The Business Owner » Business Ownership

Business Owner Imperative: Ensure Continuity

Stephanie — Sat, 03 Oct 2009 15:00:46 +0000

Sudden and unforeseen events such as tornadoes, floods, fire and hurricanes can put you out of business in a heart beat. Just as the business owner must work each day to secure profit and liquidity, he or she must have contingency plans for the unexpected. So, identify critical assets, list things that could damage those assets, develop mitigation plans and conduct a periodic review of that plan.

Time to Exercise Your Option to Buy Out a Partner?

Stephanie — Sat, 01 Aug 2009 15:00:51 +0000

There’s no doubt business profits are down so now might be a good time to buy a shareholder out and increase your ownership percentage. Just hope that shareholder doesn’t have the same idea.

Interest Free Loans Now Available

Stephanie — Wed, 01 Jul 2009 19:50:15 +0000

$35,000 interest-free loans are now available to small businesses as part of the America’s Recovery Capital loan program approved by Congress in February. The loans are for small businesses that have been profitable one of the last two years, but are not struggling. The SBA will pay lenders the prime rate plus 2%. All SBA fees will be waived and the U.S. government will provide lenders a 100% guarantee on the principal amount in case of default by the business.

Is Your Self-Esteem Derived from Your Income Statement?

Stephanie — Wed, 01 Jul 2009 15:00:27 +0000

Too often, a business owner’s self-esteem is derived from his success or his net worth. This is an issue that is more prevalent than people would think, our experts say. The answer in handling the issue lies with the owner’s ability to diversify his life and to find meaning and enjoyment in other areas besides the business.

Boom to Bust in Four Years: Don’t Let It Happen to You

Stephanie — Tue, 01 Jul 2008 20:37:01 +0000

Just a few years ago Jack and Seth were on top of the world. Both in their late 40s, their nascent business was really hitting its stride. An importer of high-end designer tiles installed mainly in high-end homes, revenue had been growing rapidly, hitting $3,200,000 in 2004. Each of them drew a $150,000 salary and another $400,000 fell to the bottom line that year. They bought a new 20,000-square-foot warehouse and each a new house and truck.

What You Need to Know About Appraisals

Stephanie — Sat, 01 Mar 2008 18:43:36 +0000

Contrary to what some people believe, an appraisal does not give the value of an asset. Given the important role appraisals play in our economic world today, taking this to heart could very well save you a lot of money one day.

You Can’t Sell Ownership to Just Anyone

Stephanie — Thu, 01 Mar 2007 21:34:50 +0000

Among the many issues to consider when selling ownership in your business is whom you sell to.

Protect Yourself When Gifting, Selling or Transferring Ownership

Stephanie — Thu, 01 Mar 2007 21:20:16 +0000

Quick Take: When gifting, issuing, transferring or selling ownership interests in your business, such as stock, units, warrants, options or convertible securities, talk to your attorney. Tell him or her you want to do the following.

Terms That Private-Company Owners Should Know

Stephanie — Mon, 01 May 2006 21:26:38 +0000

Articles of Incorporation (or Certificate of Incorporation): Instrument under which a corporation is formed. The contents are prescribed in the particular state's general incorporation statute.

Bylaws: Regulations, ordinances, rules and laws adopted by an association or corporation for its government.

Board of Directors: Elected representatives of the members or shareholders of an organization who are collectively charged with selecting and appointing the officers who will manage the day-to-day affairs of the business or organization.

Business: Commercial, industrial, service, or investment entity, or combination thereof, pursuing an economic activity.

Closely Held Corporation (a.k.a. Close Corporation): Corporation owned by few shareholders whose shares are not publicly traded.

Control: Power to direct management and policies of a business.

Controlling Interest: Ownership bloc sufficient to exert control through election of directors.

Corporation: Legal entity, organized under the laws of a particular state, consisting of an association of individuals (or other legal entities), which exists distinct from its members (shareholders), and is vested with the capacity for continuous existence irrespective of changes in its members. Includes C-corporations, S-corporations, limited-liability corporations and professional corporations.

Directors: See "Board of Directors."

Majority Interest: Informal term for Controlling Interest (see "Controlling Interest").

Minority Interest: Informal term for Non-Controlling Interest (see "Non-Controlling Interest").

Non-Controlling Interest: No power to direct management and policies of a business.

Operating Agreement: Document that defines, governs or restricts the rights of members of an LLC. Same as shareholder's agreement for C-corporations and S-corporations.

Quorum: Number of members of a committee, board of directors, meeting of shareholders, trustees, legislature or other body who must be present for the body to act. For a corporation, if quorum requirements exist, they are stipulated in the articles of incorporation, bylaws or state statutes.

Shareholder: One who holds (owns) shares (units of ownership) in a corporation.

Shareholder's Agreement: Document that defines, governs or restricts the rights of holders of shares of stock in a C-corporation or S-corporation. For an LLC, it's called an Operating Agreement.

Shareholder Rights Checklist

Stephanie — Mon, 01 May 2006 21:23:18 +0000

Was the corporation set up properly? Can you locate the certificate of incorporation?
Can you locate the governing documents of the corporation - articles of incorporation, bylaws, and the stockholder agreement, if such exists?
When and how are stockholders and shareholders meetings to be called? To what extent are the directors obligated to adhere to such and are they doing so?
Does the state under which the corporation was organized have special statutes for closely held corporations? Does the company qualify and, if so, have they officially adopted them?
Are the directors and officers complying rigidly with the provisions that maintain the liability shield so important to all shareholders?
When and how are directors appointed?
How many director seats are there and can the number be changed? If so, when and how?
What is the term of each board appointment?
List the shareholders and the percentage ownership of each. Is there a controlling shareholder? Is there a control group? How might you, or others, influence which directors are elected?
Who may call a special meeting of stockholders? Directors? How can these be called?
What constitutes a quorum of shareholders? Directors?
What are the limitations to the directors' powers? Officers?
How are motions brought before the board and/or shareholders at meetings? What is the protocol for voting? What constitutes passage and failure of a motion? A vote?