1. Comply with the Law
You should comply with the law – and yes it is necessary to include this hint or tip! It is not smart to not comply with the law. Your role as a business person is to be innovative within the bounds of the law, not to break it. Anyone can break the law – those people get fined or put in gaol.
Your business will not be sustainable if you do not comply with the relevant laws. If you want your business to last then this basic requirement is a must. If you are an employee then you will be in breach of your employment terms if you do not comply with the law.
2. Not for Personal Benefit – For the Benefit of Shareholders
You have an obligation to act in the best interests of the company when you made decisions. The resources of the businesses are not yours – they must be used for the company’s benefits. Ask yourself the question standing back – is this right?
If your business is a company, you must make sure you use the resources of the company for the benefit of the shareholders, and not for your own interests. You must effectively manage the risk of the business, make sure all financial reporting is accurate and that you make accurate all disclosures required.
3. Have a Crisis Management Plan
You should have at least a basic crisis management plan. A crisis management plan will allow you to quickly respond to a crisis in a managed and controlled manner. It will help you maintain control, and will ensure that others perceive you as being in control of the situation – which is important to protect your brand.
The reputation of your business is hard earned, and can be significantly reduced very quickly if you do not manage a crisis well. When a crisis occurs your brand can suffer significant damage, how you act is important.
If there is media coverage about the incident, then you need to consider whether you response to it. A few hints to how to respond: demonstrate regret and concern, promise to fix the problem and tell people how you are going to do this and show that you are in control and if relevant working with authorities to resolve the situation. Then you can hope that you just have one day in the media!
4. Most of Your Major Legal Crisis Risk will come from the CEO and Upper Management.
It has been shown that misbehaviour and non-compliance by the CEO and Senior Management will account for the most damaging legal crises and the associated liability.
The CEO and the Senior Management will often think they are above the law – and that compliance obligations are for the general employees only. Don’t be one of these – your days are numbered.
The larger sweeping compliance programs that operate throughout the general employee population are important; however make sure that your focus is also on the CEO and Senior Management.
5. Have a Commitments (including Contracts and $ Spend Limits) Policy.
It is well known to lawyers that a contract can be written or verbal. Also, it is also well known to lawyers that in business you need to be careful about the representations that you make to others. Unfortunately, both the above statements always seem to be a hard message to get across to busy staff.
You never want to be in a position where a junior staff member has committed to millions of dollars of expenditure without senior management approval! – Yes; it has happened and it is not pretty.
You should make sure that your company has a Contracts ($ Spend Limit) or Commitments Policy. I say “Commitments” because so many people incorrectly believe that a contract can only be in writing.
The Commitments Policy should outline who, and under what circumstances, can sign contracts or enter into commitments (verbal or written). The Commitments Policy can also include a financial approval limits.
Try to work the Commitments Policy into a simple 1 page matrix. Once completed then communicate it properly around the business, and ensure that all new staff are briefed on it when they come.
6. Work Out When You Want Your Staff to Get 3 Quotes to Ensure the Best Price for Goods or Services.
It is not always practical for you to make your staff get quotes off 3 different suppliers before proceeding to buy goods or services.
You will always want to make sure that you get best price for certain goods or services you are buying into your business, but sometimes speed of deal completion, product delivery and or the skill of a particular person that you want to engage with, will override this Keynesian desire to explore the market for the lowest price – you are not always buying widgets!
Have a 3 quote policy but allow for exceptions to a 3 quote policy before purchasing goods or services for your business. Require a higher level sign off and track the exceptions – make sure that every contract is not an exception.
No matter what, always make sure you have some idea of market pricing, and negotiate with your preferred supplier even if you are not going to get 3 quotes.
7. Have Long Term Contracts for Essential Business Supplies – and Take them to Market.
Work out what goods and services your business buys a lot of and take this volume to market to get competitive pricing from suppliers.
Make these contracts for a decent term, nothing more frustrating than having to renegotiate the same contracts all the time! – but ensure you can get out of them if the suppliers pricing is at any stage uncompetitive.
Adopt an internal policy, and communicate it, that requires all staff to only buy those specific type of goods and services from the supplier that you have negotiated your deal with. This will ensure best price and that staff do not waste time try to do deals with other suppliers.
It also helps to manage legal exposure in relation to the purchasing of those goods and services generally by your business – presuming your tender process puts the supplier on terms and conditions which are good for your business.
8. Don’t Risk Assess Illegal Activity
Doing risk assessments of business activities is great – it focuses the mind on the risks associated with the conducting of the relevant business activity.
However, when it comes to an illegal activity it is not appropriate to determine whether the consequence of the action is acceptable or not. If it illegal, you cannot undertake the action.
Just because you may be using a corporation as your business entity and operating mode, do not mean that you can act without morality.
For example, is it acceptable to undertake an illegal activity because it is unlikely you will get caught and the fine if you get caught is only $10. I say – “no” – if you want to build a sustainable business, then conduct your business legally.