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     Mike Vaughn, Attorney and Counselor at Law
     17011 Beach Blvd., 9th Floor . Huntington Beach, CA 92647
     Direct Tel: 562-592-9350 Fax:  562.684.4459
     Email:  mike@vaughnlawoffice.com

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Mike’s Blog - Legal and Strategic Advice for our Clients and Friends

“CORPORATE THERAPY”

I recently met with two different Non-profit Boards of Directors to deal with immediate management issues.

The problems faced by these boards of directors are very common to all corporate management.  Unfortunately, when members of a board of directors take very personal offense at the way the corporation is being managed, the opportunity for success for the corporation is in jeopardy.

Managing a board of directors is a diplomatic process in which the CEO or chairman must take much more into consideration than just the immediate problems facing the organization.  This requires the CEO/Chairman to know and have a personal understanding of his board.  Dissident members of a board must be given an opportunity to express their points of view and attempt to persuade the remainder of the board to their points of view.

However, dissident members must not be allowed to control the discussion and obstruct the operation of the corporation.  This requires flexibility and patience upon the chairman.  In selecting a chairman, and this is used for either gender, the chairman must be willing to spend the time and effort necessary to lead, not drive, the board.

Over the years I have seen a variety of chairmen bully, strong arm and force boards in a certain direction.  Ultimately, resentment builds against the chairman until he or she has offended a majority of the board at which time the board replaces the chairman. 

Typically, during this “revolt” period, little or nothing is accomplished and the company suffers.

I work with boards in crisis to help restructure, redesign and restate the goal, purpose and style of the discussions within the board.  Many times this requires rather severe and drastic decisions, but more often it merely requires more diplomacy than the members are accustomed to using and the willingness to explore alternative ideas and goals.

When boards are in crisis they can benefit from outside advice and counsel.  This is a process I have referred to as “Corporate Therapy”.  It blends legal concepts and axioms with the psychology of human interaction and a good dose of “common sense”.  I have worked with a variety of Non-profit and Profit corporations in resolving internal problems and returning to “good” business practices.

Remember the old saying: “All business is personal.

 

“FIREPROOFING YOUR LIFE”

As many of you know I have been working on a new book entitled, “Fireproofing Your Life”. It is planned to address many of the fundamental problems that people encounter that wind up in an attorney’s office.

If you have any suggestions for topics, please e-mail me at mike@vaughnlawoffice.com.  The following is a draft of the table of contents.  Let me know if this is of interest to you.

TABLE OF CONTENTS
 

I. Your Personal Life
     A.  Marriage
     B.  Prenuptial Agreements
     C.  Community Property
     D.  Divorce
     E.  Leases and Rental Agreements
     F.  Loans and Finance
     G.  Wills and Living Trust
     H.  Guardians
     I.   Adoption

II. Your Business
     A.  Partnerships
     B.  Corporations
     C.  Limited Liability Companies
     D.  Joint Ventures
     E.  Business Plans & Self Employment
     F.  Employees
     G.  Americans with Disabilities
     H.  Buyout Agreements and Options
     I.  License and Registration
     J.  Investments and Loans
 

III. Attorneys-Courts-Judicial System
     A.  Types of Attorneys
     B.  Fees and Expenses
     C.  What Does it Cost?
     D.  The Judicial System and How it Works
     E.  Judgments
     F.  Bankruptcy
     G.  Assignment for the Benefit of Creditors

IV. Crisis Mismanagement
     A.  Divorce
     B.  Death
     C.  As a Defendant
     D.  Taxes
     E.  The Decision Making Process

V. Deciding What is Valuable




 

“WHOSE FAULT IS IT?”

When things go badly there is always enough fault to go around.  In business, failure is not an end in itself but a process by which you learn.

If you succeed on your first try at a business venture, it is very hard to know why you succeeded and how to duplicate the result.  If you try and fail, you can be sure of one thing that does not work.

In providing strategic advice to businesses I try to emphasize that the experience is a great teacher.  Firsthand experience is what you learn from life lessons.  Experience you buy and pay for from a consultant is a commodity you learn to use wisely.  I tell small businesses to write things down.  Keep a record of how you are doing business, your marketing techniques and the people you meet and know.

Every few months measure your history against your progress.  If you are going to the same networking meeting and using the same advertising plan and nothing is happening, you must re-evaluate your networking and advertising.  If you are seeing progress, you know that you probably are making a good investment.

Watch your cash flow carefully.  I recently discussed the failure of a business with the two owners who were facing a mountain of accounts payables, demands and lawsuits.  The problem was no cash flow management.  They paid their own salaries first and then paid their employees, forgetting about the withholding taxes owed on the employees.  The supplies and independent contractors were at the end of the payment list.

Now after seizure by the IRS and in numerous lawsuits, they found themselves, despite their corporate shell, personally liable for hundreds of thousands of dollars in debt.

This could have all been prevented by careful money management and periodic reviews of their “real” financial status, not just their own paychecks.

Before you go into business make a plan about how you intend to manage and evaluate your business.

Exit plans may not prevent a business failure but an exit plan with minimize the long term effect on your life.

 

“4 OUNCES OF ADVICE”

Across the country August has been a very slow month.  I have listened to both political parties complain about the unemployment rate and how bad everything is in the United States.  What the politicians are not looking at is the amount of everyday commercial activity that is going on.  Politicians tend to lead by fear not optimism.

An unemployment rate of 8% is really a change of 4% from a “good” unemployment rate.  In making business decisions you should remember that 92% of the work force is employed.  The change from “bad” to “good” is 4%.  What does 4% really mean?

In an 8 ounce glass of milk it means a few drops.

If your car gets 20 miles to the gallon, it means you would get only 19.2 miles to the gallon.

In a 16 oz. steak you would get a 15.5 oz. steak.

If you salary is $1,000,000 per year, you would get $960,000 per year.

Everything is relative.  Consumers still must eat, buy gas, and send kids to school.  Business must buy supplies, governments must function, garbage must be picked up and roads must be repaired.

Businesses must be adaptable to changes in the economy.  When fear rules your decision you will always be behind the curve in the economy. 

Supply side and demand side politicians all forget that one without the other fails.  Business will not provide an increase in supply until there is demand.  Demand without a supply of things to buy has nowhere to go.

So in making decisions, take the long view.  Where do you want your company to be in the next 6 months, 1 year, and five years?  There is always risk. Knowing and understanding the risk results in good decisions.  Not anticipating risk and not realistically appraising it will always lead to bad decisions.

Remember, business enables life, it is not life.  No one will note on your tombstone, how much money you made or how many days you worked late.  Your passing is measured in the prayers and tears of a grateful and appreciative family. Use your time wisely.