2023 – Navigating Business Law with Confidence with Davis Business Law’s Matthew Davis

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1:05With us right now, it's Matthew Davis. Matthew, you are the CEO and owner of Davis Business Law. You're found on the web at davisbusinesslaw.com. You're also the author of The Art of Preventing Stupid. Is it The Art of Preventing Stupid? Yeah, that was a book we did a couple years ago. We've got another one in the works. and you know look we're we're the people that get called when you you fall in the ditch you hit the wall when the whatever hits the fan right and uh you know one thing we really try and teach our clients is let's figure out how to stay out of the messes because you know you stay out of the messes you're gonna prosper more in business and that's maybe the counselor part of us being attorneys and counselors at law.

2:01Yeah, certainly in business law, there are quite a few preventative things that every business should be doing that can really keep yourself from a lot of legal issues down the road. Would you mind maybe just kind of give us a quick 101 on some of the stupid things that we want to prevent? Well, yeah, and I want to add a little more contour to your thought too, because your thought's absolutely, totally true. And there's also different stages at which you need to be worried about things, depending on the size of your business. And just a little plug here, we've got a really great strong protected business checklist over at the resources tab on our website that looks at the things you should be doing and when you should be doing them.

2:55Because for instance, when you're starting out, when you just have a small business, you don't really have anything, so to speak, to be worried about. You know, there may be an exception or two, but if you're looking at the rule, not the exception, you're not really worried about your succession in the business. You ought to be worried and spending your time figuring out how to grow it. So you do get there and you have something to worry about. So for instance, you know, 10 years ago, I had a midlife crisis and started a law firm. And back then I didn't have anything to worry about. Today, I'm going to see my friend, Mr.

3:33Tall Building Lawyer, right? And we're going to have a talk about succession from this firm, because I'm 56 years old. And I've got to be thinking about that, you know, whether somebody's going to buy it internally, whether I'm going to sell it to somebody externally, you get the drift. So, but back to your question, for instance, one of the main things we always tell people when they start is get your limited liability company set up. That's going to be your default position. and there's exceptions to the rule, but that's a 101. By the way, get an operating agreement. I can't tell you how many times we see people that have no operating agreements.

4:19Now, it's fine to get a very simple basic one if you're a single member LLC. Now, if you're what we call a partnership masquerading as an LLC, meaning if it's a multi-member company, you need to spend a little money making sure you've got that right because we you know we discourage people from going into business with other people because I describe it somewhat indelicately as marriage without sex and I do that to agitate the point you you've got to have a way to split the sheets and if not you don't have that operating agreement in place a lot of states make that very difficult. We do a lot of work in Texas.

5:07And if you are trying to split up a multi-member LLC in Texas, boy, it is a nuisance. It is very, very, very difficult. So of course, every state law is different, but those are some of the main things on the business law front that we teach people to get done right up front. Yeah. Yeah. And I suppose, and I'm sure you've had folks come bang on your door because they've hit an oh crap moment. What are some of those maybe oh crap moments that you've seen pretty consistently through the years? Okay, I addressed the my partner is crazy. Oh crap moment happens all the time, right? Yeah. We call those business divorces.

5:59They are very common. Here's another one. Oh, crap. I don't really have a customer contract. And, you know, you need to have your customer contracts in place. Oh, crap. This is kind of fun. I didn't look at this vendor contract that I just signed. And that's, you know, what did I sign here? Well, what's going on? And, you know, maybe it has a choice of law clause in Virginia or in, you know, I get it all the time. All these factoring companies that companies will sign up with, which are those are, you know, loan companies, basically, which are horrible place to get. And we just talked a guy out of one of those in Austin earlier this week.

6:47But, you know, I see them all the time for some reason. Jurisdiction, New York State, venue, Canandaigua, which I don't know if you know where Canandaigua is. I used to live by Canandaigua, and it's in the middle of nowhere in New York State. And New York State's a big state. People don't get that. So that's a big one. um so your vendor and by the way get your employee contracts done and those are really important i'm was up at 6 30 this morning working on a deal for a company we had very well prepared to deal with issues with a good employee contract and it's going to make this deal go really smoothly.

7:30So vendor, customer, employee contracts, have them done, have them done well. They will save you a lot of time and trouble and money and hassle and aggravation and sleepless nights. I wonder if you have many people that when you say, well, why didn't you do this? They go, well, you know, most people are honest and friendly and you can do business with a handshake. And I don't know if that was their justification for it. But what if you do? I mean, what if someone says, yeah, you know, listen, it's pretty common sense what we do. It's pretty simple. You know, we kind of expect, you know, we're normal.

8:08We're nice. You know, it could be a naivety. I don't know. But I don't know if you can kind of address maybe objections to getting a little bit more legal. Those are very common. Those are very intuitive reasons. I'm going to throw another one in the mix. it's just understanding what your priorities should be because there are certain things you need to get done that are more foundational and i've addressed some of those and if you're really into your business which i hope you are because it's a consuming task if you want to build it and you want to build your structures you want to build your systems it's going to take a lot of effort and understanding what your priorities should be in building out your protections are critical.

8:58And that's the reason that I addressed that right up front in this podcast is it's maybe not intuitive for people to understand what that is, what those are. That list we did, we spent a lot of time thinking about what are the problems we see with our clients. And, you know, legal problems are symptoms of your business problems. That's why we addressed it in the stages of your business growth. Yeah. You'd mentioned that you have some resources on your website. Do you mind maybe sharing some of that? And then also, if you want to talk about your book as well, The Art of Preventing Stupid, that's great.

9:40But I know when I go to your website, you actually have a tab that says resources. You've got a free business audit. You've got some free forms here as well. Yeah, the Strong Protective Business Checklist is up there. And that's a great checklist for businesses to look at. And it's not all legal. We kind of look at helping our clients in a holistic sort of way. There's some things that you're going to look at on there. I believe there's one on there like, do you have somebody ready, willing, and able to tell you you're wrong? and you know I've been very fortunate to have uh Jamie and Tricia who love to tell me I'm wrong and uh not because it's it's fun you know and uh that that's a great resource for small businesses the the strong protected business forms are a a dovetail of the new book and the old the art of Preventing Stupid book because we teach our clients, and by the way, we practice this very intensely, to be productively paranoid.

10:50And this is not just me talking out of school. I mean, you can read Jim Collins talks about it. I can't remember. I think it's in Great By Choice. And he talks about how Andy Grove was that way with Intel. But when businesses will So really worry about their vulnerabilities. Those are the ones that can capitalize on your opportunities. But what you have to do and what the first book and the second book, soon to be out, are about is having a structure to brainstorm where you're really vulnerable. Because if you just ask, oh, well, what can go wrong? That's not a good question, right? Now let's put some power in it.

11:36Oh, what catastrophes could hit this management team? What catastrophes could hit this marketing, our marketing? Where, you know, what, where are we ignorant about sales? Where are we being inept or slacking off about our recruiting and hiring? You know, where are we being sloppy? And I really break the questions down at first in the three categories. What are the catastrophes? What are the sucker punches? Okay, where are you going to get smacked, right? Number two, what do you lack in knowledge and intelligence about your business and about your market, right? And then three, where are you going slack?

12:25Meaning, where are you not following through with what you know to do? Where are you getting lazy? Where are you getting sloppy? So I like that because it rhymes. I mean, where are you going to get whacked? Where, what do you lack? And where are you going slack? You know, and that's catastrophes, ignorance and ineptitude. And if you will look at your business simply with those three lenses, you're a long way ahead of everybody. There's a couple other ways of looking at it from a systemic way of how all businesses work, or you can look at it from more of an objective way of things like your market, your partners, your business associates, and so on.

13:08Those tools in the strong protective business forms are really a brainstorming tool to help you think about and ask smart questions about where you're vulnerable. Again, if you'll deal with your vulnerabilities, you can capitalize on your opportunities. The people that deal with them are the ones that are the strongest players on the field. They're the ones that are on offense. They're the ones that are scoring points. And it's just a truism, but it's something that a lot of people don't think about and they don't devote the time and energy to. Yeah. The website, again, davisbusinesslaw.com. You also have a free business audit.

13:56Do you mind maybe just sharing just a quick bit about that? Well, we will go through basically the things we just talked about with, you know, with prospective clients and spend a little time helping them figure that out. Brilliant. Again, the website, davisbusinesslaw.com. Matthew Davis, it's been great having you. Thank you so much for this conversation. Thank you. Sure enjoyed it.

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