LEGAL TIPS TO SURVIVE THE ECONOMY
1. Non-Compete Agreements
Protect your company's clients, accounts and sales information as well
as your company's trade secrets. Preparing non-compete agreements and confidentiality
agreements can protect your company during the time employees work for your company
as well as after they leave.
2. Dealing with Bankruptcy
Once a debtor goes into bankruptcy, you must cease all collection activities
against that debtor, and go through the bankrupcty court to make any claim of debt
owed to you.
3. Closing Business Deals
In the current economy, financing is tough to come by, Instead of letting
a good deal pass, consider owner financing of a property or business with the the right
to take the property or business back in the event of default. Additionally, consider
merger with another existing business to create synergy from each company's strengths
as an option instead of pure acquisition.
4. Delinquent Accounts
Track delinquent accounts and act on them before they become too stale.
Collections are most effective when they are done early. With businesses closing down,
waiting too long to collect may only ensure that the debtor will be judgment proof.
5. Personal Guarantees
Keeping the possibility of future collections in mind, it is important
to obtain personal guarantees on all new customer accounts. The ability to collect
on an account personally is certainly worth a great deal more than just against a company
as the company could close its doors and take the debt owed to you with it.
6. Preserving Corporate Structure
When conducting company business, always keep personal and business related
expenses, purchases, loans, etc. separate. Failing to do so by mingling assets and
accounts may lead to piercing of the corporate veil. A piercing of the corporate veil
essentially would make you personally liable for the debts of your company and destroy
the purpose for which you created a corporate entity.
7. Promissory Note
When making loans to others through your company or taking on company
debt, create promissory notes (secured or unsecured) to document the terms of the repayment
and your rights in the event of default. Further, make sure that there are corporate
resolutions in place to allow your company to take on such debt or loan money to others.
8. Renegotiating Leases
Don't be afraid to renegotiate leases whether you are a tenant or landlord.
You can certainly request or allow for a temporary reduction in rent to ride out the
slow economy instead of losing your business or a tenant. As a landlord, retaining
tenants may be more important than having tenants shut down or file bankruptcy. As
a tenant, a temporary reduction in rent can save you from having to shut down your
business and remain liable on the remainder of the lease term.