[00:00:01] Speaker A: Hello. Thank you for joining us. Welcome to what Counts, the podcast where we dive deep into the world of information governance. Here we highlight proven solutions developed through our experience working with companies across various industries, and we talk about how you can apply these solutions to your company.
Whether you're interested in information governance, have a need, or just curious to hear about information governance challenges like email management, retention management, or asset data management, this podcast is for you. This is Lee, and in this episode, Moore and I will talk about a little bit more about the fundamental topic of setting up your business.
The legal structure and compliance, the pieces that we said we were going to talk about in our last episode.
So, Maura, those items are articles, incorporation, the operating agreement, the mission statement. I think this is good stuff. These are important things because they, they really craft your business now. They really, they really hone your business a little bit. They give it guidelines.
Whereas our last episode was more about taxes.
[00:01:09] Speaker B: It was more about taxes. Although anyone who's listened to our last episode knows we are not tax professionals, but we do have to pay taxes. And that's part of, I was thinking about around the mission statement.
And a mission statement might feel like a, you know, fluffy consultant kind of thing. Oh, we have a mission statement, but you actually need it. To file your Articles of incorporation, you have to write just a one sentence description of what your business is going to do. That's part of the Articles of incorporation, which is the very first official document that you file as a company.
And, and you can't be registered. You can't with the state, you can't be registered with the irs. You can't do anything if you don't have that Articles of incorporation.
So we spent some time on it, as I recall talking about.
We knew we wanted to do information governance, although at the time we called it information management because vocabulary changes. But we didn't want to be confined purely to information, to the information pieces, because as we've always say, information is a journey. Information management is about the interaction of people and data. It's not a standalone thing.
It's very broad and it's how does information support your business?
So we had all that discussion and we did come up with a sentence that pulled in the people side of it, the information side of it, and the general approach to bringing the two things together. And I think we described it as management consulting because that's where we came from.
But that sentence has proven flexible and resilient enough for our business to continue. It didn't stop us from doing anything we wanted to do. It wasn't like we said, oh, we're going to be a records retention schedule development company. We're going to help our clients write records retention schedules. And then five years in, when we ran into, or not even five years in, three years in when we started looking at asset data and the, and the implications of asset data management, if we'd gone back to that, if we'd had a much more narrow statement in our articles of incorporation saying that we were going to be a records retention schedule company, I think we would have had to file an amendment potentially.
[00:03:46] Speaker A: I think you're right.
[00:03:48] Speaker B: Yeah. So that's the first thing is what are you.
And we said in one of our early episodes on this arc about small business ownership.
Are you a product company? Are you a service company? Are you something else?
And we are a service company and we have built some products for the use of our clients as part of our services.
And our mission statement encompassed that. And our guiding principle is we're all about the way that businesses use information and everything we do is centered around how businesses use information and helping our clients do that better. So that was the, the core of our mission statement that we wrote in early 2013, late 2012, a long time ago.
[00:04:42] Speaker A: But I do remember adding a sentence to the end of it that said and any other related legal business offering or something like that, like it, it allowed us to.
To be a little bit vague so that we weren't just tied into information governance or records management might have been mentioned at that point. Right. The very narrow topics or like you said, retention schedule management. I think there was this kind of trailing end sentence that said, in any other legal business that you can think of. So am I saying that if you are selling dog treats that you should add in any other legal business, I think you should consult your attorney. And that's one of the pieces that is missing here, is there are two really close friends that you need to get close to, and that's a certified public accountant and an attorney. When you're starting up a business, those two are absolutely important to begin your business.
[00:05:42] Speaker B: And when you say close friends, you don't mean that you have to have them already as friends. You're going to make friends with them. You're going to get to know them by finding them.
[00:05:51] Speaker A: Yes.
[00:05:51] Speaker B: Yeah.
[00:05:52] Speaker A: Yes.
[00:05:53] Speaker B: Okay. So that, that sentence that we wrote in our articles of incorporation, otherwise, the articles of incorporation are pretty straightforward. It's where, what state are you being incorporated in? And there are pluses and minuses to various states. What State is your headquarters in.
And that has some long reaching implications as we are considering moving our headquarters and what that means from again an information perspective, a data perspective, changing that original designation. If we decide to do it, it's just going to take effort and then it's.
And then it's really about. And then it's your structure. Like we said last time, you know, what's your, what's your corporate structure? Who are the officers of the company?
And you have to name a few and you.
And, and are there other.
[00:06:50] Speaker A: I said percentages in the Article Corporation.
[00:06:54] Speaker B: But I don't think that's true in the articles of incorporation. We should have pulled that up.
It's true in the operating agreement.
[00:07:01] Speaker A: True in the operating agreement, absolutely. So it's a good sign.
[00:07:04] Speaker B: But the Articles of Incorporation is a straightforward document.
There's probably a template in your state for how to do that in whichever state you choose to incorporate in. It's very straightforward to answer these questions. Your name is important.
If there are going to be any alternative names, a dba, a doing business as that you want to register and then the officers of the, of the company.
The operating agreement is a more personal document.
It's more about, okay, how are we going to run this company?
Who has the right to make decisions?
How does do decisions get made?
Do you have a board?
Do you have investors? Do you have, do you have to take or publish meeting minutes from the meetings of the officers or the meetings of the board for the investors if you have them?
Do you have to do an annual report? How do you manage the money?
Do all the profits go back into the company? Are you paying people? We talked last time about salaries versus draws. Do you have employees? How did those fit into the operating agreement? There's a lot of pieces in the operating agreement, conflict resolution and also a discussion of what happens if one of the owners becomes incapacitated, dies or wants to leave. Like how do you, how do you, how does the company continue?
Is there a buyout? Is there a transfer? Is like who knows there. We had a very solid corporate attorney who walked through all of the pieces of the operating agreement with us and helped us think about how do we answer these questions? What will we do in the event of a conflict? What will we do in the event of bankruptcy or dissolution or madness?
I do believe that was one of the things.
Well, it was incapacity and madness was one of the potential causes.
It is so many more things than you could than you think of when you're starting out, when you're starting the business before we got deep into the conversations with our attorney about how to write the operating agreement.
I mean, I'll admit it, I didn't know we needed an operating agreement. I didn't know what that meant.
[00:09:40] Speaker A: So the question pops up then, do you need one? And what happens if you don't have one?
And the conflict arises, like, what do you do? I mean, I'm not asking you. It's a hypothetical question. Right. Because I'm sure there's companies out there that maybe a couple is running it together and they're married and they have a disagreement.
This, that could be the end of a marriage, to be honest with you, when it comes to, when it comes to finances.
So it's better to have one than.
[00:10:14] Speaker B: To not be end of the marriage. And the business.
[00:10:16] Speaker A: And the business. Right?
[00:10:18] Speaker B: Yeah, yeah, yeah. So the operating agreement is. I would say that's the most important thing that we did in the first year was working through all those pieces, agreeing on them, and our celebratory signing ceremony at the pizza place in Oklahoma City.
Yes.
[00:10:42] Speaker A: And here is where the percentages came into play. Because we wanted to look into having a woman owned business, a certified woman owned business, because we thought we were going to get heavily into government contracting, which is a big plus. Having a certified woman owned business or being one is a big plus in the government arena. And so Maura was given, then. It was given, but it was agreement. The agreement was that you had 51% ownership rights and then I had 49%. And that gave you the ownership and that gave you a woman owned status for this business so that we can apply for this woman owned status, official woman owned status.
[00:11:29] Speaker B: That was part, that was absolutely a big piece of it. There was also a question of other owners or investors and how did they get treated in our operating agreement? Because we did. We were lucky enough. And if you heard one of our episodes, we talked about family and friends financing. We did have a good friend who offered an investment.
And.
And then we had to figure out what did that mean from an ownership perspective? Like what did it really become a loan?
No, it didn't. Not that first one. Later it did, but the first one was an investment. That's what they wanted. That's what we wanted. And that meant they were also owners and.
But they weren't in the company. They weren't running the company. So we had to deal with that, the, the question of members versus member managers versus non voting members and spell all those pieces out.
And it was a really Good introduction to the world of oh, we own a business now. Because if you had asked me four months, three months before we got to that point in the operating agreement discussions what I thought the most important thing we needed to do in our first year, it was going to be get clients.
Right.
Because we need to make money. Yes.
So and we came.
Our business is a service business. We had experience in that same service industry.
We had experience running large practices in that service industry.
So getting clients, having employees, making sure people were billable, that they had work to do, making sure we got paid, that suddenly became a lot more important too. But that's a subject for another day.
I never worried as much about the process of invoicing and payment coming in until it was our company.
So.
But I, that was the, that was a real switch from I am an information management professional to I am a small business owner.
The most important thing was the operating agreement and making sure that we were well structured and that we understood how would we deal with any contingencies.
[00:13:48] Speaker A: I think you're right. I think the only thing we're missing here from our list of items is whether or not you want to register with Dun and Bradstreet.
And that's just more of a is your business.
It helps establish your business credit and a profile to boost your credibility with potential partners, but also with visibility as well. And it's expensive.
Good.
[00:14:15] Speaker B: It is expensive. But it's also something that I would say most, if not all of our clients ran as a background check before they would hire us.
They wanted to know that we had a DNB number as well as the IRS registrations, the state registrations and all of that. They asked that question and they ran that check.
[00:14:37] Speaker A: So I would go to, I would say that if you're going to be a B2B type business, you should get a Dun and Bradstreet number. If you're going to be a bnb, get a D and B.
Sorry, I had to say it.
[00:14:52] Speaker B: If you're going to be a B2C, a business to consumer, it might not be as important but a business to business operation. And we, we are a small business but we serve big companies. We, we have large clients and it is a protection for them in hiring a small business. It's a risk for them to hire a small business. What if we went out? What if we didn't show up? It's not like we're another large business and there'd be somebody else there. So it's a risk for your clients if they want to hire you as a new small business.
Having the Dun and Bradstreet number does give them some comfort. And it was worth it. I think it was worth it. I don't know that it.
I mean, that's the only thing I think we've ever gotten out of it is the fact that we knew we had to have it as a background check for every one of our big clients. But that's enough because otherwise we wouldn't have had those clients.
[00:15:45] Speaker A: Yeah, well, we went over on time. I didn't signal you because we were over already. I didn't know how to do, like, 12 minutes anyway. So are you good? Can I go to the.
The ending? All right. If you have any questions, please send us an
[email protected] or look us up on the web at www.trailblazer.us.com. thank you for listening and please tune in to our next episode. Also, if you like this episode, please be a champion and share it with people in your social media network. As always, we appreciate you, the listeners. Special thanks goes to. Jason Blake created our music.
[00:16:26] Speaker B: Thanks, everyone.
I don't know why I said it like that, but I will see you soon.
Thanks, everyone.
[00:16:34] Speaker A: All right.
