities of managers are laid out.

This can prevent both unauthorized decisions or spending from being made that can cause significant problems, both financially for the business and can cripple and paralyze the management and operation of the business by allowing unnecessary disputes to arise.

When your decision-making process is unclear, misperceptions and hurt feelings can lead to infighting and disputes that can become as heated and damaging as anything seen during a contentious divorce.

An attorney familiar with business formation can assist in drawing up the necessary documents that can help preserve the success that you have created and avoid unpleasant and damaging fights that could otherwise develop.


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