How Do You Take Risks in Your Business?

As a business attorney, I’ve had the honor of being on the “inside” of so many businesses over the years.  I get to see what’s going on in a business and how the owner makes decisions. I also get to see the results of those decisions – the good, the bad and the catastrophic.  I see a lot of risk-taking.


Taking risks in general is a fascinating topic for me.  Back when I was working in other law firms, I judged my clients’ decision making in a certain way.  Often, I didn’t understand why so many of them were willing to take such huge risks with their businesses.  Of course, I was just looking at the “legal” side and I knew from reading hundreds of cases (and seeing first hand) what could happen when something goes wrong.  I knew the downside of those decisions and they could be catastrophic to a business.


Most of my attorney colleagues were the same as I was – very conservative, risk-averse – and we didn’t see the need to take many risks.  There was just too much at stake.  So we counseled our clients from that perspective, often discouraging them from taking any risks in their business.  I understand why some business people call attorneys “deal killers” – and there’s no doubt that many times we earned it, scaring our clients out of a course of action.  We would outline the catastrophic scenarios that could happen – no matter how remote – and were astounded when some of our clients went ahead anyway.


Many attorneys are still this way.  I am not.


I started changing the moment I decided to open my own law firm.  And wow, that was a huge risk!  It was so painful at first – so terribly painful to take those first risks and jump off the cliff of “security”.  It went against my grain and I had to fight every instinct to play it safe.


Over the past several years, I’ve come to terms with risk.  Instead of thinking of all risk in the same way, I now understand the difference between good risk and bad risk.  I’ve realized that good risk is the essential nature of business.  Without it, there is no business.


Out of necessity, I developed my own way of assessing risk and making decisions.  It’s helped me in my business and it’s helped me give better advice to my clients.  I no longer try to keep them from taking any risks – I now help them do an assessment to determine whether a particular decision is a good risk to take or a bad risk they should avoid.


The first step we do in the risk assessment is to realize that a decision can be an action – or it can be an inaction.  Either one is a decision – and either one can have a risk associated with it.  It’s easier to be aware that an action you are considering may be a risk.  But it’s also important to understand that not taking an action can be a risk.  For example, if you are avoiding putting a contract in place with your business partners, that inaction is creating a risk on you and your business.  Both action and inaction should be considered when doing risk assessments.


The second step is to understand what type of risk-taker you are.  Everyone falls somewhere on a spectrum – from very risk averse to loving the thrill of a risk.


On the one end, the very risk averse business owners move slowly and it takes them a long time to make a decision.  They are okay with really slow progress because it is more important for them to be “safe” than to move quickly.  For these clients, we give them the information they need to make the decision – hoping that it will allow them to make the decision more decisively (and quickly) than they would have without our guidance.  Our job is to provide the security of knowledge and confidence in their choices.  The result is that they acknowledge that some risks are good to take – and they move forward.


On the other hand, the thrill seekers love the adrenaline of the fast lane.  They are comfortable taking all kinds of risks (even the bad ones).  Wheeling and dealing makes them feel successful and they get energy from the super-fast pace.  For these clients, we force them to consider the different types of risk involved.  Our job is to walk them through the risk assessment and show them potential outcomes.  The result is that they acknowledge that some risks are bad – and they slow themselves down enough to steer in the best direction.


Most of us know one or two business owners on the far ends of this spectrum, but reality is that the majority of us fall somewhere in the middle.  We may lean towards the risk-averse side, but we move a little more quickly.  Or, we may lean towards the fast-paced side, but we’ve learned to make ourselves more deliberate.  Knowing where you tend to fall on the spectrum helps to see the benefits of doing a risk assessment.


Those two first steps in the assessment are ones that anyone can do right now.  The remaining steps in our risk assessment are a bit more technical and depend on particular circumstances.  The important things to remember are:

  1. Consider whether an action or an inaction are creating a risk for you or your business.
  2. Determine whether the risk is “good” or “bad”.
  3. Keep in mind your tendency for risk-taking – and whether it is affecting your decision.


About Elevate Business Law

At ELEVATE, we help business owners do risk assessments.  We aren’t coming from a “no risk is good” perspective because we know that some risk is necessary in business.  Our main goal is to help business owners avoid unnecessary bad risks and make better business decisions.

End of Year Checklist for Service Businesses

Here we are at the end of the year, winding down and getting ready to enjoy the holidays.  As business owners, this is an opportunity to assess, adjust and fortify certain areas of our businesses.


To help you do this, we’ve put together a checklist of 10 things service-based businesses should do at the end of each year:


  1. Document Business Changes.


  • If there have been or are going to be ownership changes in your business, now is the time to properly document them. It’s easier to make this kind of change at the end of the fiscal year.


  • If you need to make changes in the structure of your business, or the way it is taxed, the end of the year is a good time to make it effective.


  • Review the information filed with the State of Florida and prepare to file your Annual Report in January with any updated information.


  1. List Major Business Actions & Decisions.


  • Take a few minutes to write down the major actions and decisions that were made in your business during the year. This will help you to prepare for drafting your Annual Minutes.


  • Be mindful of any follow-ups that need to be done to complete the major actions, or if you’re planning major actions, then be mindful of things you need to be doing in preparation.


  1. Clean up Your Books and Analyze Financial Reports.


  • Along with the other bookkeeping clean-up in preparation for tax season, consider whether it’s prudent to make some expenditures before the end of the year. Sometimes moving ahead with the expenditure or pre-paying can have some tax benefits.


  • Check in with your accountant and see what you should be doing to make your life easier for tax season. Don’t wait until they’re in the middle of the tax rush to give them a call.


  1. Focus on Client Relationships.


  • This is a good time of year to reach out to clients you haven’t talked to in a while, whether it’s a phone call or a holiday card. Establishing good client relationships is worth the effort.


  • Look over your client contract forms and see if anything has changed since they were last updated. Often, we change how we do things but don’t remember to update our client contracts.  This could also help you to see where improvements can be made in your procedures.


  • Review your client list and see if you need to do any updates or whether there are renewals that are coming up.


  1. Check Status of Regulatory Compliance


  • Take a look at your licenses and permits to see when they need to be renewed. Calendar the renewal dates so that they are not forgotten.


  • Research whether there have been any changes during the last year in the rules and regulations that affect your services. Industry and trade publications, as well as your regulatory agency, is a good place to start.


  1. Assess Your Vendors.


  • It’s a good idea to make a list of all of your vendors with their updated contact information. You can use this list to assess your satisfaction with each vendor. You may even “grade” them to see just how well they are performing for you.


  • Track the start and end dates for your vendor contracts. It’s good to know when you are free of the contract and able to hire a replacement, but it’s also good to know when you need to renew if you plan to do so.


  1. Do an IT & Security Self-Audit.


  • This is a hot topic that you need to pay attention to. Make it one of your goals for 2018 to improve your cyber security.  In preparation for those actions, do a self-audit now to see where you stand.


  • Review and update your list of technology equipment (computers, printers, etc.). Assess whether any need to be replaced or whether you need to purchase technology to increase productivity.


  • Review and update your list of software applications. Assess whether they are functioning properly and providing an adequate return on investment for your processes.  Consider whether some need to be replaced or whether you need to purchase additional applications to increase productivity.


  1. Analyze Your Website.


  • Check your hosting service to see when a renewal is required. Given the increase in website hacking, you may want to review your hosting package and assess whether you should pay for more security or even change hosting providers.


  • Update the information on your website, including new addresses, phone numbers, services offered, etc. You will probably need to update your biography and maybe those of your employees.


  • Make sure you remove old offerings from your website. If you no longer provide that service or if you’ve modified it, make your website reflect your current offerings so that you represent your services honestly.


  • Check your reports to make sure your website is doing its job. Your marketing consultant should be able to help you with this assessment.


  1. Do an Inventory of Policies & Procedures.


  • One of the most important aspects of building infrastructure in your business is having policies and procedures. Now is a good time to make a list of all the ones you have in place to see if they need to be updated.


  • Make a list of the policies and procedures you intend to implement next year. Ironically, focusing on the smaller details can sometimes help you see the bigger


  1. Examine Staffing Needs.


  • Review employee files to make sure you have updated contact information on each employee.


  • If you’ve made changes during the year, make sure your employee handbook reflects your current policies and procedures.


  • Assess whether each position in your business is filled with the most capable person and whether any changes need to be made.



It should feel good once you’ve completed these ten steps.  Take a moment to reflect on the previous year and acknowledge all that you have accomplished!  Then set aside some time before the new year starts to write down some goals for the next year.  The process of going through the list above should have given you some great ideas of where to start!


Bring on the Merry!


About Elevate Business Law

Elevate Business Law guides service-based businesses through legal issues that impact their success.  By focusing on establishing better business relationships, our clients can experience dependability and stability in their businesses.  We help them to establish those beneficial relationships through direct, honest and solid contracts.

Is Your Business Prepared for a Disaster?

Our office weathered a hurricane last year with absolutely no damage, but a recent severe rainstorm caused a flood and threatened to damage some equipment that is vital to our day-to-day operations. Fortunately, I was still at the office that late afternoon when the deluge streamed over the sheetrock, down the wall and onto my desk – splattering my computer, telephone and other electronics with copious amounts of water.

With some help, I was able to move everything important out of harms way and only the carpet was damaged, but those circumstances got me thinking…is my business adequately prepared in the event of a disaster? Is the plan I have in place sufficient to keep my business up and running should a flood, fire or other catastrophe occur?

According to Federal Emergency Management Agency (FEMA), 40 percent of businesses do not reopen after a disaster of any kind. Don’t let your business become a statistic – have a plan in place, just as you would for your home or family – when disaster strikes.

In this blog post, we’re sharing a checklist of steps your business needs to take to prepare for a disaster. With an appropriate plan in place, your business will be protected.


• Assess Your Risk. A risk assessment entails identifying potential hazards and analyzing what could happen if a hazard occurs. A thorough risk assessment can help you protect your business against most potential threats.
• Create a Written Disaster Preparedness Plan. Create a detailed plan of action specific to your business and put it in writing. Keep a copy of your plan in a safe location outside of the office.
• Share Your Disaster Preparedness Plan. Review your plan in detail with your employees. Make sure they have a copy – electronic and written – of the plan. Modify your plan as needed, and keep everyone informed of plan updates.
• Determine an Alternate Work Location. Plan for another location where core employees can conduct critical business functions in the event of a disaster.
• Have a Backup Plan in Place. Back your files up online, and store them in the cloud. Find a service that works automatically and continually in the background and transmits your protected files to offsite servers.
• Protect Your Assets. If possible, take measures to buffer your facility against natural disasters. Keep a comprehensive, current inventory of the items and equipment used in your business.
• Review Your Insurance Coverage. Have your business appraised at least every five years, and have copies of insurance policies and customer service phone numbers in a safe place. Consider getting business interruption insurance. NOTE: Flood damage requires separate coverage and is not included with typical policies.
• Don’t Become Complacent. Disasters can happen anywhere at any time, so do not assume that because it hasn’t happened that it won’t happen. Taking a proactive approach and planning for the events could make the difference between losing your business or resuming operations and being up and running in a short time frame.


Although this list isn’t comprehensive, it’s a good start to making sure your business is protected in the event of a disaster. The most important thing is to have a plan in place – know ahead of time what you will do if disaster strikes.

About ELEVATE Business Law

As business attorneys, we understand the importance of protecting a business in all situations – whether it be establishing a plan for a natural disaster or putting a solid legal foundation in place on which a business can grow. Our attorneys at ELEVATE are ready to help you protect your business.

Do You Mingle or Co-Mingle?

No, it doesn’t “all come from the same place anyway”!

The biggest legal implication when it comes to managing business finances is co-mingling. When a business entity is formed (LLC or corporation), it comes with a liability shield that protects your personal assets from business liabilities. To keep it in place, you must treat the business entity as separate from yourself. That’s why co-mingling is so dangerous – if you co-mingle business and personal funds or expenses, the business entity is not being treated separately from you personally.

What is Co-Mingling?

Co-mingling is evidence used to “pierce the corporate veil” – in other words, it’s used to show that you should be personally liable for your business debts and obligations.

How can co-mingling happen? Here are just some of the ways:

• You use a business check or credit card to directly pay for personal expenses.
• You use a personal check or credit card to directly pay for business expenses (more on this below.)
• You deposit client or customer checks into your personal bank account.
• You don’t document transfers between a business account and a personal account (i.e. for distributions, loan repayments, etc.).

The General Rule

The general rule to follow is: Always use business funds for business expenses and personal funds for personal expenses – and business deposits always go into the business account.

Yes, I know that some business funds need to make their way into your personal account (so you can get paid!) and, at times, some personal funds need to be used to keep the business going.

When you are paying yourself (compensation, distributions or repayments), the preferable method is to write yourself a check from the business bank account. Be sure to document the payments so that they show up accurately in your bookkeeping.

Same goes for those times when you put personal money into the business – deposit a personal check into your business bank account. And document it very carefully!

Do not get caught up in the idea of “Oh, I’ll just pay this business bill with personal money – it all comes from the same place anyway.” NO IT DOESN’T! That is the point. You and your business are not the same. You are different and separate – and you need to keep it that way.

It’s very important that you have good business bookkeeping and records. I suggest that you create protocols for yourself to follow when paying business expenses and making business deposits. The more organized you are, the healthier your business will be – and you’ll be better able to track your business progress using financial metrics (more on that in a later blog post).

The Start-Up Exception

Clients who are starting a business often ask me how to handle the funds needed for start-up costs. This is an exception to the rule above – but it’s a limited and managed exception. You can’t get a business bank account until the business entity is officially formed. In the meantime, you have expenses to pay to get the business going, so you are going to have to use your personal funds. In this situation, you need to meticulously document each expenditure so that it can be captured in the bookkeeping once the business gets going.

I recently had the pleasure of interviewing Brent Ross, CPA from Ross Hughes & Associates for our new podcast series called Elevate Your Business (launching soon!). During my interview with Brent, he had two great tips for making this easier:

#1 – Set up a new bank account (it will be a personal account) and deposit some funds (make a guess as to what you’ll need – you can always replenish). Use this bank account to pay for all start-up costs. Even though they are personal funds, they are separated from your mainstream personal funds. Then the account records can help you to reconcile your bookkeeping once you have your business set up. This is an easy way to create a record trail for your start-up costs – instead of the time consuming task of combing through all your personal bank account statements.

#2 – In addition to or instead of a separate personal bank account, you can get a separate personal credit card to use for start-up costs. It would work the same way – you pay for all start-up costs with this one credit card. The records are all there for you to capture later in your bookkeeping.

Not only does this system help you with record-keeping, but it also gets you in the habit of using a separate source of funds for business expenses. These two tips are great – and Brent had many more so you’ll need to listen to the recording!

The Rare Exception

Even after saying that you can’t co-mingle your personal funds with your business funds, I know there are rare times when you have to pay a business expense with personal funds. For whatever reason, this does happen. You just need to make sure that it is RARE and when you do it, you fully document it. It needs to appear in your business bookkeeping in one way or another – as a reimbursable expense or as a capital contribution.

Do not set up business procedures to regularly pay business expenses with a personal account (bank or credit). This is a sure way to get caught up with co-mingling. If you need to pay with a credit card, get a business credit card for those types of purchases.

Bottom Line = Do business mingling all you want, but NEVER co-mingle!

About Elevate: Small Business + Technology Law
At Elevate, we are dedicated to bringing quality information to small business owners. In the Elevate Your Business Podcast series, we interview business advisors from different industries and record their most important tips for small business owners.

This blog post is offered for informational purposes only and is specific to Florida law. For specific advice, please contact a business attorney and discuss your particular needs.